Greek parties try to form coalition government

18 Jun 12
Yesterday’s Greek election produced a narrow victory for the pro-bailout party New Democracy, which is expected to try to form a coalition with the socialist Pasok Party

By Mike Thatcher | 18 June 2012


Yesterday’s Greek election produced a narrow victory for the pro-bailout party New Democracy, which is expected to try to form a coalition with the socialist Pasok Party.

New Democracy garnered 29.7% of the vote, giving it 129 of the 300 seats (as the leading party in Greece is automatically handed an extra 50 seats). It was followed by Syriza, the main anti-bailout party, which received 26.9% (71 seats) and Pasok, which gained 12.3% (33). The remaining seats went to Independent Greeks (20), the extreme Right Golden Dawn (18), Democratic Left (17) and Communists (12).

The result buys the country some time, reducing the prospect of an early exit from the euro.

Antonis Samaras, New Democracy leader, said there was ‘no time to waste’ in creating a ‘national salvation government’. He met Greek president Karolos Papoulias this morning and has been given three days to form a government.

‘Today the Greek people have expressed their will to stay anchored with the euro, remain an integral part of the eurozone, honour the country’s commitments and foster growth. This is a victory for all Europe,’ Samaras said.

Although his party is considered to be pro-bailout, Samaras has said that he will seek changes in the terms of the bailout agreement recently reached with the European Union and International Monetary Fund.

Financial markets in Europe and Asia initially reacted positively to the election result, but have since fallen back.

Megan Greene, director of European Economics at Roubini Global Economics, said the election result returned Greece to the ‘utterly unsustainable status quo’. She predicted that continuing austerity in the country would lead to the return of social unrest and inevitably fresh elections.

‘The Greek electorate will eventually put in place a government willing to consider alternatives to the current path of retrenchment and bailouts and will choose to exit the eurozone,’ she wrote on the Public Finance International blog.

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