Greek parties stage last bid to avert new election

The leaders of Greece's once-dominant political parties made a last push on Friday to avert a new election, which a poll showed would give victory to a radical leftist and doom an EU bailout.

The majority of Greeks want to stay in the euro zone but voted last Sunday for parties that reject the severe terms of a bailout negotiated with foreign lenders last year. European leaders say Greece will be ejected from the common currency if it turns its back on the package of tax hikes and wage cuts.

Socialist PASOK leader Evangelos Venizelos, whose party once towered over Greek politics but placed a distant third in Sunday's election, is the last politician to have a chance to form a government.

He met conservative rival Antonis Samaras, whose New Democracy party came first in the election, but who has already failed to form a coalition. If Venizelos fails as well, all parties will have one last chance to try before a new election must be held in the coming three to four weeks.

After the meeting, Samaras told lawmakers from his party he was trying to avert a new election but was not afraid of one.

"We are fighting to form a government and there are still hopes for this," he said.

A new vote could be catastrophic for Samaras, whose party benefited on Sunday from a rule that gives 50 bonus seats to the group that placed first.

In a re-run he stands to lose those seats to Alexis Tsipras's hard left SYRIZA - wiping out more than a third of the pro-bailout contingent in the 300-seat parliament and making it inconceivable that the next government would back the austerity package.

PASOK and New Democracy jointly negotiated the 130 billion euro ($168.5 billion) EU/IMF bailout in a reluctant coalition last year and now are the only parties in parliament that support it.

They say the bailout saved Greece from bankruptcy, but most of the public believes its tough conditions make it impossible for Greece to resume economic growth and emerge from five years of recession that has profoundly worsened the quality of life.

Enraged voters punished PASOK and New Democracy by reducing their combined share of the vote from 77 percent to 32 percent at last Sunday's election. Even with the 50 bonus seats they were two seats short of forming a coalition.

Samaras and Venizelos may be hoping Greeks, frightened by the prospect of hasty ejection from the euro, will return to the traditional mainstream parties if the election is re-run.

But the new opinion poll showed the main beneficiary of a new vote would be Tsipras, a 37-year-old former civil engineer and student leader who demands the bailout be torn up.

His boyish charisma has made him a star for young Greeks fed up with the middle aged major party dynasts that are widely condemned as self-serving and corrupt.

The first opinion poll to be published since the election showed SYRIZA would win with 27.7 percent of the vote, almost 11 points up on their election result, consolidating votes that had been split among smaller anti-bailout groups.

If SYRIZA were to win the 50 bonus seats for first place, the marginalization of once-mighty parties that ruled Greece for generations would be complete, and their bailout a dead letter.

"Ready to Fight"

Venizelos's hopes of reaching a last-ditch deal have rested with the Democratic Left party, a small moderate group.

But its leader, Fotis Kouvelis, insisted on Friday he would not join a coalition with the pro-bailout parties. He has called for a coalition of all parties which would gradually withdraw from the loan deal.

Samaras said Kouvelis's proposal for an all-party government was not far from his own position. But it is hard to see SYRIZA's leftist Tsipras agreeing to join it unless it decisively repudiates the bailout, especially with polls showing him favored in a new election.

Kouvelis said: "If SYRIZA doesn't change its stance we will head to elections. We didn't want these elections, we did everything we could and even more to avoid them. But if there are elections, we are ready to fight."

The political deadlock has prompted warnings by European leaders that Greece could be thrown out of the euro if it does not stick to the spending cuts and economic reforms they demand.

German Finance Minister Wolfgang Schaeuble said Europe and the International Monetary Fund were still determined to help Greece, but it could not be helped if it did not help itself.

Greece could run out money as soon as the end of June when the IMF and EU are due to grant it the next 4 billion euro tranche of their loan package. Officials say they will not give Athens the money unless it has a government in place that renews its commitment to the terms agreed last year.

"We do not have an infinite amount of time. Time is flying because there are financing needs, but the first steps have to be taken now from the Greek side," European Central Bank governing council member Ewald Nowotny said in Vienna.

The German finance ministry said the late June tranche of loans could not be released without a thumbs up from EU, European Central Bank and IMF inspectors.

A senior SYRIZA party official said European leaders were bluffing by threatening to eject Greece from the euro.

"They will be begging us to take the money," said Dimitris Stratoulis, saying Greece's exit from the euro would trigger the collapse of the euro zone.

The prospect that Greece might declare bankruptcy and leave the euro caused panic across the single currency zone last year. But since then, European banks have written off the value of most of their Greek debt, which makes them less susceptible to shock if Greece should default.

($1 = 0.7716 euros)

[Source: By Lefteris Papadimas and George Georgiopoulos, Reuters, Athens, 11May12]

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