Greek voters punish outgoing coalition for austerity drive

Agence France-Presse
The ruling coalition in Greece was routed in elections, leaving the country's future hanging in the balance

ATHENS, Greece – Greek voters delivered a stunning anti-austerity election verdict Sunday, punishing the ruling coalition and leaving the country’s political future and the eurozone’s stability hanging in the balance.

Greece’s two-party coalition, which imposed a harsh austerity programme in return for an international bail-out, was routed near-complete official figures showed early Monday.

The Socialist Pasok party and the conservatives of New Democracy (ND) scored just 32.4% between them, plummeting from 77.4 percent in the 2009 vote, according to interior ministry figures based on 95% of the vote.

That makes it extremely difficult for the two parties to pursue the public spending cuts agreed in return for the multi-billion euro bail-outs from the European Union, International Monetary Fund and European Central Bank.

Having barely escaped bankruptcy earlier this year, Greece now looks likely to plunge into a fresh political and economic crisis, with shock waves that could also destabilize other eurozone economies.

While the conservative New Democracy scraped into first place in the election, it was with the party’s lowest ever score: 19.6% of the vote, winning them 109 seats in the 300-seat parliament.

In second place came the leftist, anti-austerity Syriza party, with 16.6% of the vote and 51 seats, more than tripling its 2009 showing.

The once-mighty Pasok was reduced to third place, its vote more than halved to 13.31% — 41 seats — the voters’ deserting it for having pushed through punishing public spending cuts.

But the election also fragmented the political landscape, with voters sending at least seven parties to parliament, two more than previously.

And one of the newcomers is the neo-Nazi Hryssi Avgi (Golden Dawn), breaking into parliament for the first time in nearly 40 years.

Wave of crime

The party’s claims that immigrants had stolen Greeks’ jobs and were responsible for a wave of crime found an audience in a country struggling with 20 percent unemployment and rising poverty.

Its 6.9% of the vote should give it 21 deputies, according to the latest ministry figures.

“May the God of Greece help us,” socialist leader Evangelos Venizelos said as he called for the formation of a “national unity government” among pro-European parties.

But more than 50 percent of Greeks cast votes for parties opposing the public spending cuts that attached to the bail-out.

They include a new nationalist party called Independent Greeks and the staunchly Stalinist Communist party who between them could elect nearly 60 deputies.

The election’s nominal victor, New Democracy leader Antonis Samaras, nevertheless said he would piece together a unity government to keep Greece in the euro and seek better terms from the country’s EU-IMF creditors on growth.

“We are ready to assume the responsibility of forming a national salvation government with two exclusive goals: to keep the country in the euro and amend the policies of the memorandum,” Samaras said late Sunday.

In a week’s time, the new Greek government must redeem 436 million euros ($571 million) of debt, held by private creditors who turned down a swap last month

It must also recapitalize Greek banks that sustained heavy losses in that swap, which cut some 106 billion euros from Greece’s near- and mid-term debt of more than 350 billion euros.

And Greece’s previous administration had already promised its EU-IMF creditors that in June it would find another 11.5 billion euros ($15 billion) in savings through 2014.

“Everything points to a coalition government,” said the top-selling Ta Nea daily, which traditionally supports the socialist party.

“Regardless of developments in Europe, Greece will need a government of the broadest consensus possible, and a strong, prestigious prime minister,” liberal Kathimerini daily added.

“Such a government will have a much stronger hand in negotiation than an anti-memorandum alliance,” it said.

Forming a government

The head of state, President Carolos Papoulias, is expected to give New Democracy the mandate to form a government later on Monday, 60-year-old Samaras told reporters outside party headquarters.

Under the constitution, the conservatives would then have 3 days to form a government before the mandate passes to Syriza.

If they fail, Syriza’s young leader Alexis Tsipras will get his chance to form a left-wing government to reject the terms of the eurozone country’s bail-outs.

“The parties that signed the memorandum (with the EU and the IMF) are now a minority,” Tsipras, 37, told reporters.

“The public verdict has de-legitimised them.”

Greece’s creditors, not least paymaster-in-chief Germany, the main proponent of austerity before growth — despite growing criticism across Europe — have little appetite to loosen the bail-out terms, let alone consider a third rescue.

In ominous comments widely quoted by Greek newspapers on Saturday, German Finance Minister Wolfgang Schaeuble said that if Greece’s new government deviated from its commitments, the country would “bear the consequences.”

In early trading in Asia Monday, the markets reacted with alarm, the euro hitting a more than three-month low.

Tokyo had tumbled 2.62 percent by the break, Hong Kong slumped 2.45 percent, Sydney fell 1.51%, Seoul shed 1.70%, Wellington was 0.40 percent lower and Shanghai lost 0.41%. – Agence France-Presse