It's Time to Start Paying Attention to Greece Again

Alexis Tsipras, the leader of SYRIZA (Coalition of the Radical Left) and current leader of the Greek Opposition, is pictured at the beginning of the protest march on Nov. 27, in Athens. Photographer: Michael Debets/Pacific Press/LightRocket via Getty Images

It’s been awhile since Greece was front-page news, so here’s a refresher: A few years ago, it looked as though Greece might be forced to leave the euro zone, as investors lost faith in the country’s ability to pay its debts. In late 2011, 10-year Greek bonds were trading with a yield around 35 percent. The crisis began to dissipate in the summer of 2012, when the center-right New Democracy party eked out the narrowest of election victories and cobbled together a coalition that agreed to a bailout under harsh terms. Since then financial markets have eased considerably, although the economy is still in the gutter.

Anyway, you might want to start paying attention again.

Greece may see elections early next year, and a new poll just out has the radical leftist Syriza party in first place by more than 3 percent. If Syriza takes power, the relative calm of Greek financial markets could be rocked.

So the question is, will Greece in fact hold an early election? It may depend on what happens in late February and early March, when the Greek parliament is set to vote on a new president. Current Prime Minister Antonis Samaras of the New Democracy party faces a massive task to keep his government together.

In an e-mail, analyst Lorcan Roche Kelly of Agenda Research explained what might go down:

“[Samaras's] coalition (of New Democracy and Pasok) controls 155 seats in the 300-seat parliament. In order to elect a president, he needs 180 votes in favour of his candidate (the president vote runs in three rounds, if 200 of the 300 MPs do not vote in favour of the candidate in the first two rounds, there is a third round where the majority is reduced to 180, there are 5 days between each round, so the whole process takes over a week. ie, it will be noisey)

“Samaras is 25 seats short of this target, and if he doesn’t get it, an election will be called.”

There are a lot of question marks about whether the current coalition can get to the 180 votes needed. It’s possible that by cajoling enough independent members of parliament, the coalition could get there and keep the government alive. But it will be extremely close, and they could come up short.

If an early election is called, and if the leftist Syriza party controls the government, watch out. Ostensibly, Syriza and its leader, Alexis Tsipras, want Greece to stay in the euro zone. But they’re dead set against the current bailout/austerity regime.

Then you’re looking at a potentially huge game of chicken. The European leaders who bailed out Greece will insist that current terms are not going to be renegotiated. The new government will insist that it wants to stay in the euro zone but that the arrangement must change. How that plays out is unpredictable, but it could easily be the major world story to watch early next spring.

    Before it's here, it's on the Bloomberg Terminal.