Greece edges closer to pro-bailout coalition government

Fri, May 11, 2012, 01:00

THE PROSPECT of an unexpected breakthrough to salvage the EU/IMF rescue deal for Greece is emerging after the smallest party in the country’s parliament signalled it was ready to join a pro-bailout coalition.

The development came as the Government reiterated that it would not be postponing the fiscal treaty referendum and intensified its attacks on the No camp.

The move to form a pro-bailout Greek government may avert a second election and provide a reprieve to the EU-IMF plan for the country. After days of political stalemate, the Democratic Left party indicated yesterday that it may enter a coalition led by the centre-right New Democracy party and backed by the Pasok socialist movement.

The latter parties were the only two which campaigned to implement the EU-IMF deal. They failed to win a parliamentary majority in the election last Sunday and parties opposed to the bailout won the most votes.

This led to anxiety that the deal might collapse and prompt Greece’s departure from the single currency, which would be certain to create yet more turmoil in the euro zone.

Democratic Left had campaigned to disengage from the rescue deal and its leader, Fotis Kouvelis, ruled out joining a pro-bailout administration in talks earlier this week.

Mr Kouvelis changed tack abruptly yesterday, declaring his willingness propose a national unity government to “keep the country within the EU and the euro zone”. The talks continue today when Pasok chief Evangelos Venizelos, the third party leader to attempt to form a government, meets New Democracy leader Antonis Samaras.

Political observers believe it will be very difficult for Mr Samaras not to enter a coalition, but already there are fears for the stability of any three-party arrangement. Mr Venizelos said his meeting with Mr Kouvelis was a “good omen” for the future. “Our views are very close.”

The latest moves in Athens come as Spain advances a new rescue scheme for its stricken banks. Having nationalised the country’s fourth-biggest bank this week, Madrid will unveil a new plan today strengthen other weakened lenders.

Separately, Taoiseach Enda Kenny rejected calls to postpone the referendum as a result of the German delay in ratifying the treaty. “As we are in a [rescue] programme we will need to send out a signal of certainty,” Mr Kenny said.

His remarks came as Minister for Communications Pat Rabbitte accused Sinn Féin and the Socialist Party of exploiting the referendum for electoral gain. “I think the position of the Socialist Party and Sinn Féin is that they have made a political calculation that the worse the economic circumstances get in Europe and in Ireland the better for them,” he told reporters in Brussels.

“In the case of Sinn Féin it may be shrewd calculation for the party but it’s not a very helpful solution for the country.” Mr Rabbitte said Sinn Féin was making education, health and environmental cutbacks in the Northern Ireland executive while trying to create as much mayhem, misinformation and negativity as it could in the Dáil.

“They’re executing cuts, implementing them, justifying them and defending them. But in Dublin they’re deriding them, misrepresenting them and exaggerating them,” he said.

“I see it every day in the Dáil Éireann that Sinn Féin have little regard to what the party is doing in Northern Ireland where they’re implementing these measures and boasting about it.”

For its part, Sinn Féin accused Mr Kenny of being afraid to debate the treaty with Gerry Adams. “I think it’s disappointing that the Taoiseach is running scared from a debate with Sinn Féin on this issue,” said party finance spokesman Pearse Doherty.

He was responding to an earlier comment by Mr Kenny who said he debated with the Sinn Féin leader on Tuesdays and Wednesdays when the Dáil was sitting.

“I am very happy to debate with Deputy Adams but I do not do the Vincent Browne programme,” the Taoiseach said.