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European Debt Crisis

Where the new Greek election leaves Europe

David Brancaccio May 15, 2012

David Brancaccio: There will be a new general election in Greece, after the country’s four main parties could not resolve their deadlock. An election is now set for June. Matthias Mattjijs is a professor of international political economy at the Johns Hopkins University. Professor Mattjijs, good morning.

Matthias Mattjijs: Good morning.

Brancaccio: So where does this leave Europe, this idea that the Greeks are going to go back to the voting booth?

Mattjijs: It leaves us in another month of uncertainty. I mean it’s the irony of the Greeks — that great civilization that gave the world democracy and now they’re voting in a democracy in an election and we don’t like the outcome. And so the Irish scenario, in euro-speak, is that we hope that they’re going to vote again and they’re going to get it right. But the polls are suggesting that the party that ended second, Syriza, who rejects the bailout and rejects the austerity policies that Brussels and Frankfurt and Washington have put together. So it might even get worse and I think that’s why you see the markets reacting as they have. The euro is falling to $1.27. So I think European leaders are having an informal summit soon and they’re going to have to come back with some kind of response.

Brancaccio: Because this notion that Greece would leave the euro and adapt again the drachma is no longer science fiction. It’s something that people have to be at least doing some emergency planning about.

Mattjijs: It’s incredible. Only a few months ago this was fantasyland. This was absolute taboo. And Mario Draghi at the European Central Bank didn’t even want to talk about it. Most politicians didn’t even want to talk about it. What you see now is almost a concerted effort of ECB officials, of different capitals in Europe — especially northern Europe — where they’re actively contemplating, well nobody should be forced to stay into the eurozone. But we shouldn’t be surprised. Right? The turkeys rejected Thanksgiving when they had a chance — they want to stay in the euro, but they don’t want to accept the conditions under which they can stay in the euro.

Brancaccio: Well it will be an interesting campaign. Matthias Mattjijs at the Johns Hopkins University, thank you very much.

Mattjijs: Thank you, David.

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