Greece: Still No Government As Eurozone Exit Fears Mount

By Andy Dabilis

Greek political leaders have been stymied in a bid to form a coalition government after deadlocked May 6th elections failed to give any party a mandate. Last-ditch talks led by Greek President Karolos Papoulias yielded little progress despite pressure from international lenders that rescue loans could be cut off and the country forced to leave the eurozone.

Papoulias met with the heads of the top three finishers — the New Democracy conservatives who won with 18.8% of the vote, the surprise second-place Coalition of the Radical Left SYRIZA, and the PASOK Socialists, who finished a dismal third.

While New Democracy and PASOK support austerity measures demanded by the EU-IMF-ECB Troika as a condition of two bailouts totaling 239 billion euros, SYRIZA and the four other parties who won enough votes to gain seats in the parliament oppose them.

“They’re asking for accomplices to austerity. We can’t take part in this crime,” SYRIZA’s leader, Alexis Tsipras, 37, said.

New Democracy leader Antonis Samaras told reporters that coalition talks would continue while PASOK’s new leader, Evangelos Venizelos, said there was “limited optimism,” but that the party was preparing for new elections.

German officials, whose country is footing much of the bailout bill, have issued dire warnings of an economic apocalypse for Greece if a new government isn’t formed in favour of more pay cuts, tax hikes, slashed pensions and mass firings of workers.

Elections will be held June 17th if Papoulias fails to get the squabbling party leaders to form a coalition. Adding to the pressure, the Troika withheld 1 billion euros of a 5.2 billion-euro loan payment to Greece, with the money instead going into an escrow account to pay banks and investors.

Haralambos Tsardanidis, who heads the Athens-based Institute for International Economic Relations, said Tsipras may have changed the dynamics. “He wants to renegotiate the philosophy,” he told SETimes. “The EU wants to relieve a little bit of the austerity.”

He said dueling gambits between the EU and Greek anti-austerity parties were worrying. If the loans stop and Greece leaves the eurozone, the troubled banking sector could collapse.

While the impasse seemed set to continue, the country’s political leaders differed over what the elections results meant. Tsipras, a former Communist Youth party leader, said they showed adamant opposition to austerity — although about 77% of Greeks said they still wanted to stay in the eurozone — while Samaras and Venizelos said it meant a contradictory pro-European but anti-austerity stance.

“The Greek people have not just sent a message, they have issued an order to change policy but to remain in Europe,” Samaras said.

George Tzogopoulos, a research fellow at the Hellenic Foundation for European and Foreign Policy in Athens, said the lack of developments were troubling. “It looks like it’s impossible for a government to be formed,” he told SETimes.

He said the election, with 68% of Greeks voting against austerity, sent a message to the Troika. “The problem can’t be renegotiated to the extent that politicians want,” he said.

The austerity measures, implemented two years ago, set off protests, strikes and riots that brought down the previous government led by former PASOK leader George Papandreou, who resigned six months ago.

Tzogopoulos said that most Greeks feel that New Democracy and PASOK, which have alternately ruled for 38 years, are responsible for the crisis by packing public payrolls with hundreds of thousands of needless workers in return for votes.

“Where the EU might exert more pressure is the application of more austerity — but this society is exhausted, so you can imagine what might happen,” he said.

Greece is roiling the EU and stoking fears in world markets. “This is the collapse of the two-party system; Greece is creating a new political system,” Marios Evriveavis, an assistant professor of international relations at Panteion University in Athens, told SETimes.

“The Troika realises the people have spoken and the new developments are against their prescriptions. They can’t handle Greece being pushed out. There is a lot of scare-mongering going on.”

Working-class Greeks watched with bewilderment.

Hairdresser Eleni Dimaki, 44, said her business is way off. “Women aren’t coming to have their hair done as much. It’s a luxurious habit,” she told SETimes. “I feel scared at the idea of the country going bankrupt but I don’t know will happen if we return to the drachma. The politicians are still playing games.”