Greek reforms in balance as voters ponder left-wing turn

Greece on Sunday heads into a general election that could sweep the anti-austerity Syriza party to power and determine whether the country remains in the eurozone.

AFP| Last Updated: Jan 23, 2015, 10:12 AM IST

Athens: Greece on Sunday heads into a general election that could sweep the anti-austerity Syriza party to power and determine whether the country remains in the eurozone.

After a six-year recession in which the national output shrank by a quarter, Greeks are being called on to determine whether to stick with spending cuts demanded by their international creditors, or demand a new deal on the country`s huge debts.

The election -- the second in three years -- comes with Greece still locked in talks with its EU-IMF creditors for a 7.2-billion-euro ($8.3-billion) tranche of bailout loans the state needs to stay afloat.

Syriza, who have a steady lead in opinion polls over conservative New Democracy -- the party formerly in government -- want to redraft the EU-IMF bailout which they say has brought nothing but misery for the past five years.

They intend to erase over 50 percent of Greece`s 318-billion-euro debt, and divert funds that are currently being used to repay state bonds to help the country`s economic recovery instead.

The leftists also pledge to raise salaries and pensions, halt layoffs and freeze the privatisation of state assets -- in other words, abandon key elements of reforms demanded by the European Union and the International Monetary Fund.

"The path we have chosen demands determination, conviction and resolution for major confrontation," the party`s 40-year-old leader Alexis Tsipras told a closing rally in Athens on Thursday.

"We will not hesitate, we will not be afraid, we will not turn back," he told the crowd.

The party maintains that Greece`s creditors will agree to renegotiate the bailout when faced with a leftist government elected with a strong popular mandate.

"As of Monday, we will have a government with its own programme, not the copy of a programme imposed by the Europeans," the party`s senior economist Giannis Dragasakis told To Vima radio this week.

Such talk has sparked concern among officials in the European Union, the European Central Bank and the International Monetary Fund, who are mindful that Greece benefited from a drastic debt cut just two years ago.

IMF chief Christine Lagarde on Monday warned that to renegotiate debt carried "consequences" for the countries attempting it.

"Collective endeavours are welcome but at the same time a debt is a debt and it is a contract," Lagarde told the Irish Times during a visit to Dublin.
But observers note that it is impossible for the leftist party to apply its aims without consequences for the Greek economy.

"Staying in the euro, being in power and undoing the bailout programme is an `impossible trinity` for Syriza, in our view," investment bankers Morgan Stanley said in a note this week.

"That`s inconsistent, so one of these three has to give," they said.

There is also concern that with the electorate highly polarised, no clear victor will emerge on Sunday and a repeat ballot -- as in 2012 -- will be required, with dire consequences for the economy.

The conservatives of outgoing Prime Minister Antonis Samaras have painted a doomsday scenario in the event of Syriza coming to power. 

A New Democracy advert warns that international creditors would "call Syriza`s bluff", the Greek economy would be starved of funds, and the country would face a petrol and medicine shortage.

Syriza hit back with sarcasm: "On January 26, an asteroid will pass close to Earth, the sun will rise at 7:34, and banks and shops will open after 8 am," a party ad said.

Tsipras has promised to forge a "common struggle...with the people and workers of all the European Union to remove the noose of disastrous austerity."

The leftists` main slogan, "Hope is coming", has struck a chord with thousands of Greeks fed up with austerity.

"I feel we have no hope. We need help with our debt, from the EU, from God, from anybody! We need debt reduction," said Yro, a 65-year-old retired woman taking coffee in central Athens.

Over 9.8 million voters will participate in the snap ballot prompted by parliament`s failure to elect a president last month.

Polls have shown that the vast majority of Greeks want to stay in the eurozone, and that they would have preferred the formation of a unity government to elections.