BRUSSELS (Reuters) - Five years after Greece sparked a sovereign debt crisis that threatened the euro's survival, the country again has the potential to rattle its currency partners if Greeks have to elect a new government next month.
But this time any fallout for the euro zone could be more political than financial. It would be seen in rising support for militant political parties rather than rising borrowing costs.
This is because almost 90 percent of Greek debt is now held by official creditors -- euro zone governments -- and, after the 2012 restructuring of privately held Greek debt, no one in Greece is talking about another round for the private sector.
"I don't believe for one minute that Greece could provoke another 'mega crisis'," one EU official involved in economic policy-making during the debt crisis said. "Whatever happens there is now primarily a concern for euro zone treasuries, not for private investors."
Unlike in 2010, when the crisis started, euro zone governments now have the protection of the 500 billion euro zone bailout fund. Governments also have instruments and procedures developed during the crisis to react to market turmoil.
But the biggest defense against any contagion is the European Central Bank which declared in 2012 it would do whatever it takes to protect the euro.
"ECB President Mario Draghi's 'whatever it takes' is still extremely strong. It would not be questioned by markets if something goes wrong in Greece," said ING economist Carsten Brzeski.
Yet uncertainty among Greece's euro zone peers is rife because if Athens is forced to hold early elections, the pro-reform government of center-right Antonis Samaras could lose to the anti-reform leftist Syriza, which leads in opinion polls.
Euro zone governments want Greece, which has just started growing after six years of recession, to continue with reforms so the country can eventually repay them.
But Syriza not only vows to stop budget consolidation and reverse some privatizations and reforms, it has also called for a debt write-off from official lenders.
Such a write-off would be unlikely because officials believe that now that Greece is growing again, it can pay back its debts. A write-off would also put the euro zone in an impossible position with other debtors.
"If the euro zone would say OK in the end, Greece would win big, but then what would we do with the countries with public debt over 100 percent of GDP? Italy and Portugal are at over 120 percent. How can we expect their citizens to pay it off if Greece is forgiven? And how can we expect Third World countries to pay up in such a situation?" one euro zone official said.
While EU officials and economists believe Syria's radical slogans may mellow if it comes to power, a victory of the anti-EU party in Greece would still be a boost to like-minded Euroskeptics of far left and right across Europe.
"The peripheral countries like Greece, Spain and Ireland are growing quite rapidly, but so too is the political risk in those countries," said Mark Wall, chief euro area economist at Deutsche Bank. "That is probably an aspect markets might focus on to a certain extent -- what's the political commitment like in some of these peripheral countries."
An election victory of Syriza could add to the popularity of extremist parties all over Europe, possibly resulting in bad policy choices, economists said.
"It could spark a more fundamental discussion on the policy mix, how do we get out of low growth, etc, which could be an explosive mix," said ING's Brzeski.
For now, such concerns are just speculation. Early Greek elections may not happen if Samaras persuades enough independent and opposition deputies to vote for his candidate in a round of presidential election ballots in parliament this month.
And if there are elections in January, officials and economists point out that Syriza may not get enough votes to rule alone and need to form a coalition that may soften its demands.
"In politics you behave differently before and after elections," one euro zone official said. "There is a level of worry, but what will happen is now difficult to predict."
Editing by Jeremy Gaunt