Updated: 20/06/12 : 07:50:07
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Europe :: New Greek Government Expected Today

A coalition government could be formed by mid-afternoon today (Wednesday) in Greece, the head of the country’s socialist party has said.

Evangelos Venizelos, whose PASOK party came third in Sunday’s elections, said the socialists “will support this government sincerely and will participate in it in the most beneficial way in order to make it effective and credible”.

Later, a senior PASOK deputy said the timetable had changed somewhat, since talks between the socialists and the conservative New Democracy party had adjourned for the night and would resume today.

“We are trying to agree on the different points and we will resume discussions at 1pm,” said senior socialist MP Costas Skandalidis on leaving the Greek Parliament building shortly before midnight.

At the core of any administration would be Antonis Samaras’ New Democracy, which came first in Sunday’s vote and won 129 of Parliament’s 300 seats – short of the 151 needed to govern alone.

The radical left Syriza party, which finished in second place, with 71 seats, has refused to join any government that will implement the terms of Greece’s international bailout, under which the country has received billions of euros in rescue loans in return for deeply unpopular spending cuts and tax hikes.

Mr Venizelos, who handled Greece’s negotiations with its international creditors for several months last year as finance minister, said yesterday that due to Syriza’s stance, the government would have the support of the election winner, PASOK and the small Democratic Left party of Fotis Kouvelis, which won 17 seats.

“With Syriza’s refusal, the only practical solution now is the creation of a government with the support of New Democracy, PASOK, and the Democratic Left,” he said after several hours of negotiations. “I repeat that this government must be formed as soon as possible. As things stand now, this can be achieved by midday tomorrow.”

PASOK will convene its deputies this morning to define exactly how the party will participate, he said.
Although numerically Mr Samaras could form a government with just PASOK, which has 33 seats, both have sought a broader alliance that would be seen as potentially more stable and better able to weather the continuing storm of austerity measures taken in return for Greece’s rescue loans.

Such a government would broadly fulfill Greece’s pledges to its bailout creditors for further cutbacks and reforms, keeping the country within Europe’s joint currency. Otherwise, Greece would run out of cash and the continent could plunge deeper into a financial nightmare with global repercussions.

The austerity measures have left Greece struggling through its fifth year of a deep recession, with unemployment spiralling to 22% and tens of thousands of businesses shutting down.

Fury over the cuts that have seen salaries and pensions slashed in the public sector propelled Syriza, led by 37-year-old Alexis Tsipras, from 4.6% in 2009 to nearly 27% in Sunday’s election and gave anti-austerity parties more than 50% in total.

Mr Tsipras had campaigned on a strong anti-bailout ticket, vowing to scrap the country’s pledges and play tough with creditors – Greece’s European partners and the International Monetary Fund.

With public anger palpable, both Mr Venizelos and Mr Samaras say they will seek changes to some of the terms in Greece’s bailout deals, on which the country has depended since May 2010.

But they have pledged to respect the commitments for further austerity and reform.