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Greece in last-ditch effort to form a government

May 13, 2012 |  3:19 am

Greek President Karolos Papoulias
(This story has been updated. See the note below.)

ATHENS — Amid rising international rancor and distrust, Greece on Sunday scrambled to form a coalition government in a last-ditch bid to end a lingering political crisis and avert a devastating default that could imperil the common European currency.

Greek President Karolos Papoulias was spearheading the initiative, meeting initially with the top three finishers in last Sunday’s inconclusive elections.

But as millions of Greeks stayed glued to their television sets and analysts stressed the urgency of the government-building bid, Papoulias looked unlikely to succeed where the three political leaders — conservative head Antonis Samaras, radical left leader Alexis Tsipras and socialist PASOK chief Evangelos Venizelos — failed last week.

[Updated May 13, 2:25 p.m.: Late Sunday, officials said the negotiations had not reached a conclusion and would continue Monday.]

Reeling from two years of unrelenting austerity that have seen poverty and unrest climb as fast as living standards, causing hopes to fade, Greek voters punished mainstream parties last week, flocking to anti-austerity groups and producing a political deadlock that has left the country without a government at a time it most needs it.

Failure to form a coalition would force a repeat election as early as June 17. But even then, pundits and politicians have warned, Greece could end up stuck in a similar political quagmire.

A flurry of opinion polls published this week showed Greeks set to increase their support for the leftist Syriza party, boosting the political fortunes of Tsipras, a young, charismatic but untested leader who attracted voters with promises to tear up Athens’ recent bailout agreement with international creditors. Some of Greece's European partners, especially Germany, have warned that reneging on the agreement would force Greece out of using the euro.

The polls showed Syriza grabbing 25% to 27% of the support from respondents, about nine percentage points more than its showing in last week's election but well short of the amount needed to win an outright majority in Greece’s 300-seat parliament.

The constitution sets no deadline for Papoulias and his bid to broker a deal for a two-year national unity government to steer the country through its devastating financial crisis.

With Europe’s debt woes worsening, Greece’s already skittish lenders are losing patience.

On Friday, the Fitch ratings agency warned that if Greece did leave the euro, it would probably place all 16 remaining Eurozone nations on "rating watch negative," meaning they would be in danger of having their credit ratings downgraded.

"A Greek exit would break a fundamental tenet underpinning the euro — that membership of EMU [Economic and Monetary Union] is irrevocable," Fitch said.


French, German rifts show already

Portugal's sick economy triggers health crisis

In Greece, coalition government proves elusive amid impasse

— Anthee Carassava

Photo: Greek President Karolos Papoulias launched a last-ditch effort Sunday to persuade political leaders to form a coalition government. Credit: Aris Messinis / Agence France-Presse / Getty Images