The political turmoil in Greece over the creation of a coalition government is raising concerns anew that the rustic could become the 1st to exit the 17-nation euro currency bloc.
The Athens government avoided a eurozone exit twice within the last two years because it negotiated billions of greenbacks in bailouts from its European neighbors and the International Monetary Fund to circumvent a default. In exchange, Greece was forced to conform to impose severe austerity measures that experience drawn widespread street protests.
But in national elections last Sunday, voters overwhelmingly rejected candidates supporting the unpopular cuts in social spending. Anti-austerity political leaders are contending the rustic isn't any longer obligated to support the budget-cutting terms of the international rescue packages.
As a result, financial analysts say the inconclusive result of the election and the issue in forming a brand new government heighten the chance the rustic could exit the eurozone and return to using its former currency, the drachma. The results of a Greek exit from the 13-year-old currency union could spread far beyond the borders of the Mediterranean nation, resulting in worldwide economic uncertainty.
One European financial analyst, Andreas Lipokow, said stock markets would fall with a Greek default and the bailouts would have proven to be pointless.
"A Greek default will surely result in a drop within the markets. It might also function an example of what happens when negotiations fail and when, within the Greek case, the result [the implementation of austerity measures] was taken with no consideration. The IMF (International Monetary Fund) and the ecu have brought a bail-out package into place which subsequently would [relating to default] have had no result and achieved nothing."
An economic analyst, Theodore Krintas, said Greece would have difficulty in financing its government if it abandons the terms of the bailouts and there could be shortages in basic commodities for its people.
"You can't reject the austerity measures for straightforward reasons: if you happen to accomplish that you will be abandoned by the markets, so that you are going to stand directly between two and a half and five billion euros of shortage in fiscal, so that you might want to have the opportunity to hide the lack," said Krintas. "And when you could have abandoned the measures by yourself, you're going to face another problem, that's the balance of trade. Actually, there'll be nobody trading with you. Hence Greece will face severe issues of products of first need like food, petrol and et cetera."
The president of the ecu Council, Herman Van Rompuy, says European nations must remain united and that political leaders who claim their countries can act unilaterally aren't telling the reality to their countrymen.
"Which will convince European people we have to do more," he said. "Political leaders must tell the reality, they need to say what in truth. Populism and nationalism aren't appropriate answers to challenges we are facing today. Folks who claim that their country can also be successful in going it alone aren't just deluding themselves, they're lying. If we didn't have Europe the pricetag can be inconceivably high."
Some information for this report was provided by AP.
From WhatNewsToday.net
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