* Socialist fails to form unity government
* President to hold final meetings with politicians
* Election likely in mid-June
* Leftist who opposes bailout leads in new poll
By George Georgiopoulos and Renee Maltezou
ATHENS, May 11 (Reuters) – Greece’s politicians failed on
Friday to agree a new government, sending the country hurtling
towards a new vote, with radical leftists leading in the polls
and poised to scrap the 130 billion euro bailout that staved off
bankruptcy.
The prospect of a new election just weeks after an
inconclusive vote that paralysed the most troubled country in
the euro zone caused havoc in financial markets.
The European single currency hit its lowest point since
January near $1.29, while the Athens stock exchange fell
more than 4 percent to its lowest level since 1992.
Outgoing finance minister Evangelos Venizelos, leader of the
Socialist PASOK party, acknowledged his failure to form a
government after he was spurned by radical leftist Alexis
Tsipras, who has sworn to tear up the bailout.
“The moment of truth is here. I will inform the president
tomorrow afternoon. I hope everybody shows maturity and
responsibility in consultations with the president,” he said.
President Karolos Papoulias will now have a last chance to
meet with all political leaders to convince them to agree a
cabinet, although the odds of success are seen as scant. If he
fails as expected, he must call a new election for mid-June.
Venizelos had tried to form a unity coalition government,
but the offer was brushed aside by Tsipras, who saw it as a
scheme to salvage the bailout that most voters rejected.
“It is not the Left Coalition that has refused this
proposal, but the Greek people, who did so with their vote on
Sunday,” Tsipras said.
Venizelos’s PASOK party and its conservative New Democracy
partners dominated the country for generations but were punished
by voters for jointly agreeing the bailout. Sunday’s vote saw
their combined share fall to 32 percent from 77 percent.
Still, they had come close to forming a government because
of a rule that gives the single largest party – New Democracy –
an extra 50 seats in the 300-seat house, an advantage they are
now poised to lose.
A new poll showed Tsipras’s SYRIZA headed for first place
after consolidating the anti-bailout vote, which means he would
take the 50 bonus seats and reduce the pro-bailout contingent to
only about a third of parliament.
Greek politics would be radically transformed and a
thunderbolt felt across Europe, where voters are turning against
German-backed austerity, and where the once iron-fast principle
that no country could leave the euro currency is now in doubt.
“I appeal to the sense of national responsibility of all
(Greek) political leaders to reach an agreement respecting the
country’s engagement and ensuring its European future,” European
Council President Herman Van Rompuy said.
The overwhelming majority of Greeks still want to stay in
the euro. Tsipras’s party says that can be achieved without
accepting the terms of the bailout, which was hammered out
earlier this year when Greece was weeks away from running out of
funds.
“They will be begging us to take the money,” SYRIZA deputy
Dimitris Stratoulis said of the bailout, arguing that European
leaders would not dare risk a Greek exit from the euro that
would wreck the single currency project.
But European leaders say they are determined to halt Greek
funding if Athens rejects the bailout terms, even if that means
pushing it into bankruptcy and a costly exit from the currency.
“We will only give it if Greece meets all agreements.
Otherwise they won’t get the money,” Dutch Prime Minister Mark
Rutte said.
TSIPRAS TAPS VOTER FURY
Backers of the bailout say the wage cuts, tax hikes and
economic reforms demanded by Brussels are the only way Greece
can hope to become solvent. Opponents say it is self-defeating –
making Greece’s debt problem worse by destroying its chances of
economic growth and imposing extreme hardship on a population
already enduring five years of recession.
The younger generation has been hit particularly hard – more
than half of Greek youth are unemployed. They appear to have
found a hero in Tsipras, a boyish 37-year-old civil engineer,
ex-Communist and former student leader.
In a country fed up with middle-aged party dynasts widely
seen as corrupt, he has become a star – aided by a
self-confident manner and good looks.
Samaras and Venizelos may be hoping Greeks – frightened by
the prospect of a hasty exit from the euro – will return to
their traditional parties in a vote re-run.
But the first opinion poll since the election showed the
main beneficiary of a new vote would be Tsipras. It gave SYRIZA
27.7 percent of the vote, almost 11 points up on its Sunday
result, and well ahead of New Democracy on about 20 percent.
Ratings agency Fitch said the emergence of a government that
disavowed the bailout terms would increase the chance of Greece
leaving the euro zone, an event it said would put the credit
ratings of all euro countries at risk.
Greece could run out of money as soon as the end of June.
The prospect that Greece might declare bankruptcy and leave the
euro caused panic across the euro zone last year. Since then,
European banks have written off the value of most of their Greek
debt, making them less prone to shock if Greece defaults.
