Greece is unlikely to win a debt writeoff, however a debt extension is very possible, Olli Rehn told Bloomberg, ahead of the Greek elections. The former European Union economic and monetary affairs commissioner had helped Greece avoid the exit from the euro zone at the height of the economic crisis. The leftist SYRIZA party is leading the polls with chief Alexis Tsipras promising a debt writedown and a lift of austerity measures imposed by Greece’s international lenders. If SYRIZA forms government, it is very likely that Athens will try to renegotiate the bailout program and eventually clash with the troika of creditors. “It doesn’t mean that there would have to be a classic haircut on capital,” Rehn, now a vice president of the European Parliament, said. “Instead, I would expect that the euro zone countries would rather look at ways and means of improving debt sustainability by further extending loan maturities.” On the other side, Greek Prime Minister Antonis Samaras is struggling to win people’s votes stressing budget discipline and economic and political stability. So far, he had secured a flow of international credit and had pledged to renegotiate a precautionary credit line. However, the implementation of austerity measures have made the majority of Greek people turn to SYRIZA. “My personal view is that there’s not much room for maneuver in renegotiating the terms of the economic adjustment program,” he told Bloomberg. Rehn also warned about any inconclusive Greek election this month, saying Greece should avoid a replay of 2012 when a political deadlock led to two ballots in six weeks, a suspension of the aid program and speculation the country might be forced out of the euro. “From the Greek perspective, the best way to move forward is to reduce any uncertainty, which means first reducing the time needed to build a new government and second confirming and negotiating the next steps on the EU-IMF program,” Rehn said. Describing the current political situation in Greece, Rehn said, “There will be plenty of political shadow-boxing and political theater in the coming weeks and months in Greece, but I trust that citizens and market participants can see through it and realize this is part of the cyclical process of negotiations with Greece.” Rehn said he has met Tsipras and some of his advisers. He suggested that the whole Greek political class must focus on the underlying challenge of reducing the role of vested interests in Greece and establishing a national system of “good and fair governance.” He concluded that all efforts that have been made so far should not be spoiled by “political turmoil.”
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