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Will Greek limbo hit Europe's recovery?

Tuesday, December 30, 2014 - 02:15

The euro has dipped to a 29-month low against the dollar after the announcement of a snap election in Greece threw the country into a fresh round of political turmoil. As Sonia Legg reports, some blame the EU for failing to work out a bailout exit strategy on time.

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The weather in Athens said it all - 24 hours earlier it had been sunny. Then Greece had still been on course to exit its bailout and continue with key reforms. Now, thanks to a failed vote in parliament, black general election clouds are hanging over the country. (SOUNDBITE)(Greek) UNEMPLOYED WORKER, SUZANNA STEINER, AGED 54, SAYING: "Elections should not be happening now. It's the worst time for the economy, for security, the people are not in a good mood, no one is spending money." (SOUNDBITE)(Greek) PRIVATE BUSINESSMAN DAKIS VOULTSIS, AGED 38, SAYING: "We should have left the government to continue its work and see what it would do. But since things have turned out this way, we will have to think about who we vote for." Greek stocks were jittery about the return to a new period of political turmoil. And a wave of risk aversion swept through global markets. The euro also hit a 29 month low against the dollar. But IG's Alastair McCaig doesn't fear all Greece's good work will be undone. (SOUNDBITE) (English) ALASTAIR MCCAIG, MARKET ANALYST, IG, SAYING: "I think the general mindset of the nation has generally changed somewhat over the past couple of years from what it had been over the last few decades. I think although everyone might not be enjoying the current climate, I think everyone understood that change was essential." The outcome of the election is hard to call. Polls show the main opposition Syriza party - which is anti-austerity - has as a slight lead. But it's possible there'll be no overall winner, says political analyst Dimitri Sotiropoulos. (SOUNDBITE)(English) HELLENIC FOUNDATION FOR EUROPEAN & FOREIGN POLICY POLITICAL ANALYST, DIMITRI SOTIROPOULOS, SAYING: "The worst case scenario will be a double election, that is, if the first parliamentary election is inconclusive because no party wins the absolute majority of parliamentary seats and no coalition government is formed. That will bring a two month long period of uncertainty in the economy. " Questions are being asked about why the EU didn't make sure they completed bailout negotiations prior to the key vote. But at least this time contagion isn't seen as a big issue and the main worry is what will happen further down the line. Greece remains a euro zone template - if a new government in Athens negotiates better terms, others might look to do the same.

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Will Greek limbo hit Europe's recovery?

Tuesday, December 30, 2014 - 02:15