Greece to hold new general election after failure to form government

by editor | 16th May 2012 8:59 am

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Greek President Karolos Papoulias (C) meets with five of the Greek political leaders — New Democracy leader Antonis Samaras (3-L), coalition of the Radical Left leader Alexis Tsipras (2-R), PASOK leader Evangelos Venizelos (2-L), Independent Greeks leader Panos Kammenos (R) and Democratic Left leader Fotis Kouvelis (L), in Athens on May 15, 2012. (Photo: EPA)
Greece will hold a new election after politicians failed to form a government on Tuesday, nine days following an inconclusive vote, prolonging a political crisis that pushes it closer to bankruptcy and exit from the euro.

After a third day of failed talks with political leaders, a spokesman for President Karolos Papoulias said the process of seeking a compromise had been declared a failure and a new vote must be held.

He did not immediately give the date for the new vote, but elections rules suggest it will be in mid June. A caretaker government would be formed on Wednesday, the spokesman said.
“For God’s sake, let’s move towards something better and not something worse,” Socialist Party leader Evangelos Venizelos told reporters after the meeting. “Our motherland can find its way, we will fight for it to find its way.”

Greece remains without a government since its inconclusive election left parliament split between supporters and opponents of a 130 billion euro bailout package reviled by Greeks for imposing deep wage, pension and spending cuts.

Polls show the leftist SYRIZA party, which rejects the bailout and placed second in last week’s vote, is now on course to win, a result that would give it an automatic bonus of 50 seats in the 300-seat parliament.

European leaders say that they will cut off funding for Greece if it rejects the bailout agreed in March, which would mean bankruptcy and all but certain exit from the European single currency.

Seeking to end a nine-day deadlock, the Greek president had met on Tuesday with five political party leaders in an effort to form a new government after inconclusive elections plunged the crisis-hit country into further disarray.

The meeting was to examine a new proposal that was put forward by Papoulias for a government of technocrats or respected personalities, after repeated negotiations for a coalition government collapsed. If no deal is reached, Greece will have to call new elections.

The protracted political certainty has left Greeks frustrated and worried about whether a government of non-elected individuals would work.

“The solution is provided by democracy and democratic procedures. This means that there should be another election and they should stop intimidating the people and engaging in tactics of terror,” said Athens resident Yannis Ekaterinaris.

No party won an outright majority in Greece’s May 6 election, leading to an impasse that has shaken financial markets and led to questions about Greece’s ability to stay in the eurozone. Power-sharing efforts have failed so far after the left-wing Syriza party, which came second in the vote, insisted that the draconian terms of Greece’s financial rescue agreements be scrapped or rewritten.

The Communist Party declined to attend Tuesday’s talks and the extreme right Golden Dawn party was not invited.

European markets took a break from Greece-related concerns Tuesday, while shares on the Athens Stock Exchange recovered slightly from days of heavy losses, gaining 0.48 percent at 586.84 after European Union finance ministers voiced strong support for Greece’s continued membership of the eurozone.

New growth figures released Tuesday revealed the extent of Greece’s ongoing crisis, adding urgency to the coalition talks as an extended deadlock would trigger fresh elections.

The country’s economic output slowed by 6.2 percent in the first quarter of 2012, compared with the first three months of 2011, according to the Greek Statistical Authority.

The lack of government has also caused concern about how Greece would decide to handle an outstanding 435 million euros ($558.67 million) bond that matures May 15. The bond’s investors had held out against a massive debt restructuring Greece had agreed with private creditors in March, which saw holders of Greek debt swap their bonds for new ones with later maturity dates and lower interest rates.

The conservative New Democracy party won the May 6 election, but only received 18.9 percent of the vote as angry voters scattered to smaller parties. Second-placed Syriza, which received 16.8 percent in the election, is currently leading opinion polls.

Tuesday’s talks were joined by the leaders of New Democracy, Syriza, the Socialist PASOK, the Democratic Left and right-wing splinter party Independent Greeks.

The president’s office released transcripts of an earlier leaders’ meeting on Sunday, during which Syriza leader Alexis Tsipras said he saw no sign of sufficient common ground with other parties. “It would be irresponsible to say one thing before the elections and something else afterward,” Tsipras was quoted as saying.

Referring to possible repeat elections, he added: “We believe that a popular vote does not harbor the danger of catastrophe. How things are handled harbors the danger of catastrophe.”

Separately, the country saw interest rates rise slightly in the auction of 13-week Treasury bills. Greece raised ?1.3 billion in Tuesday’s sale, which saw interest rates rise slightly to 4.34 percent, compared to 4.2 percent in a similar auction in April. Demand also dropped slightly, with the sale 2.32 times oversubscribed, compared to 2.46 times in the April 17 auction, the Public Debt Management Agency said.

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