Winning Greek party seeks coalition partners, gets early snubs

Antonis Samaras, head of the winning New Democracy party, opened talks with other parties on forming a coalition government in politically polarized GreeceATHENS -- For the second time in six weeks, Greek conservatives on Monday scrambled to form a coalition government after winning a national election but falling short of an outright majority in parliament.

Failure to reach a deal could prolong the near-bankrupt nation's political paralysis, irritate already exasperated international creditors, spook global markets and further complicate Europe's deepening debt crisis.

In kicking off talks on forming a government, Antonis Samaras, leader of the New Democracy party, said he was determined to seal what he called "a quick and durable deal." Yet as quickly as the political horse-trading started, Samaras sustained a bruising first blow: a refusal by Syriza, a radical leftist party that finished second in Sunday's polls, to join forces.

Although widely anticipated, the snub signaled the daunting resistance that a government committed to austerity policies would face from Syriza, an upstart party that has managed to improve its political fortunes in recent months by tapping deep resentment over two years of brutal budget cuts.

"We will assume the responsibility of the opposition, and we plan to keep the government in check," said Alexis Tsipras, the young, brash leader of Syriza, which grabbed 27% of the vote Sunday, more than double the 12% it won in inconclusive polls last month.

Adding to the political malaise, Evangelos Venizelos, leader of the once all-mighty socialist PASOK party that won only 12% of the vote, urged Samaras to scrap coalition talks and allow the country's president to step in and broker the formation of a national salvation government.

"The refusal," Venizelos said of the Syriza leader's move, "was politically ... provocative. It's clear that both he and his party have already begun creating conditions for the failure of the [coming] government."

Following 50 minutes of talks with Samaras, Venizelos -- a pugnacious former finance minister and chief architect of Greece's austerity program -- refused to openly back the coalition bid. However, senior conservative and socialist party officials conceded that a backroom deal had long been reached between the two leaders.

"If needed," said one official on condition of anonymity because of his proximity to the talks, "New Democracy and PASOK will go it alone."

Together, the two parties control 162 seats in the 300-member parliament, a comfortable majority that would allow for a workable coalition. That would allow Greece to honor its bailout commitments to creditors while fine-tuning some of its harshest elements, including a fresh package of $13.8 billion in belt-tightening measures that lenders insist on as part of a plan to fix the country's broken finances by 2014.

Despite the political back-and-forth, hopes for a pro-bailout coalition government pushed Greek stocks up more than 6% in early trading.

But in a sign of the difficulties still facing the Eurozone, the cost of borrowing for Spain reached a euro-era high Monday, amid investors' fears that it would become the next Eurozone nation to request a full-fledged government bailout.

The interest rate Spain has to pay buyers of its bonds closed above 7% for the first time since that country adopted the euro, a punishing level that forced Greece, Portugal and Ireland to seek rescue packages. But Spain's economy is larger than that of those three countries combined, so any bailout for Madrid could strain European resources to the breaking point.

Sunday's vote was Greece's second recent attempt to resolve its political paralysis. Reeling from two years of unrelenting austerity that have seen poverty and incivility climb as fast as living standards and hopes have faded, Greek voters on May 6 punished mainstream parties, lurching to radical left groups and producing a political deadlock that has left the country without stable government at a time when it most needs it.

Failure to form a coalition for a second time would force a third election, with the continued stalemate raising doubts the country's membership in the shared European currency.

Under Greek law, Samaras has three days to stitch together an coalition. But finding a coalition partner in a country traditionally averse to political alliance leaves the conservative leader just a few choices. Among them, the leftist Democratic Left party, and the Independent Greeks, a conservative splinter group formed earlier this year in response to added austerity imposed in exchange for a second $164-billion bailout.

While a staunch supporter of the shared European currency and Greece's stay within the euro, Samaras insisted Monday that the bailout agreement needed to change.

"We will abide by the agreement, but at the same time we're seeking an agreement on policies that will give the Greek people room to breathe," he said.

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-- Anthee Carassava. Henry Chu in London contributed to this post.

Photo: Antonis Samaras, winner of Sunday's Greek elections and leader of the conservative New Democracy party, speaks during a news conference after meeting with a variety of leaders from Greek political parties at the parliament in Athens on Monday. Credit: Willy Antoniou / AFP/Getty Images

 
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