'ND cannot rule on its own, it needs PASOK' - Yanis Varoufakis

Yanis
    Yanis
    Varoufakis

PROFILE:
Professor of political economics at the University of Athens since 2000. He has published some relevant books and keeps a blog where he shares his thoughts on the current economic and politic situation of Greece and Europe.
Published Books: 'Game Theory: A Critical Text', London and New York: Routledge, 2004 with S. Hargreaves-Heap), 2004;
'Foundations of Economics: A beginner’s companion', London and New York: Routledge, 1998;
'Rational Conflict', Oxford: Blackwell Publishers, 1991
Blog: Thoughts for the post-2008 world
Previous Interviews: 'Rumours of a Greek exit is all smoke and mirrors, the Eurozone is simply not up to it'

It's a fact that all eyes are on Sunday's Greece elections since, as some analysts wrote on Friday morning, the financial world as we know could change depending on what happens this Sunday and on how European authorities react to it. A few days ago, Syriza seemed to take all the bets as the favorite winner of the elections, but as Deutsche Bank's George Saravelos explained in an article: "The average of ten polls conducted last week show New Democracy ahead with a small lead, partially reversing gains from the prior week. The large number of undecideds (around 10%-15%) could easily tip the balance one way or another."

Yet, the market fears a possible Syriza victory that could lead them into selling panic mode while Central Banks are ready for a possible coordinated intervention if needed. What may or may not happen is on the main interest of everyone and speculation is the only tool we have to ease the tension. Once more, FXstreet.com has spoken with Yanis Varoufakis, professor at the University of Athens, expert of the Greek economy and political landscape, this time to ask him his forecast on what could be the results of the Greek Elections.

New Democracy (ND) and Syriza are running neck and neck in this last stage of the pre-elections process. Do you think that there is a real favorite?

The race is too close to call and the outcome will probably be determined inside the polling booths, as voters weigh up, at the very last moment, the risk of saying 'no' to the troika (under the latter's threat of cutting Greece loose from the Eurozone) and the risk of carrying on along the troika's line (which also threatens Greece with a gradual degeneration leading the country out of the euro).

"Voters weigh up, at the very last moment, the risk of saying 'no' to the troika (under the latter's threat of cutting Greece loose from the eurozone) and the risk of carrying on along the troika's line"

How would the markets react to a hypothetical Syriza victory?

Markets will react negatively on Monday, if Syriza wins, and then rebound on Tuesday once it is established that the world has not really ended. The longer term effects will depend on how Europe will handle a negotiation with a Syriza government as well as on how adept Syriza proves to be at steering a sensible, though tough, course within Europe.

Do you think they will be able to develop their economic growth plan and still keep the country in the Eurozone?

No. Greece cannot recover within the euro (under the present eurozone-wide policies) nor outside. What Syriza must attempt is to negotiate a New Deal (and not just for Greece) that will make it possible for growth to return within the Eurozone's periphery.

"Markets will react negatively on the Monday, if Syriza wins, and then rebound on Tuesday once it is established that the world has not really ended"

And what could happen if there is a victory for ND or a right forces coalition?

Accelerating stagnation and a boost for the currently dominant forces of inertia within Europe.

What could be PASOK's role in the after elections process?

ND cannot rule on its own. It needs PASOK. And it will enter a coalition with it if ND tops the polls. And then we shall have the accelerating stagnation I referred to above. If, on the other hand, Syriza comes first, it will be interesting to see if PASOK will agree to enter a coalition with Syriza, agreeing to a rejection of the bailout agreement that PASOK signed with the troika a few short months ago!

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