Greek Coalition Talks, As Yet Unsuccessful, Near End

on May 14 2012 3:06 PM
Greece
Lucas Papademos said Greece can't exclude the possibility it will need a third bailout from its euro zone partners. REUTERS

The president of Greece late Monday summoned the heads of leading political parties in an apparently last-chance bid to cobble together a coalition government and avoid new national elections in June.

President Karolos Papoulias called the late-night meeting on the eighth day of post-election political maneuvering that has failed to produce a governing coalition and raised the spectre of a Greek departure from the 17-member of the euro zone, the Associated Press said.

Papoulias urged leaders to form a coalition government composed of technocrats, political leaders told the AP. Failure to form a government by Thursday will force the nation into another national election, most likely on June 17.

Meanwhile, the likelihood grows that the Hellenic Republic will be unable to collect the foreign financial aid needed to service its debt and, thus, default yet again on its sovereign debt.

For example, the three top-ranked parties in the May 6 election --  New Democracy, Syriza and Pasok -- failed Sunday to approve the proposed repayment in full of a $560 million bond due on Tuesday.

The likelihood that Greece will reject austerity -- the condition of its two financial rescues in the last two years -- is growing and was the subject of a Brussels meeting Monday that openly addressed how to handle a Greek departure from the monetary union.

The situation is very difficult and I'm not optimistic, but we must try every possible solution, socialist leader Evangelos Venizelos told the Financial Times.

The stalemate hammered the value of the euro Monday and boosted the price of such safe-haven investments as Dutch, Finnish and German bonds.

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