View this article online: https://www.insurancejournal.com/news/international/2012/06/18/251941.htm
Political parties supporting Greece’s international bailout begin forging a government on Monday after an election victory over radical leftists staved off the prospect of the debt-laden country leaving the euro and brought relief to global markets.
Conservative New Democracy leader Antonis Samaras called for broad support after winning Sunday’s election over the SYRIZA party, which said it would cancel the aid deal agreed in March to avert bankruptcy in defiance of the country’s lenders.
The result boosted the euro to a one-month high and Asian shares gained nearly 2 percent, but a pro-bailout coalition could be short-lived if it tries to squeeze more austerity measures from a population which says it cannot give any more.
“There is no time to waste,” Samaras told reporters in Athens as jubilant, chanting supporters waved blue party flags. “A national salvation government must bring economic growth and reassure Greeks the worst is over.”
With 99 percent of ballots counted, New Democracy had won 29.7 percent of the vote, ahead of SYRIZA on 27 percent. Samaras will need the PASOK Socialists, for decades Greece’s largest party, now humbled by angry voters, to form a government.
A 50-seat bonus given to the party which comes first would give New Democracy and PASOK 162 seats in the 300-seat parliament, in an alliance broadly committed to the €130 billion ($165 billion) bailout.
Relegated to third place in an earlier, inconclusive May 6 election, PASOK said it wanted a broad coalition that would include SYRIZA, but that the most important goal was to form a government and put an end to political uncertainty.
But gains in the markets were capped due to further questions over the debt crisis and over the finances of the bigger euro zone economies of Spain and Italy, which have seen borrowing costs rise near to unsustainable levels.
SUPPORT
PASOK officials told Reuters that a meeting on Monday would decide how they would support Samaras – by participating fully in government, or by voting with the coalition in parliament.
The new government might get a helping hand from its euro zone peers with Germany’s foreign minister suggesting Athens might get more time to implement the cuts demanded of it.
But most economists say even that would leave Greece, into a fifth year of deep recession, facing a program it cannot hope to deliver on.
The election result brought cheers at the headquarters of New Democracy and SYRIZA. The leftists rode a wave of discontent over austerity and corruption and see second place as a victory for a party that has long been on the fringes of Greek politics.
SYRIZA leader Alexis Tsipras, 37, made clear his was now the main opposition party, saying it would fight on against the bailout and take power sooner or later.
“Very soon, the Left will be in power,” the former communist and student protest leader told supporters in central Athens after conceding defeat. “We begin the fight again tomorrow.”
The result came as a relief for Greece’s EU and IMF lenders and euro zone partners who feared a SYRIZA victory would tip Greece over the edge and the common currency towards break-up.
But the vote revealed a society deeply split between its desire to stay in the euro and a deep-seated anger at salary, pension and job cuts that have hit the poorest while sparing a political and business elite seen by many as corrupt.
A protest vote looked set to give the ultra-right Golden Dawn party 18 seats, repeating its success of May 6 despite a now-notorious incident in which its spokesman threw water at one leftist opponent and slapped another during a TV debate.
Giorgos Argyropoulos, 25, a clerk at an electronics store who voted for SYRIZA said: “We will now have a strong parliamentary opposition to help overturn the bailout.”
Analysts say a pro-bailout coalition may not last, having commanded only slightly more than 40 percent of the vote and being pressed to make more savings from lenders.
More than two years of budget cuts have caused unemployment to jump to over 22 percent. Businesses are shutting down by the dozen and the homeless are multiplying on the streets of Athens.
RENEGOTIATE TERMS
Both New Democracy and PASOK have said they want to renegotiate the terms of the bailout to spread the burden over a longer period and take measures to boost growth.
Greece’s EU partners and the International Monetary Fund welcomed the pro-bailout parties’ victory, saying they were ready to work with the government that emerges. But EU officials have made clear Greece must stick to its pledges to receive more funding while hinting there may be some leeway at the margins.
“There can’t be substantial changes to the agreements but I can imagine that we would talk about the time axes once again, given that in reality there was political standstill in Greece because of the elections, which the normal citizens shouldn’t have to suffer from,” German Foreign Minister Guido Westerwelle said.
Even so, Greece is in a desperate situation.
Its caretaker government says the state has enough cash to last a few weeks and Athens has pledged to come up with an additional €11.7 billion [$14.83 billion] worth of spending cuts in June to merit the next loan installment.