May 07, 2012, 08.13 AM IST
Angry Greek voters head to the polls on Sunday for an election shrouded in uncertainty that could reignite Europe's debt crisis and renew doubts about the country's future in the euro zone.
The first general election since Greece's debt crisis exploded at the end of 2009 will go a long way to dictating whether the country will stick to the terms of EU/IMF bailouts which saved it from bankruptcy but propelled it into a deep recession.
At stake is whether the country that drew the decade-old euro zone into the worst crisis since its creation could push it back into turmoil.
Voters hit by record unemployment and steep wage cuts will send to parliament an unprecedented number of small parties opposed to the austerity and punish New Democracy and Socialist PASOK - the two parties who have ruled Greece for decades and the only major ones backing the bailouts.
Many feel that threats about Greece's future in Europe if they do not stay the debt-cutting course are not credible despite a warning from euro zone paymaster Germany that there would be "consequences" to an anti-bailout vote.
"The big parties are saying that if we don't vote for them we may be forced out of the euro. I am not sure that's the case. The two big parties have been in power too long, it's time for change, there has been too much austerity and scandals," said Helen Theohari, 37, who is unemployed.
The election is too close to call.
The anti-bailout parties are too divided to rule and it is not clear whether New Democracy and PASOK will scrape just enough votes together to renew a fractious coalition they set up in November to clinch a second bailout worth 130 billion euros.
Even if they do manage to gather enough support to stay in power, their marriage of convenience could well be too weak to weather public anger for long.
"The risk is high that after the elections, no stable coalition can be formed which would be willing to implement the next budget cuts and reforms," Berenberg Bank said in a note.
"The risk is also high that Europe will then cut the financing if Greece fails to fulfil the conditions, or if the continued depression leads to further fiscal slippage. In that event, Greece would probably have to exit the euro."
Although they oppose the bailout, a large majority of Greeks want to stay in the euro and that question is at the heart of the election.
Left Coalition leader Alexis Tsipras, whose party is one of the four vying for third place and the chance to act as kingmaker, says the threat of a euro exit if Greece veers off the bailout track is a bluff.
But the pro-bailout Socialists said Greece's single currency membership was very much at stake.
"Sunday will decide if we stay in Europe and in the euro ... or if we send the country down the road of bankruptcy and its people to massive poverty," Socialist leader Evangelos Venizelos told voters on Friday, before campaigning drew to a close.
The International Monetary Fund and Greece's euro zone partners have warned that whoever wins the election must keep implementing austerity measures for Greece to keep receiving the aid it needs to stay afloat.
The acid test will come fast: the new government must next month come up with over 11 billion euros in extra spending cuts for 2013 and 2014 to keep getting bailout aid, and get the plan approved by parliament.
With an economy which has already narrowed its budget deficit from 15.6 percent of GDP in 2009 to 9.1 last year and is forecast to shrink by another five percent in 2012, that will be a tough task given a parliament that could feature as many as seven small parties opposed to the bailout, including the extreme-right Golden Dawn.
Polling stations will open at 0700 local time (0400 GMT) across Greece and close 12 hours later, with many voters making up their mind at the last minute.
Pollsters say it is impossible to say who the undecided will cast a ballot for as the traditional left-right divide has given way to pro- or anti-bailout lines.
"All our tools are based on a society that does not exist any more," said Costas Panagopoulos, at ALCO pollsters. "We cannot exclude any scenario."
The first indication of the result is expected from about 1830 GMT but it could take many more hours to get the final outcome or even a clear picture under complex electoral system that gives a 50-seat bonus to the first party.
If no party wins outright, as is expected, the president will give the biggest group - expected to be New Democracy - three days to form a government. If it fails, the next largest party gets a chance and so on down the line. If they all fail, new elections would be called in about 20-25 days.
The Greek ballot could well steal the limelight from the likely election on the same day of a Socialist to lead France as president for the first time in 24 years.
"The wild card is Greece, and markets are starting to get nervous about it," said Sassan Ghahramani, CEO of New York-based hedge fund advisers SGH Macro. "We could see peripheral bonds and the euro pressured on Monday."
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