Ever since the worst of financial crisis battered the world’s economies and financial institutions, the fate of Greece has dominated the health and the prospects for the common European currency. Poor fiscal management, a bloated public sector, overly generous benefits, gilt-edge pensions, poor productivity and decades of deficit funding meant that the Athens government was never in a position to be able to turn around its high levels of debt and maintain proper and prudent fiscal policies. The result was that the European Union, the European Central Bank and the International Monetary Fund were forced on two separate occasions to put together bailout packages totalling €240 billion (Dh987 billion) — deals that severely undermined the strength of the common currency itself. And as a condition for the tranches, strict austerity measures were demanded of Athens — resulting in street riots and vocal political opposition.
But the austerity programme was working — for the first time in more than a decade, the Greek economy actually returned to positive growth. On Sunday, after five years of austerity and recession, Greeks began casting their votes in a high-stakes election that could set their battered country on a collision course with the European Union and set in train a potential national default of those bailout terms, sending the euro into free fall. Final opinion polls on Friday showed Syriza, which has pledged to overturn austerity and renegotiate Greece’s debt mountain, with a lead of between four and seven percentage points over its main rival New Democracy, with one poll putting the radical leftist party 10 points clear. But while it seems clear Alexis Tsipras’s barnstorming alliance of Maoists, Marxists, Trotskyists, Socialists, Eurocommunists and Greens will comfortably see off the conservatives of the prime minister, Antonio Samaras, they are far from certain to win the 151 seats they need to govern alone. At least this scenario provides an opportunity for European officials to talk to the new Athens administration. The key question is: Can Brussels handle an organised default with a promise to pay down the road? It may very well have to.
