Greek economy fear

first_imgGreece’s high-stakes presidential election went into a second round on Thursday morning (eastern Australian time) after parliament failed to pick a head of state in a first ballot, fuelling concerns about the future of fiscal reforms.The coalition government of Prime Minister Antonis Samaras failed to muster the required 200 out of 300 MPs to elect its nominee, former EU Environment Commissioner Stavros Dimas, meaning a second vote will be held on December 23.The looming political stalemate has alarmed international markets, pushing up the yield of Greek bonds and prompting EU Commission chief Jean-Claude Juncker to recently warn the nation against delivering the “wrong” election result.“We have two more votes. I am hopeful that a president will be elected,” the premier said in reaction to the result.“The country is facing difficult conditions and I am certain that MPs realise that the country should not face an adventure,” Samaras said.The official count showed a total of just 160 deputies voted for Dimas, nearly all of them from the government majority, which has 155 MPs.Should a third and final round be required on December 29, Dimas would need just 180 votes for the post — but a third failure will bring early elections.“Clearly this result means early elections,” said Panos Kammenos, leader of the small nationalist Independent Greeks party.The government brought forward the election from February, when it will be locked in delicate negotiations with the cash-starved country’s creditors, the European Union and the International Monetary Fund.But the gamble to stave off uncertainty during those talks may well backfire, given the government’s slender 155-seat majority in the chamber – and the rise of the opposition radical leftist party SYRIZA, which wants to end a four-year austerity drive and re-negotiate Greece’s bailout.SYRIZA leader Alexis Tsipras on Wednesday said a “fear campaign” by the government had collapsed, and that voters would soon have their say. “Very soon our people will take centre stage in developments,” Tsipras told reporters.Analysts said the government had hoped to pick up half a dozen opposition deputies tonight, and a few more next week, before the deciding vote on December 29. But a number of deputies it had counted on either voted the opposite way, or did not attend the session at all.Conservative premier Samaras said just hours before lawmakers were due to vote that rejecting his presidential nominee could prove “fatal to the European development of the country”.Any snap elections would happen at a time when SYRIZA is leading opinion polls, and could therefore roll back years of painful reforms forced through by the government in exchange for bailouts worth 240 billion euros ($300 billion).Samaras’ gamble has sent shockwaves through the markets, with stocks in Athens last week losing more than a fifth of their value over four trading days. They edged up on Wednesday and closed with a 3.33 per cent gain.The vote will be closely followed across Europe, where the fate of Greece, and its place in the eurozone, is not secure.SYRIZA pledges to raise salaries and pensions, halt layoffs and freeze privatisation of state assets – all of them key elements of reforms demanded by Greece’s creditors.“Given plans (by SYRIZA) to cut taxes and reverse some of the recent cuts in government spending, it seems likely that markets will remain nervous about the threat of another debt restructuring and perhaps even the possibility of a Greek euro exit at some point in the future,” Capital Economics said in a note.ING bank analysts said “today we have the beginnings of what could be a Greek tragedy”, while IG analyst Stan Shamu said “the first round of voting in Greece … always has the potential to cause some volatility”.Bank of Greece chief Yannis Stournaras warned Monday that “the crisis of the last few days is now taking on a serious dimension”.A change in government could lead to market volatility that could pose a “great danger of irreparable damage to the Greek economy”, Stournaras said.Thibault Mercier, an analyst at BNP Paribas, said however that Greece’s budgetary situation was better now than at the height of the Greek debt crisis in 2012.European Economic Affairs Commissioner Pierre Moscovici, on a visit to Athens on the eve of the vote, also argued the situation had improved since 2012. “Greece’s place is in Europe. That place is not threatened like it was in the past,” he said. Facebook Twitter: @NeosKosmos Instagramlast_img

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