Greek Coalition Government Possible Wednesday

By: AP Email
By: AP Email

ATHENS, Greece (AP) - A coalition government could be formed by
mid-Wednesday in Greece, the head of the country's socialist party
said Tuesday, easing the nation from political limbo as it
struggles to deal with a financial crisis that has affected
Europe's economy and markets around the world.

Evangelos Venizelos, whose PASOK party came third in Sunday's
elections, said the socialists "will support this government
sincerely and will participate in it in the most beneficial way in
order to make it effective and credible."

Later, a senior PASOK deputy said the timetable had changed
somewhat, since talks between the socialists and the conservative
New Democracy party had adjourned for the night and would resume at 1 p.m. local (1000 GMT, 0600 EST) Wednesday.

"We are trying to agree on the different points and we will
inform the heads of the parties tonight and tomorrow we will resume
discussions at 1 p.m." said senior socialist MP Costas Skandalidis
on leaving the Greek Parliament building shortly before midnight.

At the core of any administration would be Antonis Samaras' New
Democracy, which came first in Sunday's vote and won 129 of
Parliament's 300 seats - short of the 151 needed to govern alone.

The radical left Syriza party, which finished in second place,
with 71 seats, has refused to join any government that will
implement the terms of Greece's international bailout, under which
the country has received billions of euros in rescue loans in
return for deeply unpopular spending cuts and tax hikes.

Venizelos, who handled Greece's negotiations with its
international creditors for several months last year as finance
minister, said earlier Tuesday that due to Syriza's stance, the
government would have the support of the election winner, PASOK and the small Democratic Left party of Fotis Kouvelis, which won 17
seats.

"With Syriza's refusal, the only practical solution now is the
creation of a government with the support of New Democracy, PASOK,
and the Democratic Left," he said after several hours of
negotiations. "I repeat that this government must be formed as
soon as possible. As things stand now, this can be achieved by
mid-day tomorrow."

PASOK will convene its deputies Wednesday morning to define
exactly how the party will participate, he said.

Although numerically Samaras could form a government with just
PASOK, which has 33 seats, both have sought a broader alliance that
would be seen as potentially more stable and better able to weather
the continuing storm of austerity measures taken in return for
Greece's rescue loans.

Such a government would broadly fulfill Greece's pledges to its
bailout creditors for further cutbacks and reforms, keeping the
country within Europe's joint currency. Otherwise, Greece would run
out of cash and the continent could plunge deeper into a financial
nightmare with global repercussions.

The austerity measures have left Greece struggling through its
fifth year of a deep recession, with unemployment spiraling to 22
percent and tens of thousands of businesses shutting down.

Fury over the cuts that have seen salaries and pensions slashed
in the public sector propelled Syriza, led by 37-year-old Alexis
Tsipras, from 4.6 percent in 2009 to nearly 27 percent in Sunday's
election and gave anti-austerity parties more than 50 percent in
total.

Tsipras had campaigned on a strong anti-bailout ticket, vowing
to scrap the country's pledges and play tough with creditors -
Greece's European partners and the International Monetary Fund.

With public anger palpable, both Venizelos and Samaras say they
will seek changes to some of the terms in Greece's bailout deals,
on which the country has depended since May 2010. But they have
pledged to respect the commitments for further austerity and
reform.

They are pressing for an extension of at least two years in the
deadline, which would alleviate the immediate impact of new
cutbacks and is seen as a likely concession by creditors. The
Democratic Left is anti-austerity in principle, but has insisted
that its main priority is keeping Greece in the Eurozone.

"The most important issue is not the government's composition,
but the national negotiating team that will strive to achieve the
best possible revision of the loan agreement so that we can keep
all the positives and to counter the recession and unemployment and
to bring positive growth and jobs," Venizelos said.

Austrian Finance Minister Maria Fekter said Tuesday that any
changes to the bailout deal would be "an adaptation of a pragmatic
nature" after debt inspectors from major creditors visit Athens.

Separately, a European Union official said the terms of Greece's
bailout will be renegotiated because worsening economic conditions
have made the old agreement an "illusion."

The official, who spoke on condition of anonymity, citing
policy, said the goals of the agreement would still be to reduce
Greece's debt and reform its economy to make it competitive. But
how they are achieved would be up for discussion, the official
said.

Samaras' three-day mandate to form a government expires
Wednesday night. If it fails, Syriza would get a chance to form a
government, followed by the Socialists. But Tsipras has said he
will pass on the mandate and not even try to form a government.
Venizelos has advocated circumventing the entire process and
proceeding straight to a meeting of party leaders under President
Karolos Papoulias.

Setting apart their bitter rivalry stemming from four decades of
what was effectively a two-party system, New Democracy and PASOK
took part in a brief coalition government earlier this year.


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