Greek political earthquake rattles eurozone

ATHENS: Greece faced an uncertain future Monday after a stunning election shake-up by parties opposed to further vital austerity cuts, sending shockwaves through markets on fears of renewed eurozone turmoil.

The two mainstream parties fell short of an absolute majority in parliament with their share of the vote at just 32.1 per cent, more than half their score in the 2009 election, making it unclear how a new government will be formed.


Instead, voters angry after two years of cuts handed parties opposed to the terms of Greece’s two international bailouts a stunning result — a total of 151 parliamentary seats between them, based on 99 per cent of votes counted.


Neo-Nazi party Golden Dawn was set to enter parliament for the first time since the end of the military junta in 1974, with 21 seats in the 300-seat chamber.


The election’s nominal victor, New Democracy leader Antonis Samaras, nevertheless said he would try to piece together a unity government to keep Greece in the euro and seek better terms from the creditors on growth.


“We are ready to assume the responsibility of forming a national salvation government with two exclusive goals: to keep the country in the euro and amend the policies of the memorandum,” Samaras said late Sunday.


“May the God of Greece help us,” Pasok leader Evangelos Venizelos said late Sunday as he called for the formation of a national unity government among pro-European parties.


Commerzbank economist Christoph Rieger said the result was the “worst case” scenario, with the political situation now “highly uncertain.” Padhraic Garvey at ING Bank said the result, plus the outcome of the French election, were “debt-crisis-negative.”


Greece’s stock market plunged 8.3 per cent. The country is in its fifth year of recession with unemployment at 20 per cent, is committed to finding in June another 11.5 billion euros ($15 billion) in savings over the next two years.


The possibility now looms of fresh elections, as left-wing Pasok and New Democracy, which formed the outgoing coalition led by technocrat Prime Minister Lucas Papademos, will not have a legislative majority.


Pasok, which along with New Democracy has dominated Greek politics for nearly four decades, was even relegated to third place by the leftist Syriza, which more than tripled its share of the vote from 2009 to 16.7 per cent.


“The parties that signed the memorandum (with the EU and the IMF) are now a minority. The public verdict has de-legitimised them,” Syriza head Alexis Tsipras said late Sunday, calling the election a “message of overthrow”.


Golden Dawn leader Nikos Michaloliakos said his neo-Nazi party would fight against “world usurers” and the “slavery” of an EU-IMF loan agreement he likened to a “dictatorship”.


“The time for fear has come,” said Michaloliakos, whose party becomes the sixth-biggest in the parliament.


Independent Greeks, a new right-wing party set up by New Democracy dissident Panos Kammenos, is slated to become the fourth-biggest party with 33 seats followed by the communist KKE with 26 lawmakers.


The Democratic Left, a Europhile new leftist party, will hold 19 seats in the new-look chamber.


Both Pasok and ND have said they want the “troika” of the European Union, International Monetary Fund and European Central Bank to cut Greece more slack in their two bailout deals worth worth 240 billion euros.


But with voters angry at the painful austerity cuts demanded in response, the other parties, including possible kingmaker Syriza, want to tear up the agreements.


The communist KKE party wants to leave the eurozone and the neo-Nazis say they want to stop servicing Greece’s debts, an aim shared by Kammenos who advocates turning to Russia to prop up the country.


Panayotis Petrakis, economics professor at Athens University, expressed hope however that new French president-elect Francois Hollande “would prevent Europe treating us too harshly. There is still a little room for manoeuvre.”


Petrakis told AFP that the most likely outcome was another “government of technocrats” headed again by outgoing premier Papademos, or fresh elections.


Stocks on the DAX index in eurozone paymaster Germany were down 1.4 per cent while France’s stock market slid 1.3 per cent. The euro fell to its lowest level since late January but recovered some ground.



About the author

Aziz Hassan

A journalist since July 1976 with both the English and Malaya press and was with two newspaper groups before The Mole. Does corporate report-writing and translation in his free time. Currently also a contributing weekly rugby columnist for the New Straits Times.