EU Nervous Before Greek Election, but Prepared for Any Scenario

MOSCOW, January 21 (Sputnik) – Just few days ahead of a general election in Greece, the radical left party Syriza is leading in opinion polls, promising to end austerity policies; some analysts fear this could lead to Greece’s exit from the Eurozone, the European Union (EU)’s monetary zone, France24 reports.

Greece’s massive $370 billion debt is a key issue before the election on Sunday. Syriza is currently leading among voters and is a few percent ahead of the ruling New Democracy party. If elected, the party said it would abandon austerity measures, Syriza’s leader Alexis Tsipras told in an interview with local Antenna TV channel, RT says.

Following the economic crisis, Greece received $370 billion in financial assistance from the European Central Bank (ECB), International Monetary Fund (IMF) and the EU, also known as the troika of creditors. In exchange for the bailout, Greece had to impose a series of strict austerity measures, cutting a number of social services.

Although austerity measures somewhat stabilized Greece’s economy and helped the country to remain in the Eurozone, the rigid policy has had dramatic consequences on the country’s society – unemployment rates increased by 25 percent, the healthcare system and other social services collapsed, hundreds of thousands of people lost their jobs.

The EU is cautiously observing the situation in Greece. The European Commission is prepared for several scenarios that may happen following the Sunday election, including a scenario in which the country decides to leave the Eurozone, though Pierre Moscovici, the Economic and Financial Affairs Commissioner, believes that the exit of Greece is unlikely.

“Eurozone integrity is not threatened; we don't fear what will happen in the Greek elections on Sunday. We are prepared for all kinds of scenarios in Greece,” Moscovici said, cited by EurActiv.com. “Whatever is the choice of the Greek people, we have answers. We are not facing the danger of Grexit [Greece’s exit from the Eurozone] or any kind of danger.”

Despite these words of reassurance, some precautions have already been taken. Negotiations between Greece and the troika about a future credit line for the latest $280 billion bailout were suspended and their progress will depend on the result of the election. Furthermore, because of instability, Fitch downgraded the long-term debt rating for Greece to negative just last week, RT reports.