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Greek Socialist leader says coalition talks making headway

May 10, 2012 |  2:11 pm

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ATHENS –- The four-day struggle of Greek politicians to stitch together a coalition government gained sudden momentum Thursday as concerned creditors began to reduce the flow of rescue loans that keep this cash-strapped country afloat.

Evangelos Venizelos, the newly installed leader of the Socialist party PASOK, said talks with a moderate, left-wing leader had “proved productive,” raising hopes that a power-sharing deal could be concluded to contain the fallout of a lingering political crisis. The negotiations will continue Friday.

“We are very, very close in our views,” Venizelos told reporters after beckoning and brazenly staking out positions dear to Fotis Kouvelis, leader of the pro-European Democratic Left party. Kouvelis' group wants to keep Greece anchored in the 17-nation Eurozone that shares the euro currency but begin a “gradual disengagement” from the austerity crusade Europe’s taskmaster, Germany, has prescribed as a cure for the continent’s debt woes.

Earlier in the week, Kouvelis adamantly refused any participation in an administration that would include PASOK and the conservative New Democracy party, the two mainstream Greek parties supporting fiscal adjustment.

Thursday’s apparent about-face, however, kindled hopes that an agreement between Venizelos and Kouvelis could potentially reel in the support of other politicians, most notably Alexis Tsipras, the young, charismatic leader of Syriza. The far-left party rode a tidal wave of voter rage against austerity to grab nearly 17% of Sunday’s vote and emerge as the second-biggest winner in the elections.

Venizelos’ desperate efforts to woo the bailout’s opponents were decried by pundits and politicians as a cynical attempt to gain power. However, the prospect of a breakthrough looked bleak; his conservative and leftist opponents failed to form a coalition government in similar bids this week.

Venizelos, a former finance minister and chief architect of Greece’s austerity program, suffered a crushing defeat at the polls Sunday, spoiling PASOK’s political fortunes and dominant role in domestic politics for nearly three decades. The highly fractured electoral results have plunged Greece into political turmoil, leaving the crisis-stricken country without a government after no party managed to clinch more than 19% of the votes.

A surge in anti-austerity sentiment has fanned unprecedented support for fringe parties, including Syriza, a once tiny grouping of radical intellectuals that garnered about 4.5% of the vote. Tsipras has publicly called for Greece to renege on the massive bailout deal it struck with its European partners and the International Monetary Fund that has forced Athens to make steep cutbacks.

In fact, in a letter to European leaders Thursday, the 37-year-old Syriza chief said Sunday’s electoral outcome had stripped Greece’s bailout commitments of any “political legitimacy.” He said added austerity was “destroying” the recession-hit country and threatening to create a “humanitarian crisis.”

Still, the carefully worded letter that was leaked to the Greek media stopped well short of demanding that the austerity program be scrapped and debt repayments halted.

Venizelos is set to meet with Tsipras and conservative leader Antonis Samaras on Friday. Failure to clinch a coalition deal would force President Karolos Papoulias to step in as early as Friday, calling in all of the political leaders to form a national unity government before throwing in the towel and announcing another trip to the ballot box.

“It all hinges on Tsipras -- whether he is willing to soften his stance and help move the country forward, even for a bit, or whether he remains inflexible and standoffish,” a senior aide from the conservative New Democracy party said, speaking on condition of anonymity.

In a sampling of the agony Greece could face if it reneged on its fiscal adjustment commitments, European creditors withheld a chunk of a $6.8-billion loan disbursement to Athens on Thursday. Greece’s shared currency partners said they were holding on to $1.3 billion of that tranche until assurances of the country’s commitment to the bailout plan were secured.

“If Greece ends the reform process it has undertaken,” warned German Foreign Minister Guido Westerwelle, “I can’t see that the respective tranches [of aid] can be paid out.”

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-- Anthee Carassava

Photo: Greece's Socialist leader Evangelos Venizelos, left, talks with Democratic Left leader Fotis Kouvelis at the Parliament in Athens on Thursday. Credit: Dimitri Messinis / Associated Press

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