As polls opened on Sunday in a Greek vote, the outcome of which could decide whether the heavily indebted country remains in the euro zone, the World Bank warned that the election of an anti-austerity government could spark a global economic crisis.
"Europe may be able to muddle through but the risk is rising. There could be a Lehmans moment if things are not properly handled," the outgoing head of the World Bank Robert Zoellick told Britain's Observer newspaper.
The bankruptcy of U.S. bank Lehman Brothers in September 2008 triggered a global financial slump that indebted western nations are still struggling to recover from.
Policymakers and investors are nervously awaiting the outcome of this weekend's Greek election, which could empower radical leftists threatening to tear up the terms of a bailout deal and send shockwaves through financial markets.
Sunday's election is a re-run of an earlier vote on May 6 which produced no clear winner and forced voters back to the polls for a vote that is seen as a referendum on the future of the single currency.
The last opinion polls published before a two-week pre-election ban showed the radical Syriza party running neck-and-neck with the conservative New Democracy party of Antonis Samaras. But no party is likely to win enough votes to form a government on its own, meaning a coalition will have to be formed to avoid yet another election.
The European Union and International Monetary Fund have insisted that the conditions of the 130 billion bailout accord agreed in March must be accepted fully by a new government or funds will be cut off, driving Greece into bankruptcy.
Opinion polls show Greeks, weary after five years of deep recession, overwhelmingly favor remaining in the euro. But there is bitter anger over the repeated rounds of tax hikes, slashed spending and sharp cuts in wages.
"I voted with a heavy heart for a pro-bailout party because I want the country to stay in the euro, with the help of our European partners. I don't think the failed recipes of the left would get us out of this mess," Stratos Economou, 49, who runs a bakery shop in Athens, told Reuters.
Zoellick and other policy makers insist that the austerity Greece is living with is preferable to the alternative.
The Observer said the Zoellick would tell a G-20 summit that the euro crisis could hit developing nations hard, although clearly the effects would be felt further afield.
"Uncertainty in markets is now starting to increase costs for developing countries," he told the newspaper. "The ripple effects are making everybody's life harder."
The G-20, which brings together finance ministers and central bank governors from 19 major economies and the European Union, will start a meeting in Mexico on Monday. The gathering in the Pacific resort of Los Cabos promised to be overshadowed by the elections in Greece and mounting worries about Spain and Italy.
"If the radical left wins (in Greece) -- which cannot be ruled out -- the consequences for the currency union are unforeseeable," Jean-Claude Juncker, Luxembourg's prime minister and head of the group of eurozone finance ministers, told the Austrian newspaper Kurier according to the Observer. "I can only warn everyone against leaving the currency union. The internal cohesion of the euro zone would be in danger."
Finance officials in the euro zone have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing euro zone capital controls as a worst-case scenario.
All parties actually say they will keep Greece in the single currency but Alexis Tsipras of the Syriza party believes the agreement can be renegotiated without Greece having to leave, betting that European leaders cannot afford the turmoil that would be unleashed by cutting a member of the euro zone loose.
But euro zone paymaster Germany has warned Greeks on Saturday the bailout would not be renegotiated.
"That's why it's so important that the Greek elections preferably lead to a result in which those that will form a future government say: 'Yes, we will stick to the agreements'," Chancellor Angela Merkel told a party conference of her Christian Democrats
On the right, establishment heir and New Democracy leader Samaras says rejection of the EU/IMF bailout would mean a return to the drachma and even greater economic calamity.
Samaras told supporters on Friday they faced a stark choice -- "euro versus drachma."
Polls opened at 7.00 a.m. (0400 GMT) and close at 7 p.m. Exit polls will follow soon after voting ends.
Central banks from Tokyo to London are readying arsenals to defend banks and national currencies against any post-election turmoil.
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