Will Greece’s snap general election put the country’s third bailout deal at risk?
Simon French, chief economist at Panmure Gordon, says Yes.
Having just parted with €23bn to start the recapitalisation of Greek banks and to cover debt repayments, it’s inconceivable that Greece’s creditors will release the further €18bn due by 15 November.
The key to receiving this money is a successful first review of progress on structural reforms to the Greek economy. With an interim government lacking any mandate, it is highly unlikely that these reforms will proceed as planned.
Furthermore, the Greek people have voted conclusively for anti-bailout agendas.
This sets Greece on a path to reward politicians hostile to ongoing austerity and the conditions of the third bailout.
Finally, a succession of Eurozone politicians have lined up to state that an election “changes nothing” – a stark illustration that the democratic will of the Greek people is a near worthless currency to the creditors.
This is not the backdrop to successful crisis resolution – it is the next stage on the road to a certain Grexit.
Dr Holger Schmieding, chief economist at Berenberg, says No.
After getting virtually everything wrong in his first six months in office, former Prime Minister Alexis Tsipras is now trying to get things right.
Having stared into the Grexit abyss in early July, he made a complete policy U-turn and concluded a tough new bailout deal.
Hours after receiving the first fresh money, he found the courage to put his job on the line by calling early elections. As he can select the Syriza candidates, that allows him to exclude its hardline left.
Tsipras is still fresh and popular, untainted by any major scandal. He has a good chance to win outright.
Otherwise, he can choose a pro-European coalition partner in the new parliament.
In the near term, the looming election makes it more difficult to fully implement the bailout deal.
In the medium term, a fresh mandate can make it easier for Tsipras to do whatever it takes to keep Greece in the euro.