By Robert Winnett, Alex Spillius in Athens and Bruno Waterfield in Brussels, The Guardian – June 17, 2012
The fate of the euro was hanging in the balance after a rerun of the
Greek elections failed to produce a strong government with a mandate to
deliver the country’s austerity program.
Although the New Democracy party won the largest share of the vote,
it will have to rely on its discredited socialist rivals Pasok to form a
coalition government to accept the bail-out, keeping Greece in the
Both parties, which have ruled Greece for 38 years, are widely blamed
for a crisis that has taken the country to the brink of economic
collapse. Between them they won only about 40 per cent of the vote. By
contrast, parties that opposed the bail-out increased their share of the
vote to over 46 per cent, with Syriza, the radical Leftist coalition
that wants to discard the agreement, almost winning outright.
Last night, Syriza insisted it would not join any kind of national
unity government and promised to provide strong opposition to any
Alexis Tsipras, the Syriza leader, said he would help the government
if it took measures to alleviate the burden on the people. “But it must
understand that austerity measures and the selling off of public wealth
cannot be imposed,” he said. “Anti-austerity is the only viable
solution.” Any New Democracy-led government will be under intense
pressure to renegotiate the terms of Greece’s bail-out to stave off
another political collapse and civil unrest.
Financial markets are expected to react to the tight election
results, with speculation mounting that Greece may yet be forced out of
the single currency. A weakened government will struggle to implement
the austerity measures demanded by its EU and IMF creditors.
Central banks across the world are thought to be ready to pump
billions of dollars, euros and pounds into the global economy today if
it becomes necessary.
(British PM) David Cameron, who left for the G20 summit in Mexico
late last night, is today expected to warn that global leaders must now
“fight for the future of our world economy”.
European leaders including Angela Merkel, the German chancellor, and
François Hollande, the French president, delayed leaving for the summit
as they assessed the impact of the Greek result last night in a
conference call. France said the discussions had been “intense”. They
will both come under strong pressure from Mr Cameron and Barack Obama to
develop a coherent and agreed plan to stop the eurozone crisis
spreading to bigger economies such as Italy.
Germany may have to provide billions of euros for a new rescue package.
Senior German figures indicated within minutes of official Greek exit
polls last night that they were prepared to renegotiate the terms of
the bail-out with Greece. However, the fragile nature of the Greek
government means this strategy could threaten the crisis dragging on and
continuing to undermine other economies. Antonis Samaras, leader of the
New Democracy party, vowed to create a pro-euro unity government and
said Greece would honour its bail-out commitments.
An indication of the difficulties he faces came last night when Pasok insisted that Syriza should join a coalition.
Democracy may also need to look to the Democratic Left, a party that
talks about “gradual disengagement” from the austerity drive.
In his victory speech, Mr Samaras said Greece had “voted to stay in
the euro”. He said: “We will not be reigned by fear, and espcially the
sacrifices the Greek people have made will be realised.”
Greek voters returned to the polls after elections last month and days of negotiations failed to deliver a government.
However, despite dire warnings from European leaders, official exit
polls suggested that the Left-wing Syriza party, which has pledged to
block the austerity programme, received 27.1 per cent of the vote. In
total, the share of the vote for other anti-austerity parties appeared
to have risen to more than 46 per cent.
Golden Dawn, a neo-Nazi party with squads of thugs, was predicted to
win seven per cent again and enter parliament for the first time.
However, the official exit polls suggested that the New Democracy
party would be given the opportunity to lead a new coalition government
after receiving 29.5 per cent of the vote. It receives a 50-seat bonus
for coming first, giving the party the initial opportunity to form a
Mr Tsipras last night ruled out joining a New Democracy-led
coalition, suggesting his party would better serve the country to
“ensure the government acts in the best interests of the Greek people”.
He said: “The Greek people condemned the memorandum twice in six
weeks so other parties should accept it is non-viable. Our rejection of
the memorandum is the only solution, not only for us but for the rest of
Germany last night offered to allow a New Democracy led coalition a
longer period to make spending cuts so long as it stuck to credit
agreements with the EU and IMF.
Guido Westerwelle, the German foreign minister, said: “There cannot
be substantial changes to the agreements, but I can well imagine talking
again about timelines.”
Angela Merkel, the German chancellor, said she expected Greece to
stand by its “European obligations”. Didier Reynders, the Belgian deputy
prime minister, said: “We can negotiate with the Greeks, there is
space.” A Greek government must agree 77 austerity measures and sack
150,000 civil servants to get the next instalments of a €240 billion
EU-IMF bail-out by the end of the summer.
Germany and France are prepared to give Greece a “breathing space”.
Herman Van Rompuy, president of the EU, and Jose Manuel Barroso,
president of the European Commission, said they saluted the courage and
resilience of the Greeks.
The White House said it hoped a new Greek government would make “timely progress” on the economic challenges.
Article Link: http://the2012scenario.com/2012/06/greece-election-vote-leaves-euro-in-balance/