Greek lawmakers failed to elect a new president for the third time in a row, which has now triggered a snap election to be held by the end of January. The fear now is that the party currently leading in election polls, the Syriza Party, has made many campaign promises that if realized could lead to Greece exiting the European Union. One of their biggest stumping points has been rolling back austerity measures imposed by the International Monetary Fund, the European Central Bank and the European Union (combined, the three are called the “troika”).
These are conditions the bodies put in place in exchange for 240 billion euros in aid that kept the country afloat. The Syriza Party is also expected to try and write off the country’s staggering 340 billion euro debt. Greece is in no way on solid fiscal ground and without support from the troika and in all likelihood the country’s economy could once again face a crisis. One of the biggest comes from the substantial amount of debt payments due in 2015. If there is fear that a new government may not honor those debts, that leaves them open to a run on bank deposits. If they are out of the EU or in unfavorable standing with the troika, they aren’t eligible for short-term ECB help in shoring up those banks, meaning many could eventually collapse and lead the entire economy down the same path. All of this would have an impact on the EU as a whole, particularly the governments that Greece borrowed money from, money that most struggling European countries could really use to shore up their own economic houses right now. There is also the fear that this anti-EU sentiment already festering in Europe could grow more intense if Greece rejects the European Union and the troika’s demands. Obviously, that could make it very challenging to keep the EU together at all.