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May 08, 2012

Greece appears unlikely to form government and heading to new elections and policy stalemate

Christian Science Monitor - Tsipras's party came in second Sunday, winning 52 of parliament's 300 seats with 16.8 percent of the vote. He has the presidential mandate to end the political impasse by forming a governing coalition by Thursday.

UPDATE- Forbes - the risk of Greece leaving the Eurozone has risen to 75%

An ECB board member, Fitch Ratings’ CEO, and the head of an important hedge fund have all publicly accepted a Greek exit as possible, while Citi reportedly raised its probability that the Hellenic Republic leaves the Eurozone by 2013 to 75%.

Antonis Samaras, head of the winning conservative party that has 108 seats, gave up on the same task after just a few hours Monday when Tsipras spurned his advances.

Tsipras urged Samaras and third-placed Socialist leader Evangelos Venizelos to renege on their support for the bailout commitments, asking them to "honestly repent for their disastrous choices that tore our society apart."

Greece has promised to pass new austerity measures worth €14.5 billion ($18.9 billion) next month and to implement other swift reforms. These will promptly be reviewed by its creditors, who will then decide whether to release or withhold the next batch of bailout funds.

But Samaras quickly blasted Tsipras' proposal as "unbelievably arrogant," warning it would "drag the country into chaos" and see it expelled from the eurozone.

Analysts suggested that the eurozone and IMF could give Athens a minimal lifeline of credit while Greece sorts out its political impasse or holds new elections.




But even then, there is little reason to believe that angry Greek voters would change their minds in a second ballot and give a comfortable majority to the pro-austerity parties New Democracy and PASOK, said Neil Mellor, an analyst at the Bank of New York Mellon.

Even if the two eked out a slim majority in the next election, they could not enforce the current bailout terms, he added.

Dimitris Mardas, an associate professor of economics at Thessaloniki University, said he believed there was room to negotiate a coalition government.

It would be mathematically impossible for Tsipras to govern without the support of Samaras' conservatives, because the isolationist Communists have ruled out any participation in government and no party will work with the neo-Nazi Golden Dawn.

If Tsipras fails, the mandate would then pass to Venizelos. If he is also unsuccessful, party leaders will hold a final effort to reach consensus. And if nothing comes from that, elections will take place within a month.


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