May 09, 2012, 06.40 PM IST
Rabobank's Adrian Foster portends a disasterous scenario for Greece if the political parties step away from austerity, in his analysis on CNBC-TV18. He is confident of France’s adherence to austerity with the course of events in the Netherlands providing adequate evidence on the importance of the austerity measures
Rabobank's Adrian Foster portends a disasterous scenario for Greece if the political parties step away from austerity, in his analysis on CNBC-TV18. He is confident of France's adherence to austerity with the course of events in the Netherlands providing adequate evidence on the importance of the austerity measures.
Foster reposes faith in Europe's political elite to plot a rational course that will lead the region out of the economic crisis. He asks investors to take positions keeping in mind the likelihood of the absence of standard trends.
Below is an edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.
Q: What exactly would you watch out for on Greece now? Are you still hopeful that the politics in the country will turn around to accept the conditions laid down?
A: It's only domestic political machinations that are dominating the debate within Greece with a lot of behind-the-scenes power play by various parties. The new democracy party, which bagged the largest number of seats in the last election, is unable to form a governing coalition. The party had three days to negotiate and the leader gave up in six hours.
The right to form government has now passed to the second party in the parliament which is in the midst of a three-day negotiating period. Judging the competing interests amongst the different political parties makes it highly unlikely that any functioning coalition will emerge out of the current discussion.
The president then has the role of brokering a government, but that's unlikely too and the conclusion that the country will be back to the polls in June is most likely.
Q: So if country goes to the polls again in June, will the situation actually improve? How will events pan out till June in terms of debt repayment and austerity plans?
A: The worst possible scenario is that a group of parties could get together and stubbornly deny the whole austerity program that the European IMF troika has put in place.
That's a very highly improbable outcome because in reality the Greek government still runs on a budget deficit. Their government revenues within Greece do not pay for the business of government, much less for the payment of interest.
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