Greece election: The European countdown

 
Alexis Tsipras, the head of Greece's leftist Syriza party, waves at supporters during a pre-election rally in Athens June 14 2012 Syriza's Alexis Tsipras is confident Greece can renegotiate the terms of its bailout

Europe is on edge, its leaders nervous and divided. The days ahead are full of uncertainty.

On Sunday the Greeks vote in an election that could determine whether Greece stays in the euro. Friday is the last day of campaigning.

The attention remains on 37-year-old Alexis Tsipras, the radical leftist leader of Syriza.

He is a young politician who has come from obscurity to challenge the terms of the bailout deal drawn up by Brussels and the International Monetary Fund. It has made him the anti-austerity candidate.

If successful he has threatened to tear up the deal, which could risk Greece leaving the single currency.

But Mr Tsipras insists he can reject the austerity conditions attached to the bailout deal and stay in the euro.

At his last meeting in a central square in Athens he denounced the bailout memorandum.

"No to the memorandum of bankruptcy!" he said, "yes to the euro and to a national plan for economic recovery that will protect the people from bankruptcy".

Brinkmanship

He accused the two main Greek parties of looting the country and handing over the national flag to the German chancellor.

His core message is this: "Greece has been a European and international experiment, and the Greek people have been the guinea pigs. In the past two years we have suffered a social catastrophe."

Start Quote

Germany is strong, Germany is an engine of economic growth and a stability anchor in Europe. But Germany's powers are not unlimited”

End Quote Angela Merkel German Chancellor

He believes he can persuade Europe's leaders to scrap the old deal and renegotiate another. Europe is saying "don't count on it".

There is no appetite for a full-scale negotiation and without the bailout funds Greece will face bankruptcy.

The French president has warned Greeks: "There are countries in the eurozone which would prefer to end Greece's presence in the eurozone."

So, if Syriza does well, it will come down to who will blink first. Alexis Tsipras believes that Europe will bend, fearing a Greek exit more than bargaining with him.

He has been encouraged by the bailout of Spain's banks. "We will vote on Sunday with our eyes on Spain," he said.

"It negotiated and succeeded, despite the lenders' threats and blackmail. It is still in the euro, without an austerity plan."

The polls indicate that Syriza is neck-and-neck with New Democracy, a centre-right party led by Antonis Samaras which supports the bailout deal with the EU and IMF, although will seek concessions if they win.

European divisions

Many Greeks have heard the dire warnings of instability and chaos that would follow a departure from the euro.

Those fears may work to Mr Samaras's advantage. He accepts the basis of the bailout deal, but believes concessions can be won. Fear may be a key factor in the vote on Sunday.

If Mr Samaras were to succeed there would be relief in Europe, but he would have to convince the markets that he could govern effectively in the face of possible widespread protests and disruption.

A family beg on the street in front of the offices of National Bank on June 14, 2012 in Athens, Greece. On Sunday, Greeks will decide between more austerity and a possible euro exit

Uncertainty over Greece is helping force up the borrowing costs for Spain and Italy. One of the major concerns of investors is that by agreeing a bailout deal for its banks, Spain has increased its debts whilst the economy is in recession.

The leaders of Spain and Italy increasingly argue that salvation can only come at a European level.

Once again European divisions have been on display. French President Francois Hollande was visiting Italian Prime Minister Mario Monti on Thursday.

They seemed determined to send not-very-coded messages to Berlin. Budget discipline should not come at the expense of economic growth, said the Italian prime minister. Again they argued that "public account discipline" was not enough to build growth and create jobs.

Mario Monti even pointed out that Italy and France contributed 40% of the eurozone' s bailout funds and so, by implication, should be listened to.

The French president wants a banking union with a joint guarantee of deposits and a joint fund to pay down debt.

He wants the bloc's permanent rescue fund (the ESM) to be given a banking licence so it can borrow directly from the European Central Bank.

Mr Monti favours eurobonds, common debt.

