After making a stunning gain in Sunday’s national elections, Greece’s leading leftist party on Tuesday appeared to run aground in its attempt to form a coalition government, adding to the turmoil in stock markets and raising the prospect that Greek voters will be back at the polls next month.
Just hours after Alexis Tsipras, of the Radical Left or Syriza party, issued his program as would-be prime minister – to renege on the bailout agreement Greece had reached last year with the European Union, halt further austerity steps and nationalize Greece’s banks – the main centrist party issued a stinging rebuff.
“Mr. Tsipras asked me to put my signature to the destruction of Greece,” said Antonis Samaras, the head of New Democracy, which remains the single biggest party in Parliament despite its battering in the polls. “I won’t do this.”
On Monday, Samaras, as leader of the biggest vote-getter in Sunday’s election, had been offered the first chance to form a government. He announced his failure six hours later.
Tsipras’ leftist coalition won 52 seats in the 300-seat Parliament – four times its number in the previous Parliament – but it is doubtful he can form a government without New Democracy’s 108 seats. Adding insult to injury, the 37-year-old Tsirpas was rebuffed by the Greek Communists, who have 26 seats, and even by the Ecologist Greens, who fell just short of the 3 percent of the vote needed to win seats in the chamber. Only the Democratic Left splinter party, which has 19 seats, agreed to join Syriza.
Shares on European markets closed at a four-month low Tuesday, with traders blaming the uncertainty over Greece’s willingness to carry out its obligations, including new austerity measures next month. The euro fell slightly against the dollar. Stocks in the U.S. also suffered, with the Dow Jones Industrial ending the trading day down 76.44 points.
Tsipras has until Friday to assemble his coalition, but it now seems beyond reach. The once mighty ruling PASOK party, which voters reduced to an ignominious third place Sunday, has even slimmer prospects, and the sole hope for avoiding elections is if the parties agree to a government of national unity, prospects for which are uncertain at best.
In voting no confidence in the main centrist parties Sunday, Greeks made clear that the EU austerity program, imposed largely at German behest, isn’t working and that no one wants the tough measures still to come.
Since September, diners at restaurants have seen a 23 percent tax added to their bills, a move that is sure to reduce the country’s competitiveness in tourism, its single biggest money-earner. Public servants already have taken substantial pay cuts, and national health care has been trimmed back. Next month, as a condition for release of international funds needed to pay government bills, some 300,000 public servants in the army, police, the fire brigades, courts, universities and health care service are to take salary cuts of $1,300 a month, and there are to be additional cuts in pensions and allowances on top of sharp reductions already imposed.
PASOK and New Democracy leaders, who had been in an uneasy coalition since November, had no choice but to make those cuts under the EU bailout agreement. Yet after Sunday’s vote, it isn’t clear how any future government can sign up for more austerity.
Walking away from commitments already made may be a different matter. Voters asked Sunday about reneging on the agreement said the country shouldn’t walk away from its sworn obligations, a position New Democracy officials stuck to Tuesday.
“We can go to the lenders and say that we need to renegotiate the timing of the salary cuts, but we cannot tell them, ‘I am not bound by any of this,’” said Stavros Papastavrou, the international secretary for New Democracy. “If the Radical Left insists on its maximalist goal, that is something the two main parties cannot support, and I’m sure the EU cannot support.”
Papastavrou told McClatchy that if the Radical Left adopted a more pragmatic stance of trying to get the EU to agree to changes in the timing of the cuts yet to come, New Democracy would agree. “We’d say, ‘Good luck, go to Brussels, bring your revolutionary spirit there, you have our support,’” he said. But if Tsipras insists on withdrawing binding letters of guarantee unilaterally, New Democracy could not be supportive. Lenders would tell Greece to “take a hike” if a Greek government were to announced it was reneging on the deal, he said.
The other possibility, though it seems remote, is for Germany to agree to the demand by France’s new president-elect, Francois Hollande, to add a plan to stimulate the European economies, something that would have the wholehearted backing of all the eurozone countries in fiscal hot water – Greece, Ireland, Italy, Portugal and Spain.
German Chancellor Angela Merkel, who’s under pressure from her own constituents to maintain a tough stance toward Greece, said Monday that it was "of utmost importance" that Greece sticks to its reform path, although she conceded that it would be difficult.
About the only hint that a stimulus package may be in the works came from Herman Van Rompuy of Belgium, the low-profile president of the European Union, who called a special meeting of heads of state for May 23, to focus on measures to boost growth in stagnant economies.
But it will be only an informal dinner, according to a Rompuy message posted on Twitter.