As talks drag on, would calling early elections pave the way to a final agreement for Greece?

Chief economic spokesman Euclid Tsakalotos was put in charge of negotiations (Source: Getty)

Christian Schulz, senior economist at Berenberg, says Yes

It was always clear that Prime Minister Tsipras could not satisfy his party’s hardline left-wingers and international creditors at the same time. Greece needs a third bailout this summer to stay in the Eurozone in the long term. The Eurozone would offer that help, but with more conditions – many of which will run counter to Syriza’s impossible pre-election promises.

Since Tsipras cannot change the creditors, he could ditch his own radicals and call new elections. The election campaign may bring more damaging uncertainty, but pro-reform parties, potentially including a reformed Syriza, might win, form a coalition and put Greece back on the path of virtue.

First, however, Tsipras himself has to make up his mind whether he wants to return to real reforms or lead Greece into the abyss. If he fails to agree a short-term deal with the Troika, any election might only decide who would have to pick up the pieces after a catastrophic Grexit.

Vicky Pryce, chief economic adviser at the Centre for Economics and Business Research, says No

Greece is, first and foremost, short of liquidity and needs to get an agreement on its reform plans as quickly as possible. Alexis Tsipras has focused all his efforts so far on meeting Greece’s debt obligations, and avoiding default. The latest opinion polls suggest that 71 per cent of Greeks want to stay in the euro. Tsipras needs and wants a solution that he can sell to his electorate and use to pacify the opposition.

The change yesterday of the negotiating team after the impasse at the Eurogroup last week, putting the deputy foreign minister and the country’s chief economic spokesman Euclid Tsakalotos in charge of the negotiations, shows a determination to somehow achieve a breakthrough after a very difficult couple of months.

Elections would delay the process and plunge Greece, whose economy has been contracting since last autumn, into even more uncertainty.

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