Greece Nears New Vote as Syriza Rebels Try to Form Government

Updated on
Alexis Tsipras speaks to lawmakers.
Alexis Tsipras speaks to lawmakers.
Photographer: Yorgos Karahalis/Bloomberg

Greece edged closer to national elections next month even as a breakaway faction from the ruling Syriza was given a chance to forge a new government, just three days after setting up a new party.

Under constitutional procedures set in motion when Prime Minister Alexis Tsipras resigned last week, President Prokopis Pavlopoulos on Monday gave the leader of the new grouping, former Energy Minister Panagiotis Lafazanis, until 1 p.m. local time on Aug. 27 to form a new administration.

Lafazanis, who’s admitted his effort won’t succeed, said after meeting the president that he’ll nonetheless use the full three days to attempt to form a new administration so Greeks don’t spend the next three years “in a memorandum winter.”

Lafazanis said Aug. 22 that “our differences with the parties who voted for the memoranda are unbridgeable and there’s no chance of any cooperation.”

Even a failed attempt at building a new government could carry advantages for the new group, called Popular Unity.

“Lafazanis will probably take all of the time he needs in order to attract publicity for his new party,” said Dimitris Sotiropoulos, an associate professor of political science at the University of Athens. “He’ll want to make his presence felt.”

Eight Months

Tsipras stepped down Aug. 20 after eight months in power, starting a process that will take Greeks back to the ballot box in September. Elected on an anti-austerity platform, Tsipras will now look to renew his mandate after Syriza fissured over his pushing through tax increases and spending curbs he opposed while in opposition.

Lafazanis led a group of at least 25 lawmakers who abandoned Syriza to create the new movement, which will now be the third-largest party in parliament.

“We won’t accept being in the euro area and having bailout programs imposed on us,” Lafazanis told reporters in Athens on Aug. 21 at the movement’s inaugural press conference. If resisting the bailout means Greece exiting the euro area, “this is in no way a catastrophe.”

The invitation to Lafazanis to form a new administration came after main opposition leader Evangelos Meimarakis failed over the weekend to cobble together a big enough majority coalition. Earlier Monday he handed the mandate back to the president.

No Convergence

Tsipras on Sunday declined an invitation to meet Meimarakis to discuss a possible coalition, saying there is no margin for convergence between Syriza and New Democracy, a Greek government official said. Tsipras also told Meimarakis there’s no possibility to form a government from the present Greek parliament.

With little or no chance of Lafazanis succeeding, the formal election campaign process can begin by the end of the week with a caretaker government appointed. The most likely date for the national ballot is Sept. 20, government spokeswoman Olga Gerovasili said.

Greek media have speculated that Vassiliki Thanou, president of the Supreme Court, is the most likely choice to be caretaker prime minister. If so, she would become Greece’s first female premier.

‘Cohesive Government’

Greek stocks and bonds fell Monday, with the yield on two-year notes rising 113 basis points to 14.11 percent at 1:44 p.m. local time. The Athens Stock Exchange General Index dropped 5.3 percent. Greek stocks have fallen almost 25 percent since the exchange reopened on Aug. 3 following a five week-halt prompted by the imposition of capital controls.

Tsipras’s resignation “offers the possibility of a new more cohesive government, which would improve prospects for implementing Greece’s third bailout package and reduce liquidity and funding risks,” Moody’s said today.

European Stability Mechanism head Klaus Regling said that the next Greek government needs to bear in mind that reforms must be implemented to get help from its partners, Bild-Zeitung reported Saturday, citing an interview.

Tsipras remains popular with Greek voters, who gave Syriza 33.6 percent support, a 15.8 percentage-point lead over the main opposition New Democracy party, in a July 25 poll by Metron Analysis. Polls haven’t yet offered an indication of how much support Popular Unity would siphon off.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE