(Reuters) – Greek Socialist leader Evangelos Venizelos will make a last- ditch attempt to form a government on Thursday and avoid a new election after voters rejected a bailout deal and pushed Greece into a political crisis.
Chances are slim that Venizelos can clinch a deal after both the conservatives and leftists failed to cobble together a coalition in three days of talks following Sunday’s election, when voters spurned big parties and their austerity policies.
The deadlock prompted European threats to eject Greece from the euro, while impatient governments withheld part of the latest tranche of rescue funds to be paid to Greece on Thursday.
With new elections likely in three or four weeks and Athens, due to run out of cash in June, needing to impose new austerity measures in exchange for funds, the financial daily Kerdos to warn on its front page: “Time is running out.”
Venizelos said he would continue efforts to form a government “because it is in the nation’s interest”.
“Prolonging this uncertainty only hurts the country and its economy, and in the end, the weakest and the unemployed,” he told reporters.
But the mood was somber when radical Left Coalition leader Alexis Tsipras abandoned his efforts after meeting political leaders and a raft of new groups propelled into parliament by public anger at mainstream parties.
The biggest party, New Democracy, tried and failed to form a workable coalition within hours on Monday and there seemed to be little ground for compromise between the pro- and anti-bailout parties, split almost down the middle in the new parliament.
Tsipras demanded that New Democracy and PASOK, which ruled Greece for decades and were ravaged in Sunday’s poll, tear up the pledges they made in return for the bailout, which they rejected out of hand.
DIRE WARNINGS
European Central Bank policymaker Ewald Nowotny, said Greece could not be helped if it would not help itself, in a stern warning that euro exit was in the cards.
Most Greeks may oppose the terms of a 130-billion-euro ($168.11-billion) IMF/EU bailout agreed in February but want to stay in the euro.
European governments kept the country solvent for the moment by agreeing to make a 4.2 billion euros payment on Thursday from the region’s bailout fund to enable Athens to meet short term bond redemptions. But, in a sign of growing displeasure at the impasse in Athens, a further 1 billion euros was withheld, probably until next month.
Angela Merkel, leader of euro zone paymaster Germany, said in a newspaper interview that she wanted Greece to stay in the common currency but it must stick to the terms of the bailout. A senior lawmaker in her coalition said a disorderly Greek default would be less worrying now than it was a few months ago because the European Union is better prepared.
Many Greeks seemed unfazed by the crisis created by the election, with conservative daily Kathimerini writing in an editorial: “Greeks have lived through more than two years of constant fear and threats about what may be around the corner. It may be that they’re immune to it now.
But on the streets of Athens, some expressed alarm.
“People voted with anger not with reason,” said 51-year-old widow Maria Savelona. “Tsipras lives in his own world. God help us, what is this? I’m afraid we will be kicked out of the euro and he thinks he is our savior?”
Greece’s turmoil, and the prospect that it could revive the euro zone debt crisis, helped drive the euro towards a three-month low and pushed down global shares.
(Additional reporting by Karolina Tagaris, Renee Maltezou, Tatiana Fragou, Ingrid Melander and George Georgiopoulos; editing by Elizabeth Piper)