Bloomberg News

Greece Would Worsen Suffering by Breaking Aid Deal, Samaras Says

May 26, 2012

Greece will go bankrupt, exit the euro and suffer more if it unilaterally breaks its loan agreement with international lenders instead of adhering to the deal, New Democracy party leader Antonis Samaras said.

“The termination of the memorandum will lead Greece out of the euro,” Samaras said in a speech in Athens, broadcast live on state-run NET TV. “Greece would be led into uncontrolled bankruptcy, with living standards cut to a quarter of what they are today.”

New Democracy, which came first in May 6 parliamentary balloting without securing a majority, is Greece’s leading pro- bailout party. Syriza, second in this month’s vote, is against implementing the terms of the deal. An opinion poll by Rass today gave the conservative New Democracy party a 2.2 percentage-points lead over Syriza before June 17 elections. A VPRC poll yesterday placed Syriza first with a 2.5 percentage- points lead.

Greeks would be wrong to believe the country could remain within the shared currency if the country chooses not to respect the aid program, Samaras said. While a Greek exit would cost Europe 500 billion euros ($600 billion) to 1 trillion euros, allowing it to stay without keeping to the terms of the deal may prompt Portugal, Spain and Italy to do the same, he said. The bill for that would be 10 times higher, he said.

A return to the drachma would see incomes in Greece and the value of bank deposits and property fall by at least half within a few days, the party leader said in today’s speech.

‘Debt Would Double’

The former Greek currency would depreciate by at least 50 percent, prices would rise by at least 25 percent and the country’s debt as a percentage of gross domestic product would double, he said. “No society, no economy and no democracy can tolerate such a sudden collapse in so little time.”

Comparisons with Argentina’s recovery from its 2001 financial collapse aren’t valid, Samaras said. “Even when Argentina went bankrupt, it was fully sufficient in food and exported meat and grain around the world. What does Greece produce that it can export?”

A New Democracy victory in the June would see the party halt the rise in unemployment by the of 2012 and reduce jobless levels to the same rate as in 2009 within two years by creating “hundreds of thousands of new jobs,” Samaras said.

The party’s recovery program for the Greek economy would be to absorb European funds and emphasize liquidity for small and medium-sized companies, he said. Samaras repeated a pledge for no further cuts in wages and pensions, and not to introduce new taxes.

To contact the reporters on this story: Paul Tugwell in Athens at ptugwell1@bloomberg.net

To contact the editors responsible for this story: Jerrold Colten at jcolten@bloomberg.net


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