EU running out of time as Greece nears elections

Associated Press

ATHENS, Greece

European leaders insist they want to keep Greece in the eurozone but are putting off any agreement on how they hope to accomplish that. Greece says it, too, wants to stay in the eurozone, but until after elections, it’s uncertain whether it can implement the austerity that Europe has set as a condition for doing so.

Essentially, both are playing for time — about a month. The question is whether financial markets will wait or force their hand.

Concerns that European leaders lack the political will and wherewithal to tackle the continent’s economic problems have worried the markets for weeks. Among the 17 countries that use the euro, seven are in recession. Business confidence is under pressure, and banks are feeling the squeeze. The biggest fear is that if Greece cannot be kept in the euro, other larger economies — such as Spain or Portugal — might face the same fate.

“The breakup of the eurozone will be a disaster. Greece could leave, and others could leave, and this would be a huge financial tsunami,” said Dariusz Kowalczyk, senior economist at Credit Agricole CIB in Hong Kong. “Europe is not doing enough, and the market may not wait for them.”

In a general election this month, neither of Greece’s two main parties, both of which support the bailout deal, fared well. Instead, minor parties that are threatening to renege on those commitments saw their popularity surge. A new round of elections is set for June 17.