Wednesday, June 13, 2012

Next Greek Leaders Face Olympian Hurdles

Wall Street Journal
June 13, 2012

The winners of Sunday's Greek elections will inherit a central government nearly out of cash, an economy in free fall and a restive public tired of austerity measures.

With less than a week to go before the polls, there is also mounting concern that no party will win enough support to tackle these problems and that any new coalition could collapse within months.

The prospect of more political uncertainty in Athens could complicate Greece's efforts to satisfy its international creditors and risks further aggravating the euro zone's widening debt crisis, which is now engulfing Europe's vulnerable south.

If Greece's new leaders are unable, or unwilling, to meet the conditions imposed as part of a €173 billion ($216 billion) bailout from the European Union and International Monetary Fund, Brussels could pull the plug on aid, effectively pushing Greece out of the common currency.

Greece's restructuring program is already well off track, following weeks of political paralysis before and after inconclusive elections last month that failed to produce a new government. A new government will be under enormous pressure to move swiftly with more cost cutting.

Under terms of Greece's rescue package, Parliament needs to come up with ways to cut state spending by an additional €11 billion or more by June 30.

"Will these elections produce a stable government? Almost certainly not," said David Lea, a London-based analyst at Control Risks, an independent risk-consulting firm. "If the next government lasts a year it will have done quite well."


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