Greece Likely to Collide with EU Austerity Rules

Written by | Tuesday, December 30th, 2014

Berlin has warned that Greece’s future fiscal discipline is threatened as the country’s far-left anti-austerity opposition party, Syriza, is expected to win general elections in four weeks’ time. After the failure of the Greek parliament to elect a new president yesterday (29 December), Greece will hold parliamentary elections on 25 January. Syriza, led by Alexis Tsipras, has pledged to ignore eurozone austerity rules if the party wins the upcoming elections, heralding a major confrontation with Brussels and a potential crisis for the common currency. The party’s leader, Alexis Tsipras, commented that “Democracy cannot be blackmailed. With the will of our people, in a few days the bailout agreements of austerity will be history.”

Germany’s finance minister Wolfgang Schäuble, warned Athens that eurozone austerity rules are not, under any circumstances, subject to negotiations regardless of the result of the elections. “There is no alternative,” he emphasized. “If Greece takes another path, it will be difficult. New elections will not change the agreements we have struck with the Greek government. Any new government will have to stick to the agreements made by its predecessor,” Mr Schäuble further clarified. Syriza responded to the German warning by accusing Germany of seeking to overturn Greek democracy. “Nothing is stronger than the sovereignty of the people. If the Greek people decide to change policy by voting for Syriza we are obliged to respect the people’s will,” John Milios, Syriza’s economic adviser said and added that “Mr Schäuble is forgetting this democratic principle.”

EU leadership is to meet during an emergency summit following the Greek elections, which are expected to leave the country without a stable government for some time. The EU and the International Monetary Fund (IMF) are both afraid that political instability could further ignite a default on debt after the Fund suspended talks on the next tranche of financial aid to Athens, which was due in February. “Discussions with the Greek authorities will resume once a new government is in place, in consultation with the European Commission and the European Central Bank,” the IMF said.

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