European leaders narrowly avoided seeing Greece crash out of the euro zone this summer with a last-minute third bailout deal, but with a snap election in just over a week, the Aegean nation is once again dominating the continent’s political and economic agenda.
Euro zone finance ministers, better known as the Eurogroup, are meeting in Luxembourg on Saturday to discuss the latest developments in Greece, and how they could affect the first review of the country’s 86 billion euro (USD 97.4 billion) bailout due in October.
Speaking ahead of the meeting, Jeroen Djisselbloem, president of the Eurogroup, told reporters in Luxembourg that work needed to continue on the bailout despite political uncertainty in Greece.
“I think it’s important in Greece that the preparations continue while the political situation is of course unclear at the moment,” Djisselbloem said.
“The work needs to continue as much as possible. And the same would go for the institutions: they can prepare the review and work on defining the milestones for the coming months,” he said.
The snap election on September 20 comes after Prime Minister Alexis Tsipras resigned in August against a backdrop of increasing rebellion among the more radical members of his left-wing Syriza party, which was angered by his capitulation to lenders in a bailout deal that requires heavy spending cuts, privatization and tough economic targets.
The latest opinion poll published on Friday suggests that Syriza has just edged ahead of rival conservative party New Democracy.
The ProRata poll in left-leaning daily newspaper Efimerida ton Syndakton put Syriza 5 percentage points ahead at 28.5 percent, Reuters reported, the biggest lead for either of the two main parties in polls conducted since August 28.
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They are neck-and-neck in the opinion polls with a large section of voters undecided, making the result uncertain although a coalition government is expected and even desired by many Greeks, one Greek government official told CNBC.
But that official conceded, however, that coalitions often find it hard to agree on policies, let alone implement a stringent international bailout.
On Thursday, New Democracy leader Vangelis Meimarakis said he will seek an alliance with his main leftist rivals first if he wins the election, insisting that the country must not miss the “last chance” to pull itself out of a seven-year crisis, Reuters reported.
He has also said he was willing to step down if that facilitated an alliance. However, Tsipras has maintained his opposition to an alliance with a party that he says represents an “old guard,” and largely discredited, establishment of Greek politics.
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Syriza might have a good chance of winning enough seats to return to power, but it’s tenure of power over the first half of the year was dogged by fraught negotiations with Greece’s international lenders over reforms.
Greece’s recent history suggests that it will be a challenge for any new government, particularly a hybrid alliance of rival parties, to implement reforms required by lenders.
Speaking to CNBC ahead of the Eurogroup meeting, Luxembourg Finance Minister Pierre Gramegna said Greece’s third bailout, which followed two bailouts worth a combined 240 billion euros, would be subject to far more supervision this time round.
“I think that we’re going to have regular reviews of the implementation of the bailout package, which is a little bit different from what was done in the past,” he told CNBC Thursday.
“The money is also going to be paid out step-by-step and there’s going to be more assistance to Greece to make sure that they can achieve their objectives.
Last but not least, the way the package is structured will also make sure that the banks in Greece function well and that the access to credit will be facilitated for companies,” Gramegna said.
“In the end, that’s what we want, that the Greek economy picks up again and becomes sustainable on its own.”