The Joplin Globe, Joplin, MO

Business

May 9, 2012

Greek coalition talks still deadlocked

ATHENS, Greece — Greece’s coalition talks remained deadlocked Wednesday, with conservative leader Antonis Samaras denouncing calls by the head of the radical left party to reject the country’s international bailout.

Alexis Tsipras, whose Radical Left Coalition came a surprise second in Sunday’s election, has been tasked with seeking partners for a governing coalition after Greeks deserted the two main parties in droves, angry at the pain that harsh austerity cuts have brought.

Tsipras is to meet both with Samaras — who heads the conservative New Democracy party that placed first with 18.9 percent and 108 seats in the 300-member parliament, and the socialist PASOK leader later Wednesday, as well as other party leaders.

Samaras himself failed to hammer out a coalition on Monday. If Tsipras also fails, the job will move on to former finance minister and PASOK head Evangelos Venizelos.

If no deal can be reached in the next few days, new elections will have to be called in the next month. The political uncertainty is causing consternation among Greece’s international creditors, who say the country must stick to the cost-cutting terms of its multibillion bailout.

Athens has promised to pass new austerity measures worth (euro) 14.5 billion ($18.9 billion) next month and to implement other reforms. These will be reviewed by its creditors, who will then determine whether to release the next batch of bailout funds that keep Greece solvent.

With the Communist Party refusing to join any government and no parties talking to the far-right Golden Dawn, which won 21 seats in Parliament, no coalition can be formed without Samaras. But the views between him and the radical left remain as wide apart as ever.

Tsipras has called for Greece to pull out of its bailout agreement, saying the election result proves that the austerity deal has lost popular support. Samaras says such a move would be catastrophic and force Greece out of the 17-nation eurozone.

“Denouncing the agreement, as (Tsipras) proposes, will lead to immediate internal collapse and international bankruptcy, with the inevitable exit from Europe,” Samaras said. “(Amending) the loan deal is one thing, it is a completely different thing to unilaterally denounce it. The second option leads to catastrophe that is certain and immediate.”

Samaras urged Tsipras to change his stance by the time the two meet.

“If he does not do this, it means that he is trying to build a broad anti-European front and to take us to elections again,” Samaras said. “The Greek people have not given a mandate to destroy the country, nor to leave the euro. Quite the opposite.”

Greece has depended on rescue loans from other European Union countries and the International Monetary Fund since May 2010, after decades of profligate state spending and mismanagement sent its debt and deficit spiraling.

In return for two international bailouts worth (euro) 240 billion ($312 billion), Greece has slashed pensions, salaries and state spending and imposed repeated rounds of tax hikes. The reforms have left Greece mired in the fifth year of a deep recession, with unemployment spiraling to above 21 percent.

In addition, just two months ago, banks and other private creditors wrote off over (euro) 100 billion ($130 billion) in Greek debt — the largest debt writedown in history.

Samaras insists he does not want new elections, and said he was seeking to create a broad center-right front that will ensure the country remains in the euro.

If the gap between the Radical Left Coalition and New Democracy cannot be bridged, one solution could be a partnership between the conservatives, PASOK which came a surprise third with a meager 13.18 percent and 41 seats, and the small Democratic Left party of Fotis Kouvelis. With its 19 seats in parliament and 6.11 percent of the vote, the latter is emerging as a potential kingmaker in any cooperation government.

Greek shares staged a modest recovery Wednesday after two days of big losses that sent the main Athens stock market down to its lowest level for nearly 20 years. By midafternoon, the main Athens exchange was up 0.2 percent.

The political uncertainty is causing concern among ordinary Greeks as well as international creditors.

“We are not happy with the results, because the chaos that there is at the moment in politics is also simultaneously in the country’s economy,” said Klea Vakifli, who runs a coffee shop near the Finance Ministry in central Athens.

Greece’s financial crisis has hit her business hard, reducing the 30 employees of two years ago to 20 now.

“(Business) is falling and falling and falling,” she said. “Although ... our products are very good and special, it seems people can’t do it, they can’t pay.”

 

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