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Greek report
by Euro Reporter
2012-05-26 09:36:40
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Anti-bailout party extends lead in Greece

A left-wing party that opposes Greece's international bailout agreements has extended its lead ahead of next month's election, according to a new poll published Friday. The poll gave the Syriza party 30 percent support, widening its lead over the centre-right New Democracy party from 2 to 4 percentage points from a poll on May 19. The June 17 election was called after the country's political parties failed to reach a power-sharing deal after a May 6 vote that left no group with a parliamentary majority.

Greece's economy is being kept afloat on international loans, and the previous governments imposed severe spending cuts and other austerity measures that have infuriated the public. Syriza wants to scrap the loan agreements, but that has raised fears that Greece will leave the eurozone and destabilize world markets. "There's one real choice in these elections: The bailout or your dignity," Syriza's 37-year-old leader Alexis Tsipras said at his opening campaign rally on Thursday.

"We want all the peoples of Europe to hear us, and we want their leaders to hear us when we say that no (country) chooses to become servile, to lose their dignity or commit suicide ... We are the political party that with the help of the people will fulfil our campaign promises and cancel this bankrupt bailout deal." The Public Issue poll published Friday surveyed 1,214 people for the Kathimerini newspaper and had a 3.2 percentage point margin of error. Shares on the Athens Stock Exchange suffered fresh losses Friday; dropping 3.45 percent to 485.18 to hit another 22-year low, as investors appeared unconvinced by a pledge by European leaders this week to keep Greece in the euro.


Clegg warning over Greece euro exit

Greek exit from the euro could set off a "chain reaction of uncertainty" which would result in a "grinding slowdown in economic activity" across Europe, including the UK, Deputy Prime Minister Nick Clegg has warned. Mr Clegg dismissed arguments that Greece's economic woes and the instability in the single currency could best be served by a swift return to the drachma, insisting that "no-one rational" could want such an outcome. Although David Cameron has warned eurozone countries that they must "make-up or break-up", Mr Clegg insisted that the Prime Minister shared his view of the undesirability of Greek exit. His comments came after a speech in Berlin in which the DPM warned that Greek withdrawal would cause "unpredictable, irrevocable damage" to the single currency, adding: "No rational person interested in the wealth and wellbeing of Europe's citizens could advocate taking such a risk: not with Greece's future, or our own."

Speaking to BBC Two's Newsnight, Mr Clegg said: "I don't think the break-up of the eurozone or Greece coming out of the eurozone can in any way be described as a sort of recipe of success. Instead, I see it as a harbinger, if it were to happen, of even greater instability, even greater uncertainty, not just in Greece, not just in south-east Europe, but across Europe, in the United Kingdom and in the global economy as a whole. "When our economies are as fragile as they are, I don't think anyone rational could advocate that degree of further instability as a route our of the problems - and that is what, by the way, the Prime Minister believes as well." Asked what the consequences of Greek withdrawal would be, the DPM replied: "The potential risk is that what you get then is an immediate question mark about the ability of Portugal, Spain, Italy and other bigger countries to pay their way, sort out their public finances and rescue their sick banking systems. That has a knock-on effect on people's confidence in the British banking system, which is very exposed one way or another to those economies. That could in turn set off a chain reaction of uncertainty.

"The thing that is most pernicious to an emerging economic recovery is more instability, more uncertainty, more big question marks about the future. That is what we must avoid. I have no doubt in my own mind that Greece exiting the eurozone increases, rather than decreases those question marks. "I have got no doubt in my mind that if you have a chain reaction in the eurozone, where you get this contagion effect from Greece to other bigger countries, that will undoubtedly lead to higher unemployment, higher interest rates, less foreign investment, companies sitting on their hands and not investing in new plant machinery in factories. In other words - a grinding slowdown in economic activity, which is already fairly fragile. It is something I think nobody rational could wish for." Mr Clegg said the current difficulties were "the most serious economic and potentially political crisis that the EU as a whole has faced since the early 1970s." But he insisted: "I don't believe the eurozone will break up."


Talk of Greece leaving euro 'irresponsible'

People are “playing with fire” when they speculate about Greece leaving the euro, the Oireachtas Committee on European Union Affairs heard yesterday. Minister of State for European Affairs Lucinda Creighton warned of the “very, very damaging” implications if Greece abandoned the euro. Talking about Greece leaving the euro was effectively talking about the breaking up of the euro, she said. This was “thoroughly irresponsible”, and she said she was disappointed the head of the International Monetary Fund had been involved in speculation about the exit of Greece from the euro. Earlier this week the head of the IMF, Christine Lagarde, said leaving the euro was “not the most favourable solution” for Greece, but “officials must be prepared for all solutions”.

Ms Creighton said the euro zone must be a stable and durable monetary union, but if states began to opt in and opt out then the implications would be very damaging for the future of the euro and for individual states. She was responding to Fine Gael TD Paschal Donohoe, who said people were playing with fire by speculating on Greece’s departure from the euro zone. He said he was “gravely disappointed” that people were so severely underestimating the economic and political consequences if Greece left the euro. Every effort should be made to help Greece remain in the euro zone, he said. “Anything less than that will unleash . . . consequences that we will rue for a long time to come.”

Earlier, Ms Creighton told the committee that she had “full confidence” in Minister for Agriculture Simon Coveney as he negotiated Common Agricultural Policy (Cap) reforms. Concern has been expressed about Cap funding as some member states are advocating a reduction in the overall EU budget. Spending on Cap represents 40 per cent of the total EU budget. Ms Creighton said she told the general affairs council in Brussels last month that the European Commission’s proposals for Cap funding were “the minimum acceptable” to Ireland. “We see a need for continued food security and safety, which warrants only gradual changes to the Cap. “We also have an express national interest in defending our share of Cap payments.” Ms Creighton said Ireland had some “influential allies” in its defence of Cap.

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