Samaras seeks to form coalition
Antonis Samaras, leader of Greece's New Democracy party, said he will attempt to form a national salvation government with the participation of as many parties as possible after Syriza, the second-biggest party, rejected participating.
"We have clarified that we will stick to our commitments while negotiating to improve terms and add policies for growth," Mr Samaras said in Athens today after meeting Syriza leader Alexis Tsipras. "I will continue my efforts for a government after Mr Tsipras made clear he would not participate in the government."
The centre-right New Democracy party's win in yesterday's election has eased fears of a sudden Greek exit from the euro.
This morning, president Carolos Papoulias gave a formal mandate for negotiations to Mr Samaras. "The country cannot remain ungoverned for even an hour," Mr Papoulias said.
Mr Samaras called for "national understanding" on a new government and also said there should be amendments to the conditions of an EU-IMF bailout deal "so the Greek people can escape from today's torturous reality".
New Democracy won 129 of the 300 parliamentary seats in yesterday's vote, opening the path for a coalition with the third placed Socialist party Pasok, which has 33. Pasok officials said that a meeting today would decide how they would support Mr Samaras - by participating fully in government, or by voting with the coalition in parliament.
The left-wing Syriza party came second with 71 seats. It has ruled out joining a coalition, saying the harsh conditions for the EU-IMF bailout deal signed in March should be scrapped altogether.
Europe and the United States have urged Greece to act quickly to form a new government and proceed with urgent reforms in order to meet the terms of bailout loans that have kept the Greek economy on life support for the past two years.
Markets turned negative today as fresh worries over debt problems at Spain and Italy wiped out initial relief from a victory for pro-bailout parties in Greece that had sparked an earlier rally on the equities markets. The euro also fell 0.1 per cent to $1.2629, after initially strengthening by as much as 0.9 per cent to $1.2748 after the result of the vote was announced.
With all of ballots counted, New Democracy had won 29.7 per cent of the vote, ahead of Syriza on 27 per cent, while Pasok had 12.3 per cent.
A 50-seat bonus automatically given to the party which comes first would give a theoretical New Democracy-Pasok alliance 162 seats in the 300-seat parliament, enough for a majority broadly committed to the €130 billion bailout.
The White House said it hoped the election outcome would lead to the swift formation of a new government that would make "timely progress" on economic challenges. "We believe that it is in all our interests for Greece to remain in the euro area while respecting its commitment to reform," said president Barack Obama's press secretary Jay Carney.
The new government might get some relief from its euro zone peers. German deputy finance minister Steffen Kampeter said officials from the EU-IMF troika would have to verify progress and any new aid depended on reforms but that Greece could not be pushed too much on reforms.
"It is clear to us that Greece cannot be over-strained," he told Germany's ARD television today. However even if it is granted some leeway, Greece will struggle to deliver on the programme and analysts say a pro-bailout coalition may not last, having commanded only slightly more than 40 per cent of the vote.
The result came as a relief for Greece's EU and IMF lenders and euro zone partners who feared a Syriza victory would tip Greece over the edge and the common currency towards break-up. But the vote revealed a society deeply split between its desire to stay in the euro and a deep-seated anger at salary, pension and job cuts that have hit the poorest while sparing a political and business elite seen by many as corrupt.
"I don't think anything good will come out of these elections, no one had such illusions," said Dinos Arabatzis, a 56- year-old taxi driver who voted for New Democracy. "Whoever is in power now will get burned. Samaras will get burned and Tsipras will come out much stronger if we go to elections again - that's what worries me."
A protest vote looked set to give the ultra-right Golden Dawn party 18 seats, repeating its success of May 6th despite a now-notorious incident in which its spokesman threw water at one leftist opponent and slapped another during a TV debate.
More than two years of budget cuts have caused unemployment to jump to over 22 per cent. Businesses are shutting down by the dozen and the homeless are multiplying on the streets of Athens.
The caretaker government says the state has enough cash to last a few weeks and Athens has pledged to come up with an additional €11.7 billion worth of spending cuts in June to qualify for the next loan instalment.
Greece's EU partners and the IMF welcomed the pro-bailout parties' victory, saying they were ready to work with the government that emerges. But EU officials have made clear Greece must stick to its pledges to receive more funding while hinting there may be some leeway at the margins.
Fitch Ratings said New Democracy’s win has removed the immediate risk of the ratings company cutting the credit grades of fellow euro area member countries.
"Fitch will not place all euro zone sovereigns on rating watch negative as it had indicated would be the case if a Greek euro exit were a probable near-term event," Fitch said in statement today.
Even so, the crisis in Greece and the euro area "remains intense", Fitch said. “Fiscal austerity and painful structural reform combined with a strong parliamentary opposition led by Sryzia means that the new Greek government is likely to be fragile.”