If the establishment center-right party New Democracy ekes out a victory in a race that polls show as tight, Greece still faces weeks or months of negotiations with European lenders over the terms of its austerity program, which all parties agree are too onerous to enforce on its rapidly shrinking economy.
A victory by the leftist party Syriza promises a more serious confrontation, especially with Germany, over how — and perhaps whether — to keep Greece in the euro zone.
The winner will also face an uphill battle to inject confidence into a paralyzed economy that depends heavily on the continued infusion of money by the European Central Bank. The Frankfurt-based bank has become the last lifeline for a financial system that has all but seized up and a deficit-ridden government that has little ability to raise new revenues or borrow money to continue its operations.
On Monday, as Greece tries to determine whether it has a viable new government, leaders of the G-20 group of developed and emerging economies will gather in Mexico, where they are expected to debate ways to keep the Greek crisis and the weakness of the bigger economies of Spain and Italy from undermining the euro and dragging the global economy into a new recession.
Central bankers from Tokyo to Washington have already pledged to intervene in financial markets if necessary to shore up those economies, but the Greek drama nonetheless threatens to keep investors on edge for weeks to come.
“I would be very surprised if — ta-da! — everything is clear,” said Peter Westaway, chief economist for Europe at Vanguard Asset Management. “We could be in for a protracted period of uncertainty, which would not be helpful, either.”
If, as in the May elections, there is no clear winner, political leaders have said they are committed to forming a government no matter what. In any event the new government will have to open new talks with the big European powers and press for a more generous bailout. “They will be sitting around the table with each other, and then some compromises can be struck,” Mr. Westaway said.
There is no mechanism to kick Greece out of the euro, and the two leading candidates say they have no intention of taking Greece out voluntarily. Greece could be forced to fend for itself if the European Central Bank decides that it is a fool’s errand to keep replenishing Greek banks that have no collateral or credibility. But the bank’s job is to protect the euro, and it has repeatedly argued that contagion from an exit by Greece could outweigh the costs of keeping it afloat.
“It’s in the hands of the E.C.B., and the E.C.B. doesn’t want to be responsible,” said Simon Tilford, chief economist for the London-based Center for European Reform. “The E.C.B. will come under great pressure to rein in support for the Greek banking system, but the bank is quite concerned about the implications and the risks of contagion if a country leaves the euro.”
Others increasingly warn of the risk of an “accident” — a bank run somewhere in the euro zone that spirals out of control, or the Greek government running out of money to pay salaries and pensions after paying back creditors — which could quickly precipitate into market panic and social unrest.
Around 80 percent of Greeks want to remain in the European Union and within the euro zone, but they also want a radical renegotiation of the bailout terms. European leaders see this as a contradiction, but Greek leaders see it as necessary to fight a deepening recession. A restructuring of private debt as part of a second bailout in February brought Greece’s debt to 160 percent of gross domestic product, down from 165 percent but not nearly enough to keep the debt in check or revive the slumping economy.
A new round of negotiations also became inevitable after Spain, a much bigger economy, got a $125 billion bailout for its banks on terms that are much less restrictive than the austerity package demanded of Greece, which unlike Spain had run up a huge fiscal deficit in better times.
The leader of the New Democracy party, Antonis Samaras, who failed to form a government despite placing first in last month’s elections, now talks about pushing for a better deal. Syriza’s leader, Alexis Tsipras, alternately talks about “ripping up” the bailout agreement and asking European leaders to replace it with a better plan.
“Brussels, here we come,” he said to a rousing crowd in his final campaign rally here on Thursday.
Beyond the alarmism, there are already signs of back-channel diplomacy. In an interview on Thursday, Mr. Tsipras said that his conversations with the German ambassador in Athens and with others in Germany “assure us that we will be able to continue negotiations.”
Some foreign investors and much of the country’s business elite are depicting a Syriza victory as a kind of Armageddon, with the countdown toward a Greece exit from the euro zone beginning on the day it takes power. Yet there is also a consensus that Mr. Tsipras’s central contention — the second bailout deal is unworkable and needs to be replaced — is basically right.
“The memorandum of understanding is dead,” said Anthony Kefalas, adviser to the president of Greece’s leading business lobby, the Hellenic Federation of Enterprises. “It is politically dead, because in the previous elections a majority voted against it. It is also economically dead.”
The deal calls for Greece to reduce its primary budget deficit to 1 percent of gross domestic product by the end of this year, and for an additional $14.5 billion, or 5 percent of gross domestic product, in new spending cuts or tax increases over the next two years, because a deepening recession has caused Greece to miss budget-deficit targets.
While the so-called troika of lenders — the European Commission, the European Central Bank and the International Monetary Fund — may be willing to modify the agreement, in particular by giving Athens more time to repay, it is considered unlikely to change the fundamentals.
“Everyone knows that whatever they call it — and they won’t call it a renegotiation — there will have to be a de facto renegotiation of the bailout memorandum,” said Mark Leonard, director of the European Council on Foreign Relations. “If Syriza is the largest party, it will add to the general sense of panic and will push the Germans to do more” to ease pressure on the euro, he said. “The Germans are trying to slow things down, worried they’ll be forced into financial commitments without political commitments in place.”
But it is also clear that Germany, with its own internal politics, is unwilling to write a blank check, albeit loans with interest, for the rest of the euro zone. Even Germany is not big enough to bail out Spain and Italy, and the German government is holding firm before Sunday’s vote.
On Thursday, Chancellor Angela Merkel told her Parliament that “Germany’s powers are not unlimited,” and that the world should not overestimate Germany’s ability to resolve the euro crisis without a fundamental, controversial and time-consuming move toward a fiscal and political union of the euro zone, with central oversight over national budgets and banks.
The Greeks “can vote however they want,” the German finance minister, Wolfgang Schäuble, said last week. “But whatever election result we have will change nothing about the actual situation in the country, which is in a painful crisis brought on by a decades-long flawed economy.”
Mr. Schäuble told the magazine Stern that he had sympathy for the Greeks, but added: “The Greek minimum wage is just dropping to the level of Spain. If the country wants to become competitive again, it has to sink.”
It has been sinking, Greeks say, as they cut their budgets and think about making Mr. Tsipras, only 37, their new prime minister, to shake up what everyone agrees has been a political system rotten with cronyism and corruption. While New Democracy appears to be running neck-and-neck with Syriza, many say they believe that Europe’s best chance to negotiate a lasting deal with Athens — and to keep down social unrest at home — would be if Syriza is in the government and part of whatever emerges.
“We have a brand new political landscape and it will change a lot more in the years to come, because the austerity collapsed the center,” said Nikos Xydakis, a political analyst and an editor at the daily newspaper Kathimerini. He added that the next Greek government would not have much staying power.
“The problems are huge,” he said. “Actually, the country faces collapse,” and no Greek political party has the “moral power” to win over the electorate, or “huge support from Europe.”
Rachel Donadio reported from Athens, and Steven Erlanger from Paris. Jack Ewing contributed reporting from Frankfurt.