NOT for the first
time, an impending Greek election is fraying European nerves. The snap election
that Antonis Samaras, the Greek prime minister, has called for on January 25th
has reawakened fears that Greece might have to leave the euro zone, an outcome
that was narrowly avoided in 2012 and could still be disastrous both for Greece
and the single currency.
Such an outcome could occur as a consequence
of a game of bluff and counter-bluff on the part of Greece and its European
creditors, led by the German government. Syriza wants to get relief on the huge
debt that Greece owes the euro-zone governments that bailed out Greece.
Mr Tsipras may calculate that European
creditors will give way in order to avoid a Grexit, which would hurt the euro
zone as a whole by breaking the principle that membership of the single
currency is irrevocable. Set against his bluff, the German government has a
counter-bluff: it wants to send a clear message that it will not cave in to
what it regards as blackmail, not least since this would encourage politicians in
other bailed-out economies to follow Mr Tsipras’s example.
Last time this game was played, in the
summer of 2012, both Greece and Germany blinked. The Greek electorate did so by
deciding not to back Syriza, which came second in the June election, enabling
Mr Samaras to form a coalition government. And the German government eventually
decided to back Mr Samaras and not to impose a Grexit, as it had once
contemplated, for fear of the systemic consequences for the euro zone; markets
feared that where Greece might lead, others might follow.
On this occasion, both countries once again
have reasons to avoid a Grexit, but the balance of bargaining power has shifted
away from Greece to Germany. The systemic risk for the euro zone of Greece
leaving is less salient than in 2012 because bond yields have collapsed
throughout the periphery, not least on expectations that the ECB will adopt a
big programme of quantitative easing. That will encourage the German government
to take a hard line.
The
Greeks, for their part, have in any case already endured much pain in order to
stay in the euro, which a clear majority regards as good for the country rather
than bad. The economy has come out of its tailspin and although Greece is
heavily indebted to its official lenders, the terms are extraordinarily
lenient. What this suggests is that the pressures within Greece to avoid a
confrontation, either by Syriza doing less well than expected at the polls, or
through a more emollient stance by Mr Tsipras if he does win power, may be sufficient
to avoid a Grexit.
(Πηγή: economist.com)
