herald

Tuesday 12 December 2017

Euro safe as Greece forms new coalition

IRELAND will be closely watching the expected hard negotiations to form a new Greek coalition government.

Pressure is mounting on German chancellor Angela Merkel to ease some of the tough austerity conditions imposed on countries like Ireland after she signalled a softening of conditions on Greece.

The Irish Government, and those in Spain, Portugal and Italy, will monitor the developments in Greece to see what concessions the new government can wring from Merkel.

Some economists are still expressing uncertainty about whether Greece can still stay in the eurozone despite an election victory by parties backing the international bailout.

Fears of a Greek exit from Europe's joint currency receded overnight after the conservative New Democracy party came first in a critical election and pro-bailout parties won enough seats to form a joint government.

With one party, Syriza, advocating ripping up Greece's multi-billion-euro bailout deal, the election was seen as a vote on whether Greece should stay in the 17-nation group sharing the euro currency.

It scored strongly in the election and promised to continue its opposition to the painful austerity measures demanded of Greece.

A Greek exit would have had potentially catastrophic consequences for other ailing European nations, the United States and the entire global economy.

Efforts were under way in Greece today to form a new coalition government as quickly as possible -- but Syriza leader Alexis Tsipras (37) said they were now the main opposition party and they would fight on against the bailout and take power sooner or later.

The euro rose and European stocks were poised to open higher after yesterday's vote and the Athens streets were quiet after New Democracy leader Antonis Samaras pledged to move swiftly to form a government, telling supporters: "There is no time to waste."

The once-mighty Socialist PASOK party, now reduced to third place, indicated it would support Samaras but had not yet decided whether to join the government or just offer parliamentary backing.

The results "will probably ease fears of an imminent Greek euro exit", said Martin Koehring of the Economist Intelligence Unit.

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