‘The eurozone’s weakest link just got weaker.’ So says Tristan Cooper, sovereign debt analyst at Fidelity Worldwide Investment, on the results of Sunday’s Greek elections. The four parties who said they would continue the country’s austerity programme won just 36.4 per cent of the vote between them. The two of those that won parliamentary seats — centre-right New Democracy and centre-left Pasok — fell just short of a combined majority (they now hold 149 of the 300 seats). And now ND leader Antonis Samaras has admitted defeat in his efforts to form a coalition.
The impasse has come about because of the anti-austerity parties’ refusal to join New Democracy in government, and Pasok’s refusal to join a government without any other leftist parties — perhaps they’ve learnt from the Lib Dems’ tribulations here. After being rebuffed by his various potential partners, Samaras said he had ‘returned the mandate’ to President Papoulias, meaning that it now falls to Alexis Tsipras — leader of the Coalition of the Radical Left or ‘Syriza’ — to try to form a government. Tsipras will now have three days to achieve what Samaras couldn’t and form a coalition, otherwise that ‘mandate’ will pass on to Pasok leader Evangelos Venizelos and, if no agreement is reached, new elections will be held, probably within two months.
Tsipras’s aim is to put together a coalition of parties who are opposed to the anti-austerity measures. That would hasten Greece’s exit from the eurozone, a move Klaus Regling — head of the European Financial Stability Facility — has called ‘a catastrophe for Greece’. But that coalition seems pretty unlikely: to command a majority Tsipras would have to bring together his and other left-wing parties with fascists Golden Dawn.
So it looks as though we can expect another round of elections pretty soon. With the Athens Stock Exchange having fallen by seven points since the weekend, and Greek 10 year government bond yields rising to 23 per cent, Greece can ill-afford much more uncertainty.
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