Greece Election: 'Collapse' Possible No Matter Who Wins--FOREX TRADING CFB

An upstart radical leftist is racing neck and neck with the conservative heir of a prominent Greek family in an election on Sunday that will decide if Greece stays in the euro zone and could spread turmoil across global financial markets.

Voters fed up with the harsh measures prescribed by international lenders in a 130 billion euro bailout punished mainstream parties in an inconclusive May 6 election and appear split over the choices offered in the repeat vote.

Conservative New Democracy leader Antonis Samaras, 61, has run on a strong pro-European ticket, warning Greeks angry with five years of austerity that giving up obligations agreed in the EU/IMF bailout keeping Greece afloat means a return to the drachma currency. 

"These elections are about our children's future — whether we stay in the euro or not," Samaras told supporters in northern Greece on Wednesday. "That is what is at stake on Sunday."

Radical leftist Syriza party leader Alexis Tsipras, 37, has vowed to scrap the deal that plunged Greece into its worst recession in decades, to nationalize banks and stop privatizations, sending shockwaves across EU capitals and financial markets. 

His message has resonated among Greeks desperate with record unemployment of nearly 23 percent and rounds of spending cuts. The first vote catapulted him from fringe obscurity to leader of the second biggest party in Greece. 

 EU partners have warned that no more bailout money will be handed to Greece, which is expected to run out of cash in weeks, unless it meets its budget and reform pledges. Tsipras says the EU is bluffing and that he wants to keep Greece in the euro .

"If one country leaves the euro, the euro zone collapses," he told Greek TV on Thursday. "If they don't give us the next loan installment, the euro zone will collapse the day after."

The last opinion polls published two weeks before the vote ahead of a ban, showed the two running a tight race. Five polls put Samaras slightly ahead and two put Tsipras in the lead. Pollsters say the numbers have not changed dramatically since. 

Once again, no party is expected to win outright, and the biggest party is expected to launch negotiations to forge a pro-bailout or anti-bailout coalitions.

Analysts say it will be a Pyrrhic victory for whoever wins — Samaras will find it hard to govern for long with an empowered Tsipras protesting at the gates and Tsipras will realize he is inheriting a state on the verge of bankruptcy without bailout funds. 

"It's possible that we will have a collapse no matter who is in government," said Yanis Varoufakis, a professor of economics at Athens University. "There is no easy solution."

Unemployment hit 22.6 percent in the first quarter of the year amid a 6.5 percent contraction in the economy. Shops and businesses are shutting down by the dozens and the number of homeless lining the streets in Athens are multiplying.

Anger against an entrenched political class blamed for the crisis is running high.

"They've turned Greece from a sunny paradise to hell," said Dimitris Skizas, a 69-year-old whose pension has been cut. "People have lost their smiles, they are in despair and committing suicide. This is worse than the war in the 1940s." 

Euro vs. Drachma

Samaras, the scion of one of Greece's most prominent families that hasincluded politicians authors and benefactors misjudged public anger at politicians for decades of corruption and mismanagement and insisted on the May 6 vote he wound up losing.

He initially opposed and then backed international aid for Greece by joining the Socialists in a coalition government under technocrat premier Lucas Papademos last year.

Confident in his victory, he forced the election by tacitly pulling support from the coalition but paid the price for his mixed message and a campaign targeted against the once-powerful Socialist Pasok, whose crushing defeat left the two parties without enough support to forge a pro-bailout coalition. 

An economist with a Harvard MBA, Samaras staged a more effective election campaign this time, coming closer to voters in casual walkabouts and driving in his gloom and doom message if Greeks voted emotionally against the bailout. 

"The euro versus drachma debate has managed to dominate the election agenda," said Costas Panagopoulos, head of Alco pollsters. "The Syriza positions appear less realistic — cancelling the bailout and staying in the euro." 

 A former Communist party youth-wing member whose political acumen was forged in 1990s student protests, Tsipras was unprepared when he was swept by a huge wave of discontent at established parties to the forefront of Greek politics.

The youngest Greek political party leader, Tsipras is at the helm of the Syriza coalition of 12 leftist and human rights groups. His youthful looks and refusal to wear a tie appeals to young urbanites.

Aides said his first concern if he wins Sunday's election and manages to form a governing coalition is to keep the near-bankrupt state running. 

Critics warn that supporters who believe his message of a painless adjustment will be quickly disappointed and may soon abandon him.

"I may disagree with parts of his program but that doesn't worry me too much because no party applies its program once it's in power," said Varoufakis, a Syriza sympathizer. 

"What worries me is that he creates the impression among the Greek people that all their suffering will end if he gets elected on Monday. That is not the case." 

 Asad Khan
Financial Analyst  (CFB)
050-8774861
asad@cfb.ae