Syriza Says It Won’t Join Greek National Unity Government

Syriza Party Leader Alexis Tsipras
Syriza Party Leader Alexis Tsipras. Photographer: Simon Dawson/Bloomberg

Greece’s biggest anti-bailout party, Syriza, said for the second time in as many days that it won’t join a unity government, pushing the country closer to new elections that have sparked concerns about a euro-area exit.

“Syriza won’t betray the Greek people,” leader Alexis Tsipras said in statements televised on state-run NET TV after a meeting brokered by President Karolos Papoulias between the party and the leaders of the New Democracy and Pasok parties. “We are being asked to agree to the destruction of Greek society.”

Papoulias began a final bid to coax the three biggest parties into a coalition today after a week of talks which failed to deliver on mandates to form governments. He will meet later today the leaders of the four other parties to probe the likelihood of forming a national-unity government. If Papoulias’s efforts fail, new elections will need to be called.

Greece’s political impasse since inconclusive general elections May 6 has raised the possibility another vote will have to be held as early as next month, with polls showing that could boost anti-bailout Syriza to the top spot. The standoff has reignited concern the country will renege on pledges to cut spending as required by the terms of its two bailouts negotiated since May 2010, and, ultimately, leave the euro area.

Mandates Returned

Evangelos Venizelos, the socialist Pasok leader, returned the third, and final, mandate to Papoulias yesterday after Tsipras turned down an appeal by the smaller Democratic Left party to join a coalition.

Papoulias’s efforts will now focus on Democratic Left, to see if he can persuade them to join a government. Democratic Left has said that Syriza, the second-biggest party, must be part of its proposed unity government.

Tsipras said the three pro-bailout parties may proceed, a departure from his statements on May 11 when he said he hoped that Democratic Left would stick to pledges to not join such a government without Syriza.

“The three parties that have agreed on the policy framework for a two-year government to implement the memorandum have 168 lawmakers in the new parliament,” which has 300 deputies, he said. “They have the majority so let them proceed. Their demand for Syriza to join their planned agreement is illogical.”

‘Shameful’ Statements

Democratic Left party said Tsipras’s statements today were unjustified.

“Yesterday he called on us to stand fast to our positions that we not participate in a government without Syriza,” the Athens-based party said in an e-mailed statement. “Today he declares that we have agreed with Pasok and New Democracy on a government to support the bailout. It is shameful.”

Pasok, New Democracy and Democratic Left agreed last week on the broad outline of a government that would last until 2014 and be committed to keeping the country in the euro region and renegotiating bailout conditions from the International Monetary Fund and European Union to boost growth. Tsipras turned down the approach on May 11 as the first opinion polls since the elections showed he was gaining in support.

Syriza would come in first, though short of an outright majority, with 20.5 percent of the vote, if elections were held again, according to a Kapa Research poll for the newspaper To Vima, released yesterday. It got 16.8 percent in the May 6 election. Support for New Democracy would fall to 18.1 percent from 18.9 percent and Pasok would drop to 12.2 percent from 13.2 percent, according to the survey.

Concessions Wanted

The poll showed 78 percent of Greeks want the government to do whatever possible to keep Greece in the euro area and that 72 percent want political parties to make concessions to form a coalition, compared with 22.9 percent who want new elections. Kapa surveyed 1,007 Greeks May 9 and 10. The poll had a margin of error of 3.1 percentage points.

New Democracy and Pasok, the two parties that supported the international rescue in an interim government earlier this year, are two deputies short of the 151 seats needed for a majority in the 300-seat chamber. Five parties opposed to the bailout conditions are now in parliament.

Tsipras failed to reach an accord with other leaders after giving them an ultimatum to renounce support for the EU-led rescue in order to enter the government. Both Antonis Samaras, the leader of New Democracy, and Venizelos rejected the request.

Samaras, whose party finished first, gave up trying to forge a coalition after six hours of talks on May 7.

Euro Exit Risk

More than half of investors predict one of the nations in the euro area will exit the currency bloc this year as Greece’s election impasse threatens to push the European debt crisis to new depths, according to a Bloomberg Global Poll on May 10.

A Greek departure from the euro could be “technically” managed yet would damage confidence in the monetary union, European Central Bank Governing Council member Patrick Honohan said yesterday.

“It is not necessarily fatal, but it is not attractive,” Honohan told a conference in the Estonian capital, Tallinn.

Greece will run out of cash by early July if partners decided to withhold their next aid payment. The European Financial Stability Facility on May 9 confirmed that a 5.2 billion-euro ($6.7 billion) tranche will be released by the end of June, with 4.2 billion euros disbursed May 10. The remaining 1 billion euros will be released depending on Greece’s financing needs.

Bailout Terms

Under the terms of the bailout, a new government will need to spell out how it will save 11 billion euros next month.

Fitch Ratings said in a report on May 11 that the outcome of another election would be “unpredictable” and “make it doubtful that Greece could comply with the EU-IMF’s end-June deadline to propose further medium-term austerity measures.”

While Greece would probably be granted an extension to that deadline, any attempt to significantly renegotiate its program would be unacceptable to the so-called troika of the European Commission, IMF and European Central Bank, Fitch said.

“The impression from this week’s unfruitful negotiations on the formation of a new government is that Greek political parties have taken the view that new elections in June are the only way out,” Riccardo Barbieri, chief European economist at Mizuho International Plc said in a note to investors on May 11. “If new elections are called, they will indeed amount to a referendum on staying in the euro.”

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