Greeks Withdraw Their Euros From Banks Over Election Fears

By Andy Dabilis

There were no long, frantic queues, but as Sunday’s (June 17th) elections loom, Greeks and businesses quietly began withdrawing as much as 800m euros a day, anxious that their country might be forced out of the eurozone and back to a deeply devalued drachma.

“I’m worried. It’s the drachma and we don’t know what’s going on with politicians,” Petra Poursanidi, 35, told SETimes on her way out of an Alpha Bank branch in a western neighbourhood of Athens.

In the election, Greeks are facing a euro vs drachma argument: support the once-ruling parties of the New Democracy conservatives and their otherwise bitter rivals, the PASOK Socialists, who both supported austerity measures demanded by international lenders; or vote for parties opposed to the conditions, a choice that critics said could push Greece out of the eurozone.

The country’s four largest banks, including Alpha, were so weakened by massive losses imposed by the government on them and private investors as part of a deal to write down the country’s staggering debt by 106 billion euros they had to get an emergency recapitalisation of 19 billion euros. Central bank figures showed deposits shrank by about 17%, or 35.4 billion euros in 2011, and to only 165.9 billion euros at the end of April.

Bankers said the pace was picking up ahead of the vote, with combined daily outflows from the major banks at 500-800m euros, including cash withdrawals, wire transfers, and investments in other instruments.

Dimitris Hatzinikolaou, a professor of economics at the University of Ioannina in northern Greece, said that fear is growing. “People estimate correctly that their deposits could be converted into drachmas and are trying to protect their savings,” he told SETimes.

The campaign has been stoked by fear on all sides and become a sideshow of political bickering and blame-swapping. Many worry that these elections could be deadlocked too and worsen the crisis.

Tourism, the biggest revenue source, bringing in nearly 23% of the country’s 239 billion euros GDP, has taken a hit, with bookings dropping 30% or more at the beginning of the season.

If these elections don’t create a government, there are prospects of not just a run on the banks, but the supermarkets, after warnings that Greece could face a shortage of food — as well as fuel, medicine and other essentials — if it exits the eurozone. ”

People are terrified by the prospect of returning to the drachma and some believe it’s good to fill their cupboard with food products,” said Vassilis Korkidis, head of the ESEE retail federation. “It’s over the top; we must not panic. Filling the cupboard with food doesn’t mean we will escape the crisis,” he told Reuters.

The Troika has warned that any attempt by a new government to tinker with reforms could lead to the money pipeline being shut off and said the country has enough cash to last only a few weeks. It also wants another 12 billion euros in cuts, setting off a renewed debate over austerity.

While the politicians wrangled, Dimitri Charakides, 26, one of the lucky Greeks who has been able to land a job during a deep recession that reached 22.6% unemployment, came out of the bank where he had gone to get a debit card. He said that he wasn’t worried about the banks or growing withdrawals.

“I don’t have so much money,” he told SETimes. “The people who have money should be worried.”