Greek Elections Could Impact Future of Euro
Daniel Kochis /
On Sunday, January 25, Greeks will go to the polls to elect a new parliament. (Slightly smaller than Louisiana and with a population roughly equivalent to Georgia’s, the results of these elections are likely to have implications far beyond Athens.) Pre-election opinion polls indicate that the ruling center-right New Democracy Party will be unseated by the left-wing and anti-austerity Coalition of the Radical Left—popularly known as the Syriza Party.
The failure of the Greek parliament to elect a new president in December led to this month’s early elections. Hard hit by the financial crisis, Greece has secured a series of bailouts from the EU and the IMF, receiving €240 billion, but with the understanding that Greece would implement austerity measures and structural reforms to help right the Greek economy. Since the last parliamentary elections in June 2012, the ruling New Democracy Party has governed by leading a coalition government.
While unlikely to win an outright majority, the Syriza Party is likely to be the largest vote-getter in Sunday’s election. Syriza has promised an end to austerity measures, and has said it will seek better terms of repayment for the nation’s sovereign debt, including new debt forgiveness.
Syriza has not called for an exit from the euro, which Greece adopted in 2001. A victory for the left-wing party makes many in Brussels nervous, however, and sent the stock market in Greece plummeting and the euro to its lowest rate in 11 years. Greece has the highest unemployment rate in the eurozone, at 25.7 percent overall and nearly 50 percent for people under 25, and has struggled with social unrest sparked by the government-implemented austerity measures.
The economy of the eurozone remains fragile; unemployment across the eurozone is 11.5 percent and much higher for young Europeans. Growth continues to be anemic, prompting the European Central Bank to announce plans to inject up to €1 trillion into the economy by printing new euros to buy up government debt.
The massive injection of cash underscores the fact that the eurozone crisis is far from over, and the future of the single currency is far from certain. The outcome of the Greek elections on Sunday are likely to impact the future trajectory of the eurozone. Greece could become the first nation to exit the euro; Sunday’s elections may well hasten its retreat.