'Moments of truth'

Many of these ideas are rejected by Germany's Chancellor Angela Merkel. Her reply was that "Germany is strong, Germany is an engine of economic growth and a stability anchor in Europe. But Germany's powers are not unlimited".

She is not prepared for Germany to become the paymaster of Europe. She said that those clamouring for Germany to "pour billions into eurobonds, stability funds, European bank deposit guarantee funds" wanted a quick crisis fix that was unsustainable.

That persuaded French Prime Minister Jean-Marc Ayrault, in an apparent reference to Ms Merkel, to say that "the situation in Europe is sufficiently critical not to give in to simplistic talk".

So two moments of truth are approaching.

Will Greece gamble that Europe will agree to easier terms on its bailout, or will it go along with a rescue package that brings with it years of painful austerity?

Secondly, will Germany - under relentless pressure - accept it will have to pay more to ensure the euro's survival?

Angela Merkel believes there will have to be a political union in the eurozone, but will she tell the German people they will have to contribute much more to save the currency?

The days ahead will provide some answers. An analyst from CMC markets said: "We're at a tipping point. You either have to deliver or disband."

 
Gavin Hewitt, Europe editor Article written by Gavin Hewitt Gavin Hewitt Europe editor

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  • rate this
    0

    Comment number 271.

    So it all comes down to "the Germans".

    Who are they, more exactly? The voters? Well. Sort of. Not really.

    The Germans, in this case and most others, means the dominant parties in the german system of representation. They represent everyone with enough money to contribute towards the parties.

    Will those folks tie the rest of Germany to Italy and Spain?

    Maybe. Maybe not. Would you?

  • rate this
    0

    Comment number 270.

    269. rjbcoach: The introduction of the Euro was France's price for acceeding to German reunification. The idea was to tie Germany firmly into the European project. Germany, quite blatantly obviously, does not want to be the 'leader' of a huge EU state, it's everybody else who's demanding that. The whole problem is that Germany refuses to give in to others' demands to assume that role.

  • rate this
    0

    Comment number 269.

    Agree with 263. Nothing against referendums--a pure form of democracy. Perhaps a good many Euro-countries now wish they had carried out referendums, instead of being "bounced" into the German dream of becoming the leader of a huge EU State.
    Germany seem to be the arch-villains in this mess, backed for years by their French poodle. Good , happy countries like Portugal and Greece have been used !

  • rate this
    +1

    Comment number 268.

    I think the UK needs a referendum to give legitimacy. My parents had no idea they were voting for the Frankensteins monster the EU has become.
    They thought they were joining a trading block. Both voted no, and both said they didn't know one person who voted yes.
    With the way the EU is moving, it needs to take the people with it, or Change track back to the trading block promised.

  • rate this
    +1

    Comment number 267.

    264. shgp13+ Sorry, by blog I understood you to mean the article. As regards the comments, I would say that the majority are anti Euro and anti EU. You will always get some pro Euro opinion among over 250 comments, in fact it would surely be worrying, from a democratic viewpoint, if you didn't. So I still can't see how you can characterise this as a pro Euro or pro EU blog.

  • rate this
    0

    Comment number 266.

    252. Comfortably Numb: With a bit of luck 'sooner' will be this weekend. Not wishing for a Greek apocalypse, just that the suspense is too much. Will anything be resolved or will we just move on to the next episode? Even if Germany announced they'd 'save' Greece and anyone else who stumbled, would we suddenly emerge into sunlit uplands? It won't be over till strong 'growth' returns. Oh dear.

  • rate this
    0

    Comment number 265.

    Much sympathy for Greek people--lovely people. Let down by years of misgovernment and an EU which pays for motorways and luxury infrastructure in countries like Greece and Ireland ( which do not need them). Proud people such as the Greeks do not want to be ruled again by Germany ( after memories of WW2). It is absurd to think that Germany can share a common currency with Ireland,Portugal, Greece.

  • rate this
    0

    Comment number 264.

