General Secretary of the Greek Communist Party Aleka Papariga, front left, meets Greece’s President Karolos Papoulias, right, at the presidential palace in Athens May 13, 2012. Greek political leaders on Sunday ignored a final plea from the president to form a coalition government to avert a repeat election, pushing the debt-stricken nation closer to bankruptcy and a possible exit from the euro zone. (AP Photo/Panayiotis Tzamaros, Pool)PAN PYLAS
LONDON (AP) – The shockwaves from Greece’s failure to form a coalition government continued to reverberate around markets on Wednesday, with investors concerned that the country was heading for the euro exit door, thereby fracturing Europe’s single currency.
Greece is headed for another general election next month after nine days of unsuccessful talks since the May 6 poll yielded a split vote with no one party able to govern on its own.
The next election could well become a referendum over Greece’s place in the euro – which could mean the established Greek political parties that took a hammering in the first poll might do better. However, markets are still worried that Syriza, the radical left coalition that came a surprise second in the first election, may actually emerge as the biggest party in the next time round. Led by Alexis Tsipras, Syriza has steadfastly stood to its anti-austerity, anti-bailout position.
“The fear is that the anti-austerity vote will grow,” said Fawad Razaqzada, market strategist at GFT Markets. “The big issue is how this squares with the Greeks’ desire to keep the euro as their currency.”