Europe Economy

Euro Exit Means 'Impoverishment' for Greece: Ex Minister

Reporting by Julia Chatterley, Writing by Antonia van de Velde

Voters in Greece will have to think hard about who they support in the second national election in the country in six weeks as a protest vote for anti-bailout party Syriza could lead to “impoverishment” for Greece if it is forced to leave the euro, former Greek finance minister Stefanos Manos said in an interview with CNBC.

Greeks willon June 17 after the inconclusive results of the early May polls. The election has markets on tenterhooks as polls show a rise in popularity for anti-bailout parties.

Manos now leads minor political party “Drasi” which recently joined forces with the “Recreate Greece” party to form a pro-business party which supports the bailout agreement Greece struck with its creditors.

Alexis Tsipras, leader of the leftist Syriza party, has said his party wants to tear up the bailout deal which imposes harsh austerity measures on the Greek people, but he is not in favor of .

Many analysts say that tearing up the bailout deal is tantamount to leaving the euro zone however, as Germany will refuse to give more money to Greece without a firm commitment to austerity to rebuild the country's finances.

The Recreate Greece Coalition focuses on free-market reform, and Manos believes once those reforms are in place and show results, the Greek people will be more willing to accept austerity.

“We’ve had large doses of austerity and no reform. And as a result, we don’t see results. So that’s the point. We have to get moving with the reforms. That will have a positive effect. Positive effects will make austerity more acceptable,” Manos said.

“What we strive to do is get into parliament and then we will work with whoever is in power to get these reforms moving,” he said.

Moving Ahead

Manos hopes that a new mix of people leading the country will get Greece moving ahead again.

He believes the people of Greek are taking responsibility for the situation they are in, but that they are primarily angry. “And when you are very angry it’s very difficult to talk sense.”

“They will have to vote seriously and think twice before they do so,” he said.

Greek Euro Exit Equals 'Impoverishment'

He thinks it is likely Syriza will abandon its commitment to tear up the bailout once in power. “My guess is that there is going to be a turnaround, yes. But I’m not sure. That’s exactly the point,” Manos said.

“When you listen to what they’re saying it means we’re going out of Europe. But it’s not clear whether they realize that or if they don’t. They’ve never had the experience of actually being in government. So they’re saying something which sounds nice to people, but it’s completely in opposition with the purpose of staying in Europe.”

New elections before the end of the year in the event of yet another set of inconclusive results on June 17 would be a “disastrous development,” he warned.

“We have an which is in complete shambles. The government hardly has any cash left. So we cannot afford to do that,” Manos said.

He said there was a possibility that Greece could leave the euro, but that would depend on the kind of leadership that the people elected would show.

“So it is not yet decided whether we’re going to be in or out. It very much will depend on the vote,” he said.

A return to the drachma however would mean “impoverishment. Without a second thought,” Manos said. “I think the average per capita income would go down by 50 percent.”