Greece Fails to Gather Support to Elect New President

Greece moved a step closer to early elections after Prime Minister Antonis Samaras failed to gather enough support for his nominee in a parliamentary vote for a new head of state.

In voting in Athens yesterday, 160 lawmakers in Greece’s 300-seat chamber backed Samaras’s candidate for the presidency, Stavros Dimas, short of the 200 votes required in the first of three attempts this month. Samaras has 155 lawmakers in his governing coalition and failure to rally enough support for Dimas will lead to the dissolution of parliament.

“This is clearly at the lower end of the government’s expectations,” Michael Michaelides, a rates strategist at Royal Bank of Scotland Group Plc in London, said in an e-mail. “It will need a big political development between now and Dec. 29 for him to get the votes.”

Attention now turns to the second vote on Dec. 23, when Samaras again needs a two-thirds majority to win. If he fails in the third attempt, set for Dec. 29, parliament is dissolved and early elections will be called.

Samaras needs to do something to persuade more parliamentarians to support Dimas, Athanasios Vamvakidis, head of G-10 foreign exchange strategy at Bank of America Merrill Lynch, said in an e-mail after the vote. “Promising early elections may help,” he said.

Market Reaction

Greek bonds fell today, with the yield on three-year notes rising 20 basis points to 10.55 percent as of 10:51 a.m. in Athens. The 10-year benchmark yield rose two basis points to 8.78 percent. The Athens Stock Exchange index, which dropped 20 percent last week, rose 1.2 percent.

Samaras, who is due to attend a European Union summit in Brussels, pointed out that he still has two more chances to elect Dimas. “Greece shouldn’t enter into a situation of turmoil,” he told reporters after the result.

In the ballot yesterday evening, 135 lawmakers withheld their support and five abstained.

With polls putting anti-austerity opposition party Syriza ahead of Samaras’s New Democracy, the prospect of early parliamentary elections had roiled financial markets in Greece, evoking memories of the height of the financial crisis in 2012 when the country’s euro membership was in jeopardy.

“The government’s scaremongering was unsuccessful,” Syriza leader Alexis Tsipras told reporters. Those comments were echoed by Panos Kammenos, head of the opposition Independent Greeks party, who said the “operation to terrorize lawmakers” had failed. Fotis Kouvelis, leader of Democratic Left, said the result “opens the road for new elections.”

Best Chance

While Samaras managed to lure five lawmakers from outside his coalition to his side, his best chance to elect his nominee and avert early elections lies in the third and final vote, when the threshold drops to 180 lawmakers.

The prime minister needed at least 160 votes to sustain momentum in his push to install Dimas, Costas Panagopoulos, chief executive officer at Alco, an Athens-based polling company, said before the vote.

Gerasimos Giakoumatos, deputy minister for development, was confident. He said in an interview that the 135 members who didn’t vote for Dimas can be whittled down to 119 in the coming votes, and “we will elect a president.”

The ballot was clouded by tactical voting, with some lawmakers who plan to back Dimas only willing to do so at the last attempt, according to George Pagoulatos, a professor of European politics and economy at the Athens University of Economics and Business.

Game Changing

When that moment comes, “they want to show they were forced to do so after immense pressure,” Pagoulatos said by phone. “The problem is that, as they add up today, those MPs are not enough to reach 180, unless a major force, a game changer alters the situation. Perhaps something triggering the destabilization of the economy.”

Samaras gambled on bringing forward the vote for the mainly ceremonial post of president. His decision came when negotiations with Greece’s official creditors stalled as he tried to broker an exit from the country’s 240 billion-euro ($300 billion) bailout program.

Officials from the euro area and the International Monetary Fund are expected to return to Athens for more talks early next year, Greek Finance Minister Gikas Hardouvelis said on Dec. 15.

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