Greek conservatives poised to clinch coalition deal
ATHENS |
(Reuters) - Greece's conservatives expect to be able to form a coalition
government with the Socialists on Tuesday, allowing the two parties
that dominated politics for decades to share power despite a major
anti-establishment election vote.
Conservative New Democracy
leader Antonis Samaras has promised to negotiate less punishing terms
for Greece's international bailout, after only narrowly beating a
radical left-wing party that campaigned to scrap the austerity deal
entirely.
A senior New Democracy
official expected agreement soon on a new cabinet with the PASOK
Socialists and possibly another smaller centre-left party following
Sunday's election, the second in as many months.
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Speaking
late on Monday, he said a deal would be reached on Tuesday that would
involve more than a symbolic involvement by PASOK in the government.
"They will participate actively," said the official, who declined to be identified.
New
Democracy and PASOK alternated in power from the fall of military rule
in 1974 until last year, when Greece's economic crisis forced the arch
rivals to share power in a pro-bailout national unity government.
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"Political
leaders should be aware of the fact that this government is Greece's
last chance to remain in the eurozone," the centre-left daily Ta Nea
said in an editorial.
"The Greek
people are ready to reward the parties that manage to ease austerity and
punish those that raise voices of dissent," it said.
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The
comment underscored the widespread expectation in Greece that a new
government will be able to negotiate an easing in the tough conditions
of the European Union and International Monetary Fund bailout despite
resistance from Germany.
Many
Greeks hold both parties responsible for the nation's near bankruptcy,
which forced it to take bailouts from the European Union and IMF in 2010
and again this year.
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New Democracy narrowly won the election, averting the immediate risk of a Greek euro zone
exit but raising doubts on whether the new government can impose
austerity cuts on a nation deeply divided over the price for bailout
funds.
After claiming victory over
the radical leftist SYRIZA party to jubilant crowds, Samaras began on
Monday the more sobering task of talking to rivals to cobble together a
coalition.
The greatly weakened
PASOK, which finished third in Sunday's vote, has yet to commit to
supporting Samaras, but its leader Evangelos Venizelos said talks must
be wrapped up by Tuesday - signaling a deal would be agreed by then.
The
smaller, moderate Democratic Left party, which opposed the bailout
backed by the conservatives and the Socialists, has also suggested it
will offer conditional support to a government led by Samaras.
Venizelos
was due to meet the head of Democratic Left, Fotis Kouvelis in the
morning to gauge support for a three-way alliance with their traditional
conservative rivals.
With Greece
just weeks away from running out of cash and a new government needed to
negotiate the next installment of funds from lenders, Greek political
leaders appeared determined to avert the deadlock that followed an
inconclusive vote on May 6.
"I am
optimistic that this time they will agree to form a government," a Greek
banker who declined to be named told Reuters. "They have realized that
there is no margin of error or further delays. A third election would be
a disaster."
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With New Democracy
taking a 50-seat bonus under Greek electoral law for coming first, a New
Democracy-PASOK alliance would have 162 seats, a majority in the
300-seat parliament. Adding the Democratic Left would give it 179 seats.
NATION IN CRISIS
A
difficult road lies ahead for Samaras, a U.S.-educated economist who
went to college with former Socialist Prime Minister George Papandreou.
He
inherits a nation in deep social and economic crisis, with an economy
in its fifth year of a recession that has left one in five workers out
of a job. A rising number of businesses are closing down, the number of
homeless on the streets is growing and anger at austerity cuts is at
boiling point.
Samaras promised Greeks and prospective partners that he would water down the painful terms of the EU/IMF bailout.
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"We
will simultaneously have to make some necessary amendments to the
bailout agreement in order to relieve the people of crippling
unemployment and huge hardships," he said.
Samaras campaigned on promises to cut taxes as well as raising unemployment benefits and pensions.
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The
New Democracy official said the new government would aim to accelerate
and broaden a privatization program to top up state but also ask its
creditors to spread 11.7 billion euros ($14.7 billion) of further
austerity cuts over four years instead of two.
But
any attempt to veer off the prescribed austerity path would not sit
well with European partners already irritated by what they see as the
slow pace of Greek reform. Germany, Europe's paymaster, has ruled out
more than minor delays to some targets in the 130-billion-euro rescue
package.
-
Chancellor Angela Merkel
said at a meeting of G20 leaders in Mexico that any loosening of
Greece's agreed reform promises would be unacceptable and reiterated
that Athens had to stick to its commitments.
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With
an emboldened SYRIZA bloc led by former communist student leader
Tsipras at the head of a powerful opposition, the new government could
face protests soon after taking office. SYRIZA almost doubled its share
of the vote since the previous election on May 6.
($1 = 0.7949 euros)
(Writing by Deepa Babington; Editing by Will Waterman)
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