FACTBOX-Five risks to watch for the eurozone

By Paul Taylor

PARIS, Aug 10 (Reuters) - German elections, an Irish EU referendum, Baltic currency worries, a leftwards tilt in the European Commission's policies and a potential new Ukraine gas row could all impact European markets by the end of this year.

Here are the key risks and what to watch on each issue.

GERMAN ELECTION

The Sept. 27 federal election is the most important vote in Europe this year, with the focus on what form of coalition emerges. The most likely outcome is either a shift to the right in the form of a coalition between the Christian Democrats (CDU) and Christian Social Union (CSU) together with the centre-right Free Democrats (FDP) or a continued grand coalition of the CDU/CSU and the centre-left Social Democrats (SPD).

Latest polls give the CDU/CSU around 36 percent with the Social Democrats trailing behind in the 20-25 percent range -- less than the roughly 30 percent they would need to continue in the grand coalition. The FDP has around 13-14 percent support and the Greens and post-communist Left Party around 10 percent each.

A centre-right coalition would be committed on paper to cutting taxes and might take more decisive action to clean up the banking sector by transferring more of the risk from toxic assets to the taxpayer, an unpopular move but arguably key to a sustainable economic recovery in Germany and the euro zone. In return, the state could insist on taking an equity share in more troubled banks. A centre-right government might also be more willing to let failed companies go to the wall, instead of bailing them out.

A renewed grand coalition would be a recipe for political stalemate and more cautious government. It might extend short-time work schemes to keep down unemployment in the hope of an export-driven recovery.

IRISH EU REFERENDUM

Having rejected the EU's Lisbon Treaty in June 2008, the Irish hold a second referendum on Oct. 2. Opinion polls point to a "yes" vote this time, with the financial crisis having changed many voters' views of the EU to that of a protector. Dublin has received binding assurances that the treaty does not affect tax sovereignty, Irish family law, military neutrality, workers rights and social policy. However, the polls are notoriously unreliable and a late swing towards a "no" is entirely possible.

If the Irish vote no, the EU will be plunged into a deeper crisis of confidence. Some countries, including Britain, the Netherlands, Sweden and possibly Poland, would declare efforts to reform EU institutions dead and say the bloc should soldier on under the 2000 Nice Treaty. Others, probably led by France, may talk of forming a vanguard of nations willing to move forward in closer cooperation. There would be much finger-pointing but little action. The EU's voice and influence would be diminished in the world.

If the Irish vote yes, and the Germans adopt a law on parliamentary scrutiny of EU legislation demanded by the German constitutional court, there are two other potential hitches -- the Czech and Polish presidents have so far refused to sign the treaty that their parliaments have approved.

However, a yes from Dublin would likely remove those hurdles. The treaty coming into force, probably on Jan. 1, 2010, would boost the EU's self-confidence. An October summit would choose the first president of the European Council to chair and prepare EU summits, as well as a new High Representative for foreign and security policy who would lead an EU diplomatic service with a large budget.