Monday, December 29, 2014

Greece at a crossroads – THE WORLD

Greece at a crossroads – THE WORLD

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Greece at the Crossroads

After the failed presidential election there will be elections in late January. Government and left fighting for power. Three scenarios for the future

                  After the failed presidential election there will be elections in late January. Government and left fighting for power. Three scenarios for the future
                  By Jan Dams,

At the end Stavros Dimas missing twelve votes for election to the Greek President. But the third attempt succeeded the candidate of the ruling coalition not to convince the necessary majority of parliamentarians. Thus, there is now the one, Greece donors eager to avoid: On January 25 elections will be held

For Greece the ballot is the fateful choice. Greece holds fast to his reforms and remains a member of the Euro zone? Or choose the country to the left politician Alexis Tsipras and flies may be out of the euro? What happened to the German billions in aid? Threatened by a resurgence of the euro crisis ? Three possible scenarios could now arrive

Scenario 1:. Despite elections no chaos

Despite elections must in Greece no chaos break out – if the alliance of conservative Prime Minister Antonis Samaras should win. Samaras one should not write off despite the defeat in the presidential elections. That the opposition has now forced an election could not go down well in the population. Many Greeks should the ballot as the grasp what it actually is: a fateful election. “The Greek people will think at the ballot three times if she wants to take a different path,” the director of the Institute of the German Economy Cologne (IW Köln), Michael Huether said.

Samaras asked by the troika of the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) even to loosen the reins savings. But so far he was willing to cooperate. And its price has shown successes. The country grew last as much as any other country in the euro zone. “We are, no matter how the election goes out, losing precious time. This is all the more regrettable because Greece in many areas on the right track,” said the CDU parliamentary leader in the Bundestag, Ralph Brinkhaus.

“citizens will know how to prevent it, that Greece by fireworks promises of the opposition back in a new adventure crashes,” said Prime Minister Samaras are confident. Well, not his chances though. Polls predict a shift to the left and a victory of Tsipras ahead

Scenario 2:. Tsipras comes to power – and fails

Tsipras is the specter of Europeans. The head of the party’s left alliance SYRIZA does have declared their intention to keep Greece in the euro zone. But with his demands is almost impossible: He wants to end the German austerity, terminate all reform contracts and negotiate a radical debt relief for his country

get these demands. in the population at. Since 2009, the gross domestic product has fallen by 25 percent. Many Greeks blame the reforms imposed for its dramatic economic decline. Therefore Tsipras’s chances of victory are not bad. If he actually come to power, put Greece’s lenders on a quick disenchantment. “We would hope that the SYRIZA coalition would fall apart and some of the partners to anschlössen the Socialists of Pasok,” said EU observers.

Excluded is not. The end of February runs from the EU’s bailout program. The new government had only a few days for negotiations on new aids. “A Greek government would Tsipras to the EU in a weak bargaining position,” says Huether. “The blackmail Europe is significantly less than three years ago. Other countries, such as Ireland and Portugal have worked out of the crisis, and there were institutional advances such as the banking union.”

In addition, donors Athens hold back the date for the final installment of the bailout because Greece has not yet fulfilled all reform requirements. “Without outside help Greece is unable to act in the face of the debt,” says SPD finance politicians Carsten Schneider. “In Greece, private interest of reforms must be continued.” In mid-March would be Greece without assistance bankrupt.

At the latest after the change of government, the markets are also likely to exert immense pressure on Greece. Probably a flight of capital and a new economic downturn. Then Greece would need a new rescue package. But that would mean new editions of the hated Troika. If Tsipras decides against new tools, more moderate forces could leave his alliance to avoid the worst. The flying out of the euro-zone

Scenario 3: Greece flies out of the euro

If Tsipras clings to his demands and his government will not tilt Greece is hard to keep in the Euro-zone. An terminate the contracts reform and debt relief on a large scale would not vote donors. Too much money is at stake: So far, Greece has received 240 billion euros in aid of its partners. In addition to major concessions in Greece would be a devastating blow to other euro-crisis countries.

A terminate the contracts would lead to an auxiliary stop and thus to the insolvency of the Greeks , An exit from the euro would result. The consequences would be devastating: “In a euro exit threatens the whole country a massive impoverishment and withdrawal from the EU,” says economist Huether. “The country would have to be sealed off financially, so it does the rest of Europe with its problems contagious,” said one observer.

Lost would be at a Euro- exit a majority of German aid of around 80 billion euros. If the new Greek currency would depreciate sharply, the debt burden would rise sharply. Because the debt must continue to operate in the country euro. On a debt summit Greece would have to negotiate with its lenders, which debt the country can still operate.

For a long time the withdrawal of a Member State of the euro as the nightmare scenario at all. Investors could also bet against other euro countries after leaving a country. Like a domino effect would a country leaving the euro zone after another. But times have changed. “I believe that the monetary union could sustain a Greek exit now. The contagion to other countries would be minimal,” says Huether.

“The euro zone has now to deal with a well-oiled machinery crises, “says Holger Schmieding, chief economist at Berenberg Bank. The rescue ESM would be willing to help financially struggling countries. Furthermore, the European Central Bank (ECB) will probably buy government bonds in the coming year, which at least temporarily significantly reduces the risk of sovereign default of other states. Schmiedings conclusion is therefore short and sweet: “Greece is a danger – but above all for themselves.”

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