A key European Central Bank policymaker said it would be a disaster if the major opposition Coalition of the Radical Left SYRIZA party wins the Jan. 25 elections and Greece is forced out of the Eurozone.
Ewald Nowotny, whose bank is one of the international lenders putting up 240 billion euros ($306 billion) in two bailouts and wants to be repaid, issued the warning at an event in Vienna.
“For Greece it would a catastrophe, for the other euro countries a massive problem,” Nowotny said. The ECB, along with the European Union and International Monetary Fund make up the Troika which provided two rescue packages for Greece.
Prime Minister and new Democracy Conservative leader Antonis Samaras has imposed austeritiy measures in return for the loans so that there will be enough money to pay the banks first.
That policy is opposed by SYRIZA leader Alexis Tsipras who had said he would walk away from the debt and austerity unless the Troika renegotiates the terms. His stance has roiled the Eurozone and markets.
German Chancellor Angela Merkel, whose country has put up much of the loan money but has demande austerity, has played down the chances of a Greek exit from the Eurozone, but made clear she expected Athens to stick to the terms of its international bailouts after this month’s election even if SYRIZA wins.
The ECB is also threatening to choke off funding to Greece’s lenders in the hope it won’t actually need to, the news agency Bloomberg said.
Parliamentary elections on January 25 hinge on whether Greek voters are willing to accept a strings-attached successor to the country’s international bailout package.
Under President Mario Draghi, the Frankfurt-based ECB has made its position clear: No program means no guarantee of cash from us.