Greek parties embark on election amid debate on euro

By Leon Mangasarian

Greece?s political parties embarked on a flash campaign for elections in less than three weeks that Prime Minister Antonis Samaras said will determine the fate of the country?s membership in the euro currency area.

Samaras used a Jan. 2 speech to warn that victory for the main opposition Syriza party would cause default and Greece?s exit from the 19-member euro region, while Syriza leader Alexis Tsipras said his party would end German-led austerity. Der Spiegel magazine reported Chancellor Angela Merkel is ready to accept a Greek exit, a development Berlin sees as inevitable and manageable if Syriza wins, as polls suggest.

The high-stakes run-up to the Jan. 25 vote returns Greece to the center of European policy makers? attention as they strive to fend off a return of the debt crisis that wracked the region from late 2009, forcing international financial support for five EU countries. While Greek 10-year bond yields rose to about 9 percent last week from a post-crisis low of 5.57 percent in September, the relative improvement in yields from Italy to Ireland suggests that the contagion has been contained.

?Many European officials believe a Greek exit would be manageable, and in contrast to 2010-2011, we wouldn?t see the same cascading effect on countries like Spain or Ireland,? Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, said by telephone.

Tsipras, in a speech on Jan. 3, vowed to restructure his nation?s debt and end what he called the ?unreasonable and catastrophic? austerity policies.

German Model

Greece will ?write down on most of the nominal value of debt, so that it becomes sustainable,? Tsipras said, according to the e-mailed transcript of...

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