The widespread electoral success of anti-bailout parties in Greece yesterday threw the country’s economic rescue package into doubt as markets plunged and European partners worried about revived risks of a eurozone exit.
“We see significant potential for a new Greek government to miss the next round of [austerity] targets,” said Guillaume Menuet, an economist at the global financial conglomerate Citigroup.
He cited a 75 percent “probability” of what the giant banking firm has labeled “Grexit” happening within 12 to 18 months.
Both the country’s bailout--backing mainstream right and left political parties missed an absolute majority in parliament and took a combined share of just 32.1 percent of the vote, as Greeks angry at two years of cuts voted to tip the balance of power.
Extremist parties from both sides of the political spectrum that are hostile to the bailout and the harsh austerity budget, as well as being suspicious of the EU, made big enough gains in the nationwide poll to acquire significant bargaining power in the country’s new parliament.
Alexis Tsipras, head of the coalition of left-wing political parties collectively known as Syriza, which scooped nearly 17 percent of the vote, said “the parties that signed the memorandum are now a minority” and added that “the public verdict has de-legitimized them.”
In Athens, Conservative New Democracy leader Antonis Samaras — whose party suffered heavy losses in the election — said the goal now was to assemble “a -national salvation government” that would “keep the country in the euro” and amend the bailout deal.
Despite the overwhelming electoral result, German government spokesman Steffen Seibert insisted that deep budget cuts and reforms imposed by the EU in exchange for financial aid remain the “best path.”
In its fifth year of recession and with unemployment running at 20 percent, the Greek state has signed a deal with the EU and the IMF to implement another 11.5 billion euros (US$15 billion) in savings over the next two years.