    263.jammydodger; For example.
    251.Eddy from Waring
    245.Eddy from Waring
    230.BelPaese

  • rate this
    +5

    Comment number 263.

    261. shgp13= I have reread this blog carefully. I don't see that it is pro Euro or pro EU, in fact it comes across as fairly objective. Neither can I see where it belittles people who want referendums. Perhaps I'm not reading it properly, and you can highlight relevant extracts for me?

  • rate this
    -7

    Comment number 262.

    228 Brits might have been able to buy decent lunches for their schoolchildren but they squandered the money instead on a diamond jubilee row-tilla canoe festival and sports arenas that will be used for two weeks and then go into oblivion like the Millenium Dome.Nothing new there, they did the same when they spent money for military "kit"on MP's dog pedicures and swimming pool maintenance instead.

  • rate this
    +1

    Comment number 261.

    There is sadly a common thread with all pro Euro/EU blogs. The writers of these blogs try to belittle those democratically minded people who wish to hold national referendums on a number of matters appertaining to the EU. Maybe they are brainwashed by 'Barroso and VonRompuy into not recognising the right of a nations populous to the right to determine their own future or just plain ignorant.

  • rate this
    +1

    Comment number 260.

    251.Eddy from Waring; I believe the 'thick' are those poor simple fools who still have faith in the euro currency. It has been ridiculed by its own architects, by the money markets and now looks likely to bankrupt a number of Mediterranean Countries.
    Only Austria actually had a democratic vote on its imposition and voted yes, Sweden & Denmark wisely gave it a wide wide berth.

  • rate this
    -1

    Comment number 259.

    #153 The Greeks consistently elected govts that spent far more than they earned, accepted retirement ages that were unsustainable, failed to pay taxes ... the list goes on.

    Greece's problems were self inflicted. What happened 70 years ago is irrelevant but if you want to trade history the fact is that Greece has been bankrupt very regularly over the last 180 years. Greece is a bad credit risk

  • rate this
    0

    Comment number 258.

    248. AngelaMerkelsEvilTwin: Indeed. Even now it's the symbolism of a Greek default, as much as it's cost, that's the problem. The other PIIGS look askance at the 'unconditional' bailout of Spanish banks, and see a precedent set. It seems to matter little what the rules were, none of them properly govern the current situation. Will any of the new sets of rules be any better?

  • rate this
    +1

    Comment number 257.

    255.Suilerua; Delusion?
    I voted for the Common Market membership in 1975, I do not recognise the EU Parliament, the European Community or any other European device.
    Therefore I suffer no delusion.
    You however I believe to be in the USA Are you from native Indian stock or are you indeed an immigrant or at least from immigrant stock?

  • rate this
    0

    Comment number 256.

    Why is there such a panic against the collapse of the euro, it came in without much of a problem and it can go in the same way.

  • rate this
    0

    Comment number 255.

    254 You have to understand that there are many Brits who are under the delusion that they live in a democratic nation and that their vote to join the EU was about entering a free trade zone, not relinquishing their sovereignty to become part of a larger country called the United States of Europe or EUSSR. Therefore they incorrectly consider anyone not a "British citizen" to be a foreigner.

  • rate this
    0

    Comment number 254.

    Yokil i respect you thought bat i have a strong objection to be call foreigner i am a citizen of the EU and the UK is member of the EU.
    Foreigner are the people from the rest of the word.

  • rate this
    0

    Comment number 253.

    ECB is not a true independent central bank in the sense of BOE or the Fed. It can't print money when it's necessary, it is constrained by political considerations insisted upon by Germany.It has a legal mandate to keep prices stable.Moderate inflation by increasing the money supply to create credit and devalue debt isn't possible.Straightjacketed it cannot be effective in the current circumstances

  • rate this
    +1

    Comment number 252.

    Whether or not Greece proves to be the catalyst, this economic powder keg is due to explode - sooner rather than later. The signs are there wherever you look. Sometimes it seems that events just have to run their course. When it's over, you pick up the pieces and build something better.

    Gold rather than stocks I think.

 

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