Ahhhh, Parliamentary systems…This will be rather interesting to watch, do read to the end.
New Democracy leader Antonis Samaras said he failed to forge agreement to form a new Greek government after elections that raised questions about the country’s euro membership and triggered the biggest stock-market drop in six months.
“I tried to form a coalition government with two goals: that the country remain in the euro and bailout policies change to include growth measures,” Samaras said in a statement on state-run NET TV today. “I did what I could to get a result but it was not possible. As such, I have informed the president of the republic and handed back the mandate.”
Samaras gave up his bid after nearly six hours of talks in Athens. The attempt to form a government will now pass to Alexis Tsipras, the head of Syriza, the second biggest party, which has vowed to cancel the bailout terms. Tsipras will see President Karolos Papoulias tomorrow at 2 p.m. Athens time.
Samaras had been given three days from today to put together a coalition from an assembly split down the middle on whether to renege on the terms of the two bailout agreements negotiated since May 2010. New Democracy and the socialist Pasok party, rivals until the country’s crisis made them partners in a national government last year, are two seats short of the 151 seats needed for a parliamentary majority.
New Democracy Leads
New Democracy led in the election, receiving 19 percent of the vote and 108 seats in the 300-seat Parliament. Syriza got 17 percent to score 52 seats; Pasok came third with 13 percent and 41 seats.
As voters across Europe rebel against austerity measures imposed to stamp out the debt crisis, Citigroup Inc. said today that the risk of Greece leaving the euro by the end of 2013 has risen as high as 75 percent. Yesterday’s election propelled into Parliament a party that wants to put land mines on the border with Turkey and another that wants Germany, the country’s biggest donor, to pay World War II reparations. The benchmark ASE Stock index plunged 6.7 percent in Athens today, its biggest drop in six months.
Greece plans to sell 1 billion euros ($1.3 billion) of 26- week Treasury bills tomorrow, according to a May 4 statement by the Greek Debt Management Office. Acting Greek Finance Minister Filippos Sachinidis declined to comment on the country’s cash reserves when contacted by Bloomberg News today by phone.
Samaras got his first rebuff today from Tsipras, who repeated his plans to forge a coalition of leftist parties that will overturn the bailout policies. He said Samaras’s endorsement of the second rescue package for Greece this year and the austerity measures are “policy positions opposite to the left’s alternative plan for cooperation.”
“There cannot be a government of national salvation, as he calls it, since the signatures and his commitments are not salvation, but tragedy for the people and the place,” Tsipras said in a statement after the meeting.
Pasok leader and former Finance Minister Evangelos Venizelos repeated his call for a national unity government in which all pro-European parties would join and which could begin talks with international lenders on relaxing bailout terms.
Democratic Left, which won 19 seats in Parliament and rejects austerity measures yet is in favour of remaining in the euro, said it planned to listen to all approaches before taking a position.
Quit the Bailout
“Our election pledge is clear: a government of wide popular legitimacy which must secure Greece’s place in the euro area and to proceed with disengagement from the bailout,” Fotis Kouvelis, the Democratic Left leader, said after meeting Samaras. “Each political party must define its stance on these two points.”
Independent Greeks leader Panos Kammenos declined to meet with Samaras, NET TV reported, without saying where it got the information. Kammenos’s party secured 33 seats in the parliament. Communist Party of Greece chief Aleka Papariga, which wants to withdraw from both the European Union and NATO also refused to meet Samaras. Samaras didn’t approach Golden Dawn, the far-right anti-immigrant nationalist party.
The pro-bailout camp of New Democracy and Pasok has neither the seats nor political legitimacy, since they only got 32 percent of the vote, to form a new government and “the search for a third partner is very likely to fail,” Wolfango Piccoli, an analyst at Eurasia Group in London, said in a note.
“Greece is unlikely to have a strong, stable government any time soon, raising political uncertainty and potentially putting its bailout at risk,” Piccoli said.
If Tsipras also fails to get the necessary number of seats, the onus on forming a government will pass to Pasok. Each mandate can last for three days.
If the process fails to yield a coalition, President Papoulias must try to broker a government of national unity, the constitution says. If that process fails, the Greek constitution stipulates that new elections are to be held.
Greece’s ASE Stock Index dropped as much as 8.3 percent to 632.77 points, close to the 20-year low of 626 hit in January. Shares of Alpha Bank SA fell 19 percent. National Bank of Greece (TELL) SA, the nation’s largest lender, dropped by 8.3 percent. The euro also fell as French socialist Francois Hollande defeated Nicolas Sarkozy in the country’s presidential election yesterday. The euro declined to $1.2955, the weakest since Jan. 25, before trading 0.2 percent lower at $1.3064 at 2:12 p.m. New York time.