Greece raced to form a coalition with broad support by the end of Monday after an election victory by pro-bailout parties which eased fears of a Greek eurozone exit and brought relief to world markets.
“There is a categorical imperative to form the government” today, President Carolos Papoulias said before giving a formal mandate for negotiations to conservative leader Antonis Samaras, whose New Democracy party won the election.
“The country cannot remain ungoverned for even an hour,” Papoulias said. The 61-year-old Harvard-educated Samaras said: “A national agreement is an imperative called for by everyone. We need to resolve the question immediately.”
He also said there should be amendments to the conditions of an EU-IMF bailout deal “so the Greek people can escape from today’s torturous reality.”
New Democracy won 129 of the 300 parliamentary seats in Sunday’s vote, opening the path for a coalition with the third placed socialist party Pasok, which has 33 but has called for other leftist parties to be included.
Europe and the United States urged Greece to act quickly to form a new government and proceed with urgent reforms in order to meet the terms of bailout loans that have kept the Greek economy on life support for the past two years. The anti-austerity leftist Syriza party and its firebrand leader Alexis Tsipras came second with 71 seats. It has ruled out joining a coalition, saying the harsh conditions for the bailout deal should be scrapped altogether.
“It would be disastrous to continue salary and pension cuts,” Tsipras said.
“There must be a government soon, and we must take on the role of the main opposition party, to keep the government in check,” he said. The eurozone is hoping the result can draw a line under a lengthy period of uncertainty that has unsettled markets.
Global stock markets initially rallied after the result and the euro rose against the dollar but those gains quickly petered out. In foreign exchange deals on Monday, the euro was just up, at $1.2648 from $1.2644 late on Friday in New York. The Athens stock exchange hit seven percent before midday but the gains were clipped to 4.09 percent in late afternoon trade.
“There is no alternative to a coalition between the right and the socialists since the key issue at stake was the formation of a pro-euro government,” Thomas Gerakis, head of the Marc polling institute, told AFP. Political analyst Yiannis Loulis said: “The government will be fragile, with a fragile popular base, and I do not think it is going to last very long.
“It was mainly a vote of fear against the exit from the euro, not a real support of the reforms,” he said.
