Samaras Races to Form Greek Government as EU Warns on Timing

Greek Election Winner Antonis Samaras
Greek election winner Antonis Samaras said, “A national unity government must be formed with as much participation as possible.” Photographer: Chris Ratcliffe/Bloomberg

Greek election winner Antonis Samaras raced to build a coalition to keep bailout aid flowing after the anti-bailout party Syriza rejected his offer to join a government, with talks set to continue a second day.

With German Chancellor Angela Merkel offering no flexibility on emergency loans, Socialist Pasok leader Evangelos Venizelos, the former finance minister who negotiated the second rescue, proposed President Karolos Papoulias host a meeting of party leaders tomorrow to get a coalition with the widest possible support.

“With Mr Venizelos we remain in agreement that we must have, at all cost, and within the deadline of my mandate, a government of national salvation,” Samaras said in Athens after receiving the three-day mandate to form a government. “We will, of course, have new meetings.”

Yesterday’s vote forced Greeks, in a fifth year of recession, to choose open-ended austerity to stay in the euro or reject the terms of a bailout and risk the turmoil of exiting the union. With the 17-nation currency’s future on the line, finance ministers pledged to assist Greece in its struggle with the cycle of austerity and recession that has trapped the country since it became the first victim of the debt crisis in 2010.

Stocks Gain

The win by Samaras over Syriza leader Alexis Tsipras sent Greek stocks and bonds higher. The euro pared an advance on concern the debt crisis will deepen in Spain. The Athens Stock Exchange Index rose 3.6 percent to 580.67, after earlier gaining as much as 7.2 percent. The FTSE/Athex Banks Index climbed 6.2 percent, its ninth day of gains. Deposit outflows slowed today, three people familiar with situation said.

In exchange for aid pledges totaling 240 billion euros ($302 billion), Greece promised state asset sales, pension cuts and wage reductions. Tsipras said he’d abandon those measures. Samaras had said that made the vote a referendum on quitting the euro. Tsipras, who said he’d try to keep Greece in the euro while tearing up the bailout agreements, urged voters to reject the two main parties that backed the international rescue, New Democracy and Pasok.

In a rare show of agreement on the urgency of the situation facing Greece, which has cash only until the middle of next month, Tsipras said that he’d refuse to take the mandate to form a government if offered to him under the Constitution if Samaras fails in his three-day window.

High Bar

The opportunities opening up to renegotiate the austerity policies “mustn’t be wasted,” Tsipras said after meeting Samaras. “The new government which will be formed must go to Brussels with the bar high, where the people have put it.”

New Democracy won 129 seats, enough to put together a coalition with Pasok. Venizelos said today after meeting Samaras that party leaders needed to send a message of unity to Greeks and a message of credibility internationally by forming a government.

New Democracy and Pasok would have 162 seats if they agree to govern together in the 300-member parliament. The addition of Democratic Left, which has demanded commitment to staying in the euro as well as “gradual disengagement” from the austerity measures, would give a government 179 seats.

Democratic Left leader Fotis Kouvelis said yesterday his party, the sixth-biggest, would take part in talks to form a government that will secure the country’s place in the euro.

‘No Loosening’

Merkel indicated today there would be no leeway on Greece, saying any government must stick with the rescue commitments and that “there can be no loosening on the reform steps.”

The EU will withhold aid payments to Greece until the next review by international monitors, said Thomas Wieser, head of the group that prepares meetings for euro-area finance ministers.

“There will be no new decisions on disbursements before the new MOU has been negotiated and signed,” Wieser told reporters in Vienna.

In contrast, Richard Corbett, an aide to European Union President Herman Van Rompuy, said in a Bloomberg Television interview “there might need to be some adjustment, but not a rewriting of the whole memorandum of understanding, far from it.”

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