Key European leaders (including the leaders of Germany, France and the European Commission) have stated that next month's Greek repeat election should be regarded as a referendum on euro membership. This call is unlikely to have a major impact on the election outcome. The Greek electorate is determined to treat the repeat election as another referendum on the previous two governments' austerity agenda (which most Greeks do not see as a condition for euro membership) as well as on the performance of the two mainstream parties that many Greeks hold responsible for causing Greece's current predicament.
However, it is exactly these two mainstream parties (the centre-right New Democracy party and the centre-left Pasok) that Greece's international lenders have the most trust in with regard to implementing the tough agenda of budget cuts that is part of the bail-out package.
It currently looks almost inevitable that the left-wing Syriza will become the strongest party at the repeat election. As Syriza strongly opposes austerity but wants to remain within the euro area there will have to be difficult compromises if Syriza were to form a new government (which itself is far from certain). There is a growing dichotomy between wanting to stay in the euro (around 70% of Greeks still want to keep the euro and the vast majority of parties in parliament does so too), on the one hand, and the outright rejection of fiscal austerity (which the 'troika' of European Commission, European Central Bank and IMF see as a precondition for further aid disbursements) on the other hand.
Both a new Greek government (of whatever composition) and the troika will have to acknowledge this dilemma and will have to find some middle ground (potentially involving a slight renegotiation of the austerity package) to avoid Greece being forced out of the euro. One thing is clear: a new Greek governing coalition will not have the legitimacy from the Greek electorate to continue with the current austerity plan, which would involve coming up in June with additional budget cuts worth around 7% of GDP for 2013-14.
In conclusion, European leaders may be shooting themselves in the foot by calling the next election a referendum on the euro given that most Greeks do not accept that euro membership and fiscal austerity are two sides of the same coin. Therefore, the call may make it even more likely that Syriza (which wants Greece to be tougher with its international lenders) and other anti-austerity parties to make great strides in the poll. Nonetheless, any new government (including one led by Syriza) would soon realise that Greece has limited choice and its room for manoeuvre is limited, which could lead to compromises on easing the austerity plan slightly without Greece leaving the euro: both the new government (in its communications with the electorate) and the troika (in its attempt to maintain the focus on austerity) could sell this compromise as a victory.
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