Greek Election Polls Point to a New Euro Crisis

Tensions are rising as Greece prepares to head to the polls Sunday in a vote that could determine its future in Europe's common currency. Some say the mood is reminiscent of the run on Greek banks in 2012.
Greece Election Vote Illustration Source AP Mirelle Hadzic
sisyphus writing 3 Fotoalia AP


The customers were densely packed in front of the counters at a bank in central Athens on Thursday morning and the lines were growing longer at the cash machines outside.

“They are coming to get their money,” said Despina, a bank employee. “It reminds one at times of the worst days in 2012.” The closer it gets to Greece’s parliamentary election on Sunday, the bigger the rush, said a tall woman wearing a dark blue suit.

Three years ago, many Greeks emptied their bank accounts and put their assets somewhere safe when it appeared the leftist Syriza party led by Alexis Tsipras might win that election. They feared an end to the European financial bailout packages that were sustaining the highly indebted nation and averting bankruptcy while staving off Greece’s exit from the euro zone.

Now, with the reins of Greek power seemingly within Mr. Tsipras’ grasp, money is being withdrawn again from Greek banks in massive amounts. According to bank estimates cited by the local media, Greeks on Wednesday withdrew at least €1.8 billion ($2.1 billion) from bank accounts. That was up from Tuesday, when consumers pulled out €1.4 billion in cash, and on Monday, when they took out €1 billion.

The three-day total was more than Greeks withdrew in the entire month of December.

Greek bankers had anticipated withdrawals of €4.5 billion for the week before the elections, but that figure will be exceeded. The European Central Bank approved further emergency liquidity assistance for Greek banks as a buffer to possible liquidity problems.

Mr. Tsipras hopes to unseat Greek Prime Minister Antonis Samaras of the conservative New Democracy Party, meaning radical political change, and with it a new existential crisis for the euro, could be imminent.

The euro is now used by 19 countries after the addition of Lithuania on Jan. 1.

Mr. Tsipras wants to end Greece's program of spending cuts and credit agreements with its troika of lenders made up of the European Commission, the European Central Bank, and the International Monetary Fund, and wants to negotiate a comprehensive debt haircut. Those demands have been dismissed as unrealistic by Greece's lenders.

“We will bring an end to this tragedy, which has threatened to smother this country for five years,” Mr. Tsipras continues to promise at campaign events.

Should foreign creditors remain intransigent and not extend aid programs worth billions, then Greece could once again careen toward bankruptcy as it did in 2012, precipitating its exit from the euro zone.

Many Greeks consider new elections to be the biggest risk.

Four election results are possible, and one possibility holds the risk of a serious confrontation with international investors: Mr. Tsipras taking over the government.

This possibility is realistic only if Syriza obtains an absolute majority or manages to enter a coalition with a small party. That is, at least if the party leaders remain true to what they promised during the election campaign.

Syriza has always ruled out working with established Greek political parties who support the troika's austerity policies.

That would exclude as potential coalition partners not just the two current ruling parties, New Democracy and socialist Pasok, but also the party founded by former Prime Minister Georgios Papandreou at the beginning of the month, the Democratic Socialists’ Movement. The communist KKE on the other hand made clear it would not participate in a Syriza-led government.


Consumers are pulling cash out in record numbers ahead of Greece's national elections on Sunday, which could see a leftist, anti-euro party gain power.


Not everyone has a negative view of Mr. Tsipras.

Isaac Chebar, a European equity manager at DNCA Finance, expects “stronger exchange rate fluctuations” especially if Syriza wins. Then an interesting phase would start, Mr. Chebar said. Mr. Tsipras a realistic, clever tactician, Mr. Chebar said, who will try to convince international lenders to give his country breathing room after reform efforts are achieved to grow.

Mr. Tsipras’ Syriza must win at least 151 of 300 seats for an absolute majority. However, that includes the extra 50 seats that the winning party is allocated. For that to happen, it depends not just on his party’s own share of the votes. What will be crucial is how many votes go to those parties that do not make it into parliament.

According to the current survey by opinion pollster Prorata, 33.5 percent of voters are in favor of Syriza. That is not enough for an absolute majority. Since 4 percent of votes go to parties that fail to make the electoral threshold, Syriza must therefore add more than 5 percentage points to its total to reach 38.8 percent. That has not been entirely ruled out.

Up to 10 percent of those eligible to vote remain undecided, according to opinion polls, such as Voters like Christos, a taxi driver from Rhodes. “This is the first time in my life that I don’t know who I should vote for,” said the 58-year-old.


Greece Ahead of the Election pt2-01 (2)


The second possibility is that Prime Minister Antonis Samaras will remain in power. The polls have his party New Democracy at 25.5 percent. But Mr. Samaras is still aiming to form a coalition. Possibilities include Pasok again or collaboration with the party founded last spring, To Potami (The River).

This movement, like Syriza, is profiting from the enduring crisis in Greece. The party leadership promises to end corruption in the public sector and clean up patronage. Unlike Mr. Tsipras’ left-wing radicals, To Potami has a liberal market orientation.

In the third scenario, smaller parties such as Pasok or To Potami acquiesce to Mr. Tsipras’ led minority government, or even join a coalition with Syriza. They could threaten to withdraw their support if the government were to back controversial projects that would put Greece’s membership in the euro at risk. The small parties may, however, prefer this option to a fourth scenario: fresh elections.

Many Greeks consider new elections to be the biggest risk.

“The worst scenario is a stalemate, not a triumph of the left,” said a leading banker in the Athens suburb of Glyfada. “Should the building of a government lag and new elections possibly even become necessary, as in 2012, then the international money lenders could lose patience with our country and they would have at the same time an excuse to shelve their support,” she said.

The €240 billion bailout package for Greece from the European Union and the IMF has been extended, but only until the end of February. If the next government does not apply for an extension and receive it by then, the country is at risk of national bankruptcy by the middle of the year. If another vote were necessary, the new elections would likely take place at the beginning of March.

The uncertainty over Greece’s future has been reflected in the financial markets.

Since the beginning of December, when the parliament in Athens struggled in vain to elect a president, the stock and bond markets have been in turmoil. The leading stock index ASE has slumped by 25 percent since December 8. The prices for Greek government bonds also dropped significantly, while their returns jumped by more than 40 percent.

Georgios Kokologiannis is Handelsblatt’s Athens correspondent. To contact him: [email protected]