Greece's political leaders made their final appeals to voters as they wound up a campaign for tomorrow's election that may determine whether the country has a future in the euro area.
Former Finance Minister Evangelos Venizelos addressed supporters of his socialist Pasok party in a speech yesterday in the square outside Parliament, the focal point of two years of protests and riots against the austerity measures that his party has agreed to in return for two international rescue packages.
"Sunday will determine if we stay in Europe and the euro; if we move down a difficult but safe road," Venizelos said. "Or if we embark on adventures that take us many decades back, leading the country to bankruptcy and mass poverty."
Greeks are voting for the first time since the country became the byword for the European debt crisis, with polls showing many voters spurning the two main parties of Pasok and New Democracy in favor of anti-bailout groups promising an end to austerity. An inconclusive outcome to the election could mean political instability that endangers bailout funds and, ultimately, membership of the euro.
Polls suggest New Democracy will place first though without enough support to rule outright, leaving leader Antonis Samaras with the option of teaming up with Venizelos if he is to govern. The two parties, which have alternated in power since 1974, were partners in the outgoing caretaker government of Prime Minister Lucas Papademos, which secured a second rescue package earlier this year, saving Greece from financial collapse.
More Cuts Needed
Under the terms of that 130 billion-euro ($170 billion) package, which was accompanied by the biggest debt restructuring ever, international lenders expect to hear in June how Greece will achieve 11.6 billion euros of savings for 2013 and 2014.
Samaras, 60, has appealed for support that will give him outright victory so he can renegotiate terms for the European Union and International Monetary Fund bailout. He has promised tax cuts for businesses to boost growth and to reduce waste in the public sector. A New Democracy win would ensure the stability the country needs, he said.
"You cannot have jobs and growth with political instability," he said yesterday in the northern Greek border town of Alexandroupoli. "A European future for our children can be had with stability: not instability."
Economy Shrinks
This weekend's contest will measure the Greek public's resolve to continue the reforms that international lenders from the EU and IMF say are imperative. Greece's economy will shrink for a fifth year in 2012 under the weight of pension and wage cuts and higher sales taxes.
While polls show most people don't want to leave the euro or the EU, analysts and economists warn that support for anti- bailout parties could tilt the balance in favor of rejecting the rescue terms and threaten Greece's membership in the euro.
A Greek exit would reignite concerns about the fate of other members of the euro area which face low growth and high debt and deficits. Fitch Ratings said in a report on May 3 that a Greek exit would spark a ratings review of all euro area nations with Cyprus, Ireland, Italy, Portugal and Spain probably downgraded on the risk of "contagion to banks, bond market and capital flight."
The country must choose between "an organized and painstaking effort to reconstruct the economy within the euro area" or "regressing decades socially and economically, which would eventually lead the country out of the euro area and the European Union," Bank of Greece Governor George Provopoulos said on April 24.
Austerity Fatigue
Polls suggest as many as 10 parties may enter Parliament, underscoring fatigue over austerity and the politicians responsible for implementing it. Unemployment has reached one in five people.
Rising crime and illegal immigration have dominated the campaign alongside the economy, spurring support for groups like the anti-immigrant Golden Dawn, which may win seats at the federal level for the first time, and the nationalist Independent Greeks.
Final opinion polls on April 20 showed New Democracy and Pasok with about 45 percent of the total vote with anti-bailout parties on both the left and right running with nearly the same level of support.
The Greek economy has shrunk more than 13 percent over the past three years since the last election in October 2009, when former Prime Minister George Papandreou's Pasok unseated New Democracy only to find the country's debt had been understated. Greece's election is being held two years after the government negotiated its first, 110 billion-euro package, from the EU and the IMF.
Campaigning is prohibited today. A total of 9.85 million Greeks, including 360,000 new voters, are eligible to vote. Polls open at 7 a.m. tomorrow and close at 7 p.m. Athens time with the first exit polls expected at that time.
To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net; Natalie Weeks in Athens at nweeks2@bloomberg.net.
To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net
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