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Political Crisis Hammers Greece's Financial Markets


Markets in Greece were hammered after the country plunged itself into political turmoil by calling early elections next month. That's the bad news for Greece. But there is good news for the rest of Europe. Joanna Kakissis reports that this time around, the problems in Greece are not spreading to markets in the rest of the eurozone.

JOANNA KAKISSIS, BYLINE: The last time Greece held elections in June 2012, everyone was panicking. A leftist party, Syriza, was rising in public opinion polls and threatening to fight eurozone lenders who were keeping Greece solvent through billions of dollars in bailouts loans. There was real fear Greece would leave the euro and take the rest of the eurozone with it. But that's not the case anymore, says Wolfango Piccoli, a London-based financial analyst.

WOLFANGO PICCOLI: The ability of Greece, even in the worst-case scenario, to shake the financial market now is much more limited.

KAKISSIS: One reason is that 80 percent of Greek sovereign debt is now owned not by Greece, but by the European Union, the European Central Bank and the International Monetary Fund - the country's lenders.

PICCOLI: So the ability of Greece to really impact on the wider eurozone now is significantly diminished.

KAKISSIS: But there's still unease. The leftist party Syriza is expected to win elections next month. It strongly opposes the bailout. That's worrying many in Europe, says economist Platon Tinios.

PLATON TINIOS: Well, they're not really reacting to a Syriza government per se. What they're reacting is against this - a renewed period of uncertainty.

KAKISSIS: And that political uncertainty may spread to other economically vulnerable countries like Spain, causing more division in the eurozone. For NPR News, I'm Joanna Kakissis. Transcript provided by NPR, Copyright NPR.

Joanna Kakissis is a foreign correspondent based in Kyiv, Ukraine, where she reports poignant stories of a conflict that has upended millions of lives, affected global energy and food supplies and pitted NATO against Russia.