Financial, Political Uncertainty Grips Europe

Posted June 15th, 2012 at 10:10 am (UTC-5)
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Financial and political uncertainty is gripping Europe, with new evidence of its economic slump and contentious parliamentary elections Sunday in Greece centered on its fate in the euro currency bloc.

The chief of the European Central Bank, Mario Draghi, warned Friday that the 17-nation eurozone faces “serious downside risks,” mostly because of “heightened uncertainty.” He said the bank stood ready to provide more money to solvent banks to avert a major credit crunch if economic conditions worsen.

A new European Union report said the number of people working in the eurozone fell another 277,000 in the first three months of the year, the third straight quarter employment has dropped. And the international ratings agency Moody's downgraded the credit standing of banks in the Netherlands, France, Luxembourg and Belgium because of the eurozone's deteriorating financial condition.

Nowhere is the uncertainty higher than in Greece, where voters will head to the polls Sunday for the second time in six weeks. It is a vote that has become a referendum on whether Athens stays in the eurozone or becomes the first to leave the currency union. An election last month proved inconclusive.

Greece's European neighbors and the International Monetary Fund have handed the country $300 billion in two bailouts in the last two years, but in exchange demanded sharp austerity spending cuts that have angered Greeks.

Now, ahead of the election, Greek political leaders are calling for renegotiated bailout terms. Radical left Syriza leader Alexis Tsipras says if he is elected, the bailout will be history.

“As of Monday, together with the people, we begin a new era. An era of great changes and great reforms for the people. On Monday, the bailout will be history. Monday will be a new era of growth and social solidarity. Together, we will begin to change the country.''

His key opponent, conservative leader Antonis Samaras, has also called for revamping the bailout terms, but has also emphasized Greece's continued role in the eurozone.

“We cannot play poker or dice with Greece. There is the path of responsibility, in which you are clear about what you want, and we say we want the euro and renegotiation. There are others who are vague, they don't speak clearly and in our opinion, that is the path of irresponsibility.''