On Sunday, the Greeks for the second time in six weeks will go to the polls to choose new leadership. The outcome of elections in that European country can be the future of the euro area and the health of the global economy as well.
Why these elections are so important?
Re-elections will be a kind of referendum on membership of Greece in the euro area. If people will choose Parliament most of places in which will consist of members who are opposing the austerity measures, international creditors may cease to provide rescue loans. The country will become bankrupt and be forced to leave the eurozone.
Although the economy of Greece is only 2% of the eurozone economy, the shock wave will reach the entire international financial system. Investors fear that the other eurozone countries, like Italy and Spain also may disclose a default, which leads to increased borrowing costs to an unacceptable level.
European banks may stop lending to each other, not knowing when they will return the money. Banks around the world will not want to lend, leading to a collapse in credit and financial system. Last time a similar situation the world faced in 2008 after the bankruptcy of Lehman Brothers.
To prevent such a scenario, the European leaders, notably German Chancellor Angela Merkel urged the Greeks to adopt austerity measures. French president Francois Hollande has other opinion on the Greek’s issue, offering to release eurobonds, which can be a very helpful step for countries facing a crisis.
Elections will be held on Sunday, June 17. Polling stations will open at 9:00 am GMT and will close at 21:00. Results of exit polls will be announced immediately after the polls closed.
What would happen if the parties once again can not form a coalition?
If this voting will not lead to the formation of a coalition, new elections will be appointed. The Greek Constitution stipulates that the President should appoint a new elections to be held not later than 30 days.
This scenario will contribute to the weakening of the Euro and the possible exit of Greece from the eurozone, which is often spoken.