Should markets fear Greece's radical Syriza party?

Fears among markets and European governments over a potential win for radical party Syriza in Greek elections later this month are rife, but there are disagreements over the degree of economic and political instability that the anti-austerity party could unleash.

Markets are jittery on the prospect of Greek elections on January 25, which anti-bailout party Syriza could win, if current opinion polls remain unchanged. The yield on Greece's ten-year government bonds rose above 10 percent on Monday, although they are currently trading at 9.78 percent; the Athens benchmark stock index traded down 2.6 percent on Wednesday.


Alexis Tsipras, leader of Syriza
Louisa Gouliamaki | AFP | Getty Images
Alexis Tsipras, leader of Syriza

Tina Fordham, chief political analyst at Citi, told CNBC Wednesday that she thought concerns over Syriza were overdone.

"Syriza has been ahead in the polls for 18 months and they are likely to be the strongest party in the January 25 elections, but they may very well struggle to form the government," she told CNBC on Wednesday.

"I think we should be clear that 2015 is not 2012 (when rumors abounded that Greece might leave the euro), Greece is far more stable now," said Fordham.

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Greece is more stable economically now than in 2012, following several bailouts totaling 240 billion euros ($283 billion) and the implementation of tough cost-cutting measures by Prime Minister Antonis Samaras' government. However, cost-cutting measures have proved very unpopular with the Greek populace, and have helped Syriza, which campaigns on an anti-austerity platform, gain voters.

Fordham added that the "biggest implication" of a Syriza win would be "an extended period of political uncertainty in Greece."

Oligarchs beware

Syriza has said it would seek to renegotiate the terms of the bailout, putting it on a collision course with Greece's international loan supervisors – the International Monetary Fund, the European Commission and the European Central Bank – and potentially jeopardizing Greece's economic recovery and access to more aid.

Read MoreEurope gets ready for another Greek drama

In addition, there are concerns that a Syriza win could lead to Greece exiting the euro zone, if the party does what it has promised and tears up the country's bailout agreement.

The German government is even preparing for such an eventuality, according to speculation in the German press this week.

Read MoreGermany, France take calculated risk with 'Grexit' talk

Syriza certainly shows no signs of attempting to mollify the rest of the euro zone, or indeed, the Greek establishment. One of the party's senior economists, George Stathakis, told the Financial Times on Tuesday that the party's priority was to tackle Greece's powerful businessmen that are seen by Syriza as too closely connected to the political elite.

"The oligarchs are high on our agenda… They will be a priority for action," he said, adding that industries where oligarchs are active, including the domestic media, state procurement and real estate, would be scrutinized.

The Syriza 'precipice'

An economist at consultancy Oxford Economics said an analysis of multiple opinion polls showed that Syriza was "on the verge of a decisive victory."

"It is not just whether the radical-left wing party Syriza wins Greek elections on January 25, but how," economist Gabriel Sterne, head of global macro investor services at Oxford Economics, said in a note Tuesday.

"Syriza support is sufficient to secure a workable majority," Sterne said. "Thirty-six percent of the final vote is the approximate threshold beyond which a strong anti-austerity government is plausible and Syriza's performance has been consistent with this in each of the last 20 opinion polls, and over 40 percent of the vote on average in the last five."

Sterne warned that even if Syriza were to sign off on the conditions needed to continue the country's bailout program, "adequate implementation appears unlikely. It was hard enough for determined center-right politicians, never mind Syriza."

"Should Syriza fail to implement the program adequately, Greece could return to the precipice," he added. "Perhaps the government would fall at, or before, this point and there would be a return to an implementation-minded government; perhaps Greece would exit (the euro zone) although this is not our baseline scenario."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt. Follow us on Twitter: @CNBCWorld