Greece’s President Carolos Papoulias is to meet political party chiefs today in a last-ditch attempt to form a cabinet after inconclusive elections that have raised fears of a Greek eurozone exit.
The consequences would be much worse (for Athens) than for the rest of the eurozone
“The president will summon party leaders in a bid to form a government that will enjoy the backing of the parliamentary body that emerged from general elections on May 6,” the president’s office said in a statement yesterday.
The leaders of the conservative, radical left and socialist parties, which occupied the top three places after the polls but who all failed to form a government last week, will see Papoulias this morning.
The president will subsequently meet separately with heads of smaller parties elected to parliament on May 6, including the neo-Nazi Golden Dawn, Papoulias’ office said yesterday.
If the parties cannot agree a compromise by Thursday, when parliament is to be convened, new elections will have to be called in June.
Papoulias yesterday said there were “grains of optimism” that a cabinet could be formed between the conservatives, the socialists and a small pro-European leftist party, according to his office.
“Things are rather difficult,” he told socialist leader Evangelos Venizelos, noting that Greece needs to be represented at a eurozone finance ministers’ meeting tomorrow, a Nato meeting on Thursday and an EU summit on Friday.
Outgoing finance minister Philippos Sachinidis will represent Greece at the first meeting, reports said.
Venizelos told Papoulias that the three parties – New Democracy, Pasok and Democratic Left, who have a total of 168 deputies in the 300-seat parliament – could form a temporary two-year government to keep Greece in the euro.
The goal would also be to “drastically” improve the loan deal with the EU and the IMF, Venizelos said.
But Democratic Left has previously said it would not join a government made up of only Pasok and New Democracy that did not include Syriza, the radical leftist party that opposes the €240 billion EU-International Monetary Fund bailout for Greece. And Syriza yesterday refused to cooperate.
“This is an attempt to continue the politics of the bailout,” Syriza said.
“They have the numbers, let them proceed and assume their responsibilities before the people,” it said.
Two new opinion polls have shown that Syriza could even emerge as the victor if new elections are held in June.
The latest survey, a Metron Analysis poll published in yesterday’s Ependytis weekly, gave it 20.2 per cent of the vote.
And the inclusion of undecided voters would further boost the leftists to 25.5 per cent, the pollster said.
One in two respondents said Greece should be run by a centre-left government and 67 per cent said they would pick the same party as last Sunday.
The country’s international creditors have warned that no new loans will be forthcoming if it falters on structural reforms required to set the Greek economy in order after decades of overspending by the state.
A new warning came yesterday from paymaster Germany, whose central bank chief Jens Weidmann said: “If Athens doesn’t keep its word, it will be a democratic choice.
“The consequence will be that the basis for fresh aid will disappear.”
He shrugged off the prospect of Greece reverting to a drastically devalued drachma, saying, “The consequences would be much worse (for Athens) than for the rest of the eurozone.”
Highly-indebted Greece is deeply torn over the tough austerity measures imposed as conditions for IMF-EU bailouts, and the crisis has raised the spectre of it defaulting and even leaving the 17-member eurozone.
Voters last Sunday punished the mainstream parties and left a fractured political landscape amid intense EU pressure over Greek finances.
Pasok and New Democracy pushed through the austerity measures in the previous coalition government but failed to even win a majority between them in the elections.
Brussels on Friday revised downwards its economic forecasts for the country at the epicentre of the eurozone debt crisis.
The European Commission said the economy is expected to contract by 4.7 per cent this year and see zero growth next year.
Fitch credit rating agency warned that the emergence of a Greek government “unwilling or unable to abide by the terms of the current EU-IMF programme would increase the risk of Greece leaving the eurozone.”
“If they are required, the re-run elections will therefore be a critical event for both Greece and for the eurozone,” it said in a note.
Greece has already committed to finding in June another €11.5 bn in savings over the next two years. It also needs to redeem €435m in maturing debt on May 15.