Greek austerity must continue for healthy future

Greece's Prime Minister and leader of the ruling conservative New Democracy party Antonis Samaras gestures as he delivers a pre-election speech outlining his policies in Athens January 10, 2015. [Photo/Agencies]

The election in Greece on Jan 25th, may enable the far-left party Syriza to form a new government. Its leader has warned that Greece may exit the euro if the European Union and International Monetary Fund don't agree to loosen austerity measures. So "Grexit" is making headlines again after being in the news almost continuously in 2011 and 2012.

The snap poll has already had an impact on the country's economy and eurozone stability and Finance Minister Gikas Hardouvelis said in an interview with The Wall Street Journal that some 3 billion euros ($3.5 billion) worth of deposits have left the banking system in the past two months.

There is a danger that if Syriza wins the election, the credit rating agencies, the media and the market will fan up fears about the policies of the far-left party and the situation will go from bad to worse again.

Fortunately, the Syriza leader Alexis Tsipras has been softening his tone, saying no unilateral decision will be taken to announce an immediate default.

Even if the political uncertainties in Greece can be properly handled, it will be followed by more uncertainties in the EU if Prime Minister David Cameron's Conservatives win the May elections in the United Kingdom and table a referendum on whether the country should remain in the EU by 2017 as promised. Article 50 of the EU's Lisbon Treaty allows member countries the right to exit.

So far, though, the debate has focused on the fate of Greece.