Greece remained mired in political stalemate Friday as talks on forming a coalition government stalled after inconclusive weekend polls boosted anti-austerity parties and rattled the eurozone.
As EU paymaster Germany threatened to cut off the country’s loan lifeline, party leaders failed to break ground on coalition talks which now hinge on an anti-bailout radical leftist party that shot to second place in the ballot.
Hopes for a breakthrough earlier in the day were dashed when a possible ally, the small Democratic Left, said it would not join a government without fellow leftists Syriza, a party that opposes the terms of the 240 billion euro (311 billion dollar) EU-IMF bailout.
“We will not participate in a government with (just) New Democracy and Pasok,” Democratic Left leader Fotis Kouvelis told party cadres, adding: “Unless Syriza changes stance we will have repeat elections.”
The Athens stock exchange shed 5.02 percent in late afternoon trade after closing up 4.19 percent on Thursday.
With Greek reforms already on hold owing to the election campaign, Brussels on Friday revised downwards its economic forecasts for Athens.
The European Commission said the Greek economy is expected to contract by 4.7 percent this year — compared to a Greek budget estimate of 2.8 percent — and saw zero growth next year.
And it cast doubt on Greek pledges to reduce the public deficit to 7.0 percent this year, favouring a 7.3-percent estimate instead.
Conservative New Democracy leader Antonis Samaras also said Friday a government cannot be formed without the Syriza party.
“There must be a durable government,” Samaras told a meeting of his party. “The Syriza party must participate, or give a vote of tolerance. It’s in their hands to decide what they want to do,” he said.
Socialist leader Evangelos Venizelos, who participated in the last government in a coalition with Samaras’ party, has been tasked with forming a coalition by late Saturday after earlier efforts by Samaras and Syriza leader Alexis Tsipras failed. He was scheduled to meet with the Syriza leader at 1600 GMT, but reports said he would give up the mandate on Saturday.
This would leave room for a last-ditch meeting between President Carolos Papoulias and the leaders of all the parties, which is likely to take place late Saturday or Sunday, in the hopes of forming an emergency unity government.
But new elections will have to be called if the parties cannot agree a compromise by next Thursday.
Sunday’s election punished the mainstream parties for their insistence on crippling austerity measures introduced in the wake of the bailout and alarmed Greece’s eurozone partners amid fears that vital reforms may be at risk.
