Greece seeks coalition as eurozone fears ease

Jun 18, 2012

New Democracy hopes to lead coalition but huge questions remain


ANTONIS SAMARAS, leader of Greece's New Democracy party, which narrowly won yesterday's election, has met the country's president and been given three days to form a coalition government after his party secured almost 30 per cent of the vote.

Samaras's narrow victory partly allayed fears of Greece being forced out of the eurozone. The anti-austerity Syriza party, whose leader Alexis Tsipras promised voters he would tear up the country's EU bailout agreement, conceded defeat.

With almost all of the ballots counted, conservative New Democracy has 29.7 per cent of the vote, with the leftist Syriza just behind on 26.9 per cent. The Pasok socialists have 12.3 per cent.

Samaras meets Evangelos Venizelos, leader of Pasok this afternoon, the BBC reports. Observers are confident the two parties can form a governing coalition but Samaras will also push to include other, smaller parties.

After meeting president Karolos Papoulias, Samaras said: "A national understanding by everybody is imperative … the country cannot remain ungoverned for even an hour."

Samaras also vowed to seek changes to the terms of the bailout deal. While New Democracy's victory has soothed EU fears, commentators point out that only 40 per cent of voters backed parties that support the bailout.

Greeting his supporters last night, the New Democracy leader (pictured) said: "The Greek people voted today to stay on the European course and remain in the eurozone... there will be no more adventures, Greece's place in Europe will not be put in doubt."
Immediate market reaction to the result was favourable, with the euro hitting a three-week high against the US dollar, rising to around $1.2730 in early Australasian Monday trade, from around $1.2655 late in New York on Friday, says Businessweek.
Eurozone governments last night said they had held 'intense' discussions on the situation in Greece. French finance minister Pierre Moscovici said: "There were intense consultations this afternoon and there will very rapidly be a statement, which will say how we want to broach the situation in Greece."
Last night Germany's Foreign Minister Guido Westerwelle said it was important for a new Greek government to stick to the country's agreements with international creditors. However,  The Daily Telegraph reports, he signalled that Athens may be given more time to comply with them after weeks of pre-election standstill.
Westerwelle said: "We want Greece to stay in the euro; we want Greece to continue wanting to belong to Europe. But Greece will decide now on its own path; you cannot stop anyone who wants to go."
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 bn EU-IMF bailout by the end of the summer.
Economists remain concerned about the debt and banking crises in several larger European nations, including Spain and Italy. These issues will take centre stage at a series of coming international political gatherings, including a meeting of the Group of 20 nations that is set to begin today in Mexico.
"If there are not more decisions toward more integration in Europe, the euro will certainly not survive in its current shape with its current members," said Antonio Garcia Pascual, the chief southern European economist at Barclays.
Prime Minister David Cameron, who left for the G20 summit in Los Cabos, late last night, is today expected to warn that global leaders must now "fight for the future of our world economy", stressing that fears of repercussions in the global market remain, and raising the spectre of the euro breaking up.
Senior financial analysts, meanwhile, remain doubtful of any lasting resolution coming from last night's results. Paul Mortimer-Lee economist at French Bank BNP Paribas said: "We may have dodged the bullet this time, but where are we going to be in six months time? This is not going to go away," The Times reports.

Sign up for our daily newsletter