European Corporates Await Greek Election Result
After a turbulent opening to 2015, European corporates are braced for further market volatility ahead of this weekend’s election in Greece.
The country’s voters elect a new parliament on Sunday, with the anti-austerity opposition Syriza favored to win, but without an overall majority. Polls show the party and its leader, Alexis Tsipras, ahead of the ruling New Democracy party of Greek prime minister Antonis Samaras.
“For all markets, if they gain control, all bets are off, said John De Clue, chief investment officer (CIO) for the private client reserve at US Bank Wealth Management. “We do not think it is possible for Greece to exit the European Union (EU), or they could if they want to commit sovereign suicide.”
Tsipras has pledged, if elected, to convince the European Central Bank (ECB) and eurozone to write down the value of their Greek debt holdings, thereby enabling him to increase public spending and stimulate job growth.
Professor Theo Papadopoulos, an academic at the UK’s University of Bath who dubbed Syriza’s charismatic leader as “the Communist Harry Potter” questioned how likely it was that his election success “could implode the Eurozone.”
“The current leadership of Syriza has made numerous statements that it does not intend to destroy the euro nor force Greece out of the eurozone,” said Papadopoulos. “But they also mentioned that they are not willing to keep Greece into the Eurozone at any cost.
“If Greece leaves the euro under Syriza, it will happen not because its leadership wants to but because it will be forced to.
“While attacking the incompetence and corruption of the two-party establishment that has run Greece since the 1970s, Syriza has framed the issue of Greek sovereign debt as part of the wider issue of European economic governance and, most recently, promoted the idea of a European Summit on debt. In this way it opened a political space both for itself and other European political forces to change the dominant economic narrative in the EU.
“Is the EU establishment going to respond? The announcement of new
quantitative easing measures
from the ECB marks a change in economic policy but according to chief Mario Draghi, Greece could be treated differently and any help will come with conditions. The months ahead will be tense and uncertain but one thing is for sure: nothing will be the same in Greek and European politics after Monday.”