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06/18/2012 11:47 AM

The World from Berlin

'Expecting an Election to Solve the Euro Crisis Is Naive'

With New Democracy's victory in Greece's election, an immediate Greek exit from the euro zone appears to have been averted. But German commentators warn that time is running out for a new government to tackle the country's problems.

When the Greek election results came in on Sunday evening, it felt like Europe breathed a collective sigh of relief. New Democracy's victory, and the prospect of a pro-bailout coalition government with the center-left Socialists, means that a Greek exit from the euro zone appears to have been averted -- at least for now.

According to official results from the Greek Interior Ministry, conservative New Democracy came first with 29.7 percent of the vote, giving it 129 seats, followed by the left-wing Syriza party with 26.9 percent (71 seats). The center-left Socialists (PASOK) came third with 12.3 percent (33 seats). The far-right Golden Dawn party received 6.9 percent of the vote, giving it 18 seats in parliament. New Democracy and the Socialists now look set to form a government that will broadly support the bailout deal with the European Union and International Monetary Fund (IMF), even if they may try to renegotiate the terms.

European leaders welcomed the result. German Finance Minister Wolfgang Schäuble called it "a decision by Greek voters to forge ahead with the implementation of far-reaching economic and fiscal reforms. This path will be neither short nor easy but is necessary and will give the Greek people the prospect of a better future." Other European Union and German officials reiterated their support for Greece, while insisting that the country had to stick to the reforms agreed as part of the EU-IMF deal.

Stock markets, too, reacted to the vote with relief, at least initially. The German DAX index shot up by 1.4 percent on Monday morning -- before, however, swiftly dropping again. Other European stock market indices increased by between 1 and 1.8 percent, while the Nikkei index in Tokyo closed with an increase of almost 1.8 percent.

Investors had feared that a victory by the left-wing Syriza party would have forced Greece to leave the euro zone, with unpredictable results for the currency union.

But past experience during the euro crisis suggests that such stock market gains can quickly evaporate with the returning realization that the crisis is still far from solved. Indeed, the value of the euro dropped by as much as 0.9 percent against the dollar at times on Monday morning, suggesting that investors are still not convinced the currency union can get its problems under control.

On Monday, German commentators also warn that much still needs to be done to overcome the euro crisis.

The center-right daily Frankfurter Allgemeine Zeitung writes:

"The Greek drama is not over. The Greeks want to keep the euro, but most find the conditions for further aid unjust. Furthermore, they see themselves as victims of ruinous scheming by their corrupt elite as well as by Brussels and -- of course -- Berlin. In light of such perceptual disorders and the political polarization in the country … it remains a mystery as to how the reforms and resuscitation of the economy are supposed to succeed. As a result, the euro crisis has not been overcome by this supposedly key election."

"One thing is clear: The Greek electorate is obviously divided. But the country needs a government that has the power and courage to pass and implement the unavoidable reforms: a government that can convince the people that their country needs a fundamental renewal. It won't be easy to form such a government -- 'not easy' being a gross understatement. The coming days will show just how difficult it will be."

Financial daily Handelsblatt writes:

"Greece's problems are so immense that the political parties would be well-advised to create a broad coalition government -- and quickly. The country can afford neither weeks of coalition negotiations, nor a third election if the efforts to build a government fail once again."

"Greece's international partners now expect a clear message from Athens … The financial markets also expect that Greece will finally be governed again. The two months of political paralysis since parliament was dissolved in mid-April have set the country back significantly … By mid-July, the coffers will be empty."

"If international investors don't jump in, Greece will go broke. The lenders have clearly signalled in recent weeks that they are open to discussing adjustments in the austerity measures. Athens should get more time to implement consolidation targets, German Foreign Minister Guido Westerwelle said on Sunday. But the prerequisite for this is a stable, functioning government in Athens. Time is of the essence."

The Financial Times Deutschland writes:

"Despite all the conflict over which path to take, most Greeks have the same goals as many Europeans -- to overcome the crisis, stop Greece's collapse and preserve the euro zone. As clear as that seems, the coming months will be dangerously uncertain. … That's why it will be necessary to send clear signals. The Greeks must provide clear affirmation of reforms. They don't just owe this to their fellow Europeans, from whom they are accepting aid, but also to themselves. The population must understand that there can be no going back to the pre-crisis state of affairs."

"But the EU must also ease its tough position to gain trust on both the markets and from the Greeks. They have to accommodate Athens on the terms of their aid repayments and their austerity targets. Even Angela Merkel will have to accept this. It certainly wouldn't be the first time that she's taken a more conciliatory position after an election."

The left-leaning Die Tageszeitung writes:

"The Greeks have voted. The most striking result is that Greece is a deeply divided country. A third of voters opted for the conservatives and another third voted for a leftist experiment called Syriza. Both parties are united by the desire to keep the euro, but are poles apart on how that can be achieved."

"But regardless of whether the left or right prevails, Greece and Europe needs one of the two camps to usher in a stable government. Greece needs a capable government if it wants to renegotiate its austerity measures. Similarly, Europe needs a strong partner in Athens to implement its austerity programs. So if the process of building a new government doesn't work out over the next few days, then it will mean failure for everyone."

"If the left-wing Syriza alliance manages to form a government, the European Union will face a dilemma. On the one hand, can we punish a population for exercising their right to vote? No, that is not possible. On the other hand, can we make open-ended payments to Greece without the country even trying to become self-sufficient? No, that will not work either."

"Either way, expecting an election to solve the euro crisis is overly naive."

The conservative Die Welt writes:

"Even before the Greek election, it was clear that the situation would remain precarious, regardless of the winner. Now the conservatives have won the race. That means that Greece has avoided the pitfall of a victory for the radical left, which wanted to take advantage of Europe. So, European leaders will continue to be able to offer Greece help and hope to win more time for a solution. But will that be enough? Europe is no longer what it was. The days of the postwar order are gone… Germany is stable and strong, and for that reason it is also hated by Greeks, the French, and probably soon by Spaniards and Italians too. It was also strong before the crisis, but it was quiet. (Germany was) humble and selfless, obeying the unwritten law of the postwar era: to atone for the crimes of the past."

"Chancellor Merkel insists on shared responsibility. She emphasizes that austerity and reforms are the way to solve Europe's debt crisis. This clarity is even making many Germans uneasy. And yet these conclusions, which are actually banal, are being made within a political context that is increasingly volatile. Germany is showing strength, without trying to dominate, and yet it is punished by being despised. If Angela Merkel were to change course, if she were to buckle to criticism, then it would really not be good for Europe or for Germany. The fact that Germany was long the EU's paymaster does not mean that it can just subsidize other countries indefinitely. Especially not those countries which unabashedly insist on their right to these funds as if they were perpetual reparation payments (for the Nazi occupation during World War II)."

The mass-circulation daily Bild writes:

"Far too many Greeks voted for a left-wing party which takes them for idiots. A party that tells them their country can get euros for nothing and claims that Greece has significant leverage in the negotiations with the rest of the euro zone."

"But in truth, Greece is a developing country. It has no economic substance, no (functioning) administration -- and no strategy on how to solve these problems. And no political party can really start anything new if it just has a small majority, neither in Athens nor elsewhere in Europe."

"The Greek election was free but it will have consequences: It will divide and damage the country and will not help the euro out of its crisis."

"Greece has not said 'no' to the euro -- but it has avoided saying a clear 'yes.' And on the morning after the vote, just one thing is clear: The painful wrangling will continue."

By SPIEGEL Staff

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