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Tags: Greece | EU | IMF | politics | economy

Greece Reels Over Early Presidential Vote

Tuesday, 09 December 2014 06:56 AM EST

Greek stocks plunged Tuesday after the government unexpectedly brought forward a high-stakes presidential election, sparking fears of a political stalemate.

The vote by 300 members of parliament to replace President Karolos Papoulias had been due in February but has now been set for a first round on December 17.

The poll is a key test for embattled Prime Minister Antonis Samaras, who would be forced to call snap general elections if his presidential candidate fails to garner enough support.

The Athens overall index fell over 8.0 percent to 950 points around midday, as analysts warned that the political uncertainty could stall Greece's fiscal reforms.

"A Greek accident remains a potent risk...the risk of a political backlash and reform reversal is thus very real for now," analysts Berenberg said in a note.

According to news reports, former EU environment commissioner Stavros Dimas, 73, a veteran member of Samaras's conservative party, will be the government's candidate for president.

However, Samaras has a narrow majority of 155 seats, and his candidate is therefore unlikely to secure a first round win.

A second and third round are scheduled for December 23 and 29, but the bar for a win rises in the final round — with 180 votes needed.

Failing victory, Samaras would have to call a snap general election at a time when polls indicate radical left party Syriza — which has pledged to reverse many of the reforms imposed by the country's EU-IMF creditors — is favored by voters.

An early general ballot in February would be Greece's second in less than two years.



In 2012, back-to-back elections were needed in May and June to form a shaky coalition government, stalling Greece's fiscal reforms and sparking speculation that the country was about to be ejected from the euro.

"Election talk has always been bad for the market," Vassilis Korkidis, head of the confederation of Greek commerce, told To Vima radio.

"Nobody knows what Syriza would do in power . . . that uncertainty would weigh heavily on markets," noted Hamburg-based Berenberg.

The move — described by most analysts as a gamble for Samaras — came as Greece brokered a two-month extension from eurozone ministers to its multi-billion bailout program.

Greece has set its sights on a new credit line, but this would require the existing 240-billion-euro ($295-billion) bailout to be completed or terminated, and with talks between the government and the creditors still ongoing, this seemed unlikely before the December 31 deadline.

The latest budget, passed on Sunday, forecasts 2.9 percent growth and a deficit of 0.2 percent but the 'troika' of creditors — the EU, IMF and the European Central Bank — regard these estimates as overly optimistic.

At issue is the fifth and final review of Greece's current bailout, which would be the last 1.8 billion euro installment from the eurozone.

"If (Samaras) can get the political uncertainty out of the way in December, the outlook for the Greek economy for 2015 would improve," Berenberg said.

Leading political analyst Ilias Nikolakopoulos argued that an election victory for Syriza early in 2015 would not necessarily be a boon for the leftist party.

"If it comes to power in February, it will have no margin of time to negotiate with the troika," he told AFP.

© AFP 2023

Greek stocks plunged Tuesday after the government unexpectedly brought forward a high-stakes presidential election, sparking fears of a political stalemate.
Greece, EU, IMF, politics, economy
Tuesday, 09 December 2014 06:56 AM
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