Greece's wrangling politicians were locked in last-ditch efforts Friday to form a coalition government, with chances of a deal appearing slim and the country's future in Europe's common currency at stake.
Voters on Sunday punished both main parties, the conservative New Democracy and socialist PASOK, for their handling of the country's protracted financial crisis, deserting them for a myriad of smaller parties on the right and left. The result left a hung parliament, with no party able to form a government.
Hopes for a deal between election winner New Democracy and third place PASOK with the small Democratic Left party of Fotis Kouvelis suffered a setback Friday when Mr. Kouvelis insisted he could not participate in a government with just the conservatives and socialists.
“We have made our position clear. In a government with (only) New Democracy and PASOK, we will not take part,” Mr. Kouvelis said.
Unless an agreement is found, the country will head to new elections next month. The political instability has alarmed Greece's European creditors, who have warned that the country's international bailout package and continued use of the euro could be threatened.
German Finance Minister Wolfgang Schaeuble suggested the eurozone could deal with an abrupt Greek exit, although he said he didn't want that.
“We have learned a lot in the last two years and built in protective mechanisms,” he told the Rheinische Post newspaper. “The risk of effects on other countries in the eurozone have been reduced and the eurozone as a whole has become more resistant.”
Hopes had been raised Thursday night for a deal involving Antonis Samaras' New Democracy and former finance minister Evangelos Venizelos' PASOK joining forces with the Democratic Left, whose 19 seats in the 300-member parliament put it in a potential kingmaker position.
But Mr. Kouvelis insisted any coalition must include election runner-up Alexis Tsipras, whose anti-bailout Radical Left Coalition, or Syriza, won 52 seats.
So far, Mr. Tsipras has refused to join any government that does not reject the austerity terms of Greece's bailout, saying the spending cuts and tax cuts are destroying the country's chances of recovering from its deep financial crisis.
“It is clear from its reaction that from the first moment, Syriza wanted elections,” Mr. Kouvelis told his deputies in a speech Friday. “And without Syriza, a government cannot be formed that is in harmony with the popular will, representing the strength of each political party.”
The country has been dependent since May 2010 on rescue loans from other European Union countries that use the euro and the International Monetary Fund. In return, Athens has imposed repeated rounds of spending cuts and tax hikes, leaving the country mired in a fifth year of recession with unemployment above 21 per cent.
Both Mr. Samaras and Mr. Venizelos have said some parts of Greece's bailout terms should be reviewed, but warn that Mr. Tsipras's policies would lead to disaster, forcing Greece out of the eurozone. The vast majority of Greeks want to keep using the euro, and all the main parties, including Mr. Tsipras's and Mr. Kouvelis's, insist they do, too.
Leaving the joint currency “would be an exceptionally negative development ... not just for Greece but for the whole of Europe,” Mr. Tsipras told The Associated Press on Thursday.
But he insisted the austerity measures must be repealed, rather than simply amended.
“We can't compromise with the idea that we will insist on the wrong thing, but in smaller amounts,” he said. “That would have made sense if this was two years ago. But now we have an economy on its knees, in tatters, and a society that can't take any more.”
But European officials appear unswayed.
EU monetary affairs chief Olli Rehn stressed that Greece's bailout terms were the only way the country could reform its economy.
“Greece systemically lived beyond its means for a decade. ... It is simply not sustainable and therefore Greece has had to take firm action to restore its economic competitiveness and sustainable public finances,” he said in Brussels.
“The EU and international community have supported Greece with very big contributions and loans. ... I trust that the Greek political forces will aim at soon forming a coalition government that can ensure that Greece will indeed return to sustainable footing and return to growth and competitiveness.”
Mr. Venizelos, who currently holds the mandate to seek coalition partners, is to meet with Mr. Tsipras on Friday evening. With opinions so far apart, and Mr. Kouvelis risking being branded as a left-wing traitor if he helps the pro-austerity parties govern without Mr. Tsipras's support, a deal seems unlikely.
If new elections are held, Mr. Tsipras is expected to make gains. An opinion poll published Thursday indicated Syriza would come first with nearly 28 per cent of the vote in a new election — benefiting from a 50-seat bonus for the first party to give it 128 seats. Although it would still fall well short of the 151 seats needed to form a government, it would put it in a strong position to form a governing coalition with smaller anti-bailout parties.
The Marc survey for private Alpha TV gave New Democracy 20.3 per cent and 57 seats compared to 18.85 per cent that gave it 108 seats with the first party bonus now, and showed the extremist right-wing Golden Dawn declining to 5.7 per cent, with 16 seats instead of its current 21.
The May 8-9 nationwide survey was the first published after Sunday's vote. It gave no margin of error.
Source: The Globe and Mail
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