In the wake of fractured elections in Greece in which the only party that supports austerity performed abysmally, the European Union and Germany have warned Athens that the next Greek government must abide by the strict terms of its bailout package.
The agreements must be adhered to. They are the best way forward for Greece,” Steffen Seibert, spokesman for German Chancellor Angela Merkel, said during a regular news conference.
Similarly, Pia Ahrenkilde Hansen, a spokeswoman for the European Commission said the EU hopes and expects that the future government of Greece will respect the engagement that Greece has entered into,” while adding that Brussels will help Athens with its ongoing reform agenda.
Seven political parties gained at least 6 percent of the vote in Sunday’s election in Greece, with the top vote-getter, the conservative New Democracy, winning about 18.9 percent.
PASOK, the Socialist party that is most closely identified with the bailout, did so poorly that it actually finished in third place (with 13.2 percent) behind Syriza, an alliance of leftist groups vehemently opposed to austerity, which gained 16.8 percent.
Thus, with less than one-third of the total electorate, it will be impossible for PASOK and ND to enter into any kind of coalition without the participation support of some third party. Given the overwhelming opposition to austerity across the Greek political body, finding a third member for a pro-bailout coalition would be a monumental challenge.
James Goudry, an analyst at IHS Global Insight in London, commented that the election result “means that the pro-austerity parties will be unable to form a grand coalition with an absolute majority, putting in doubt Greece's ability to honor the austerity measures agreed with the EU and IMF as part of two bailouts.”
The leader of ND, Antonis Samaras (who only gave austerity a lukewarm embrace in the first place) will have to find willing partners in his new government.
Samaras said he wants to form a unity government that will seek to maintain Greece’s membership in the euro, but he cautioned that he wants to “amend” the bailout agreement in order to increase economic growth in the country.
The leader of PASOK (and former finance minister) Evangelos Venizelos has called for a broad alliance of pro-bailout parties, but conceded such an arrangement would be extremely difficult in the current atmosphere.
A coalition government of the old two-party system would not have sufficient legitimacy or sufficient domestic and international credibility if it would gather a slim majority, he said.
A government of national unity with the participation of all the parties that favor a European course, regardless of their positions toward the loan agreements, would have meaning.
Of even greater urgency, under terms of the EU-IMF bailout, Athens will have to find another 11 billion euros in spending cuts by next month.
Mark Lowen, a BBC correspondent in Athens, wrote that Samaras --- the apparent “winner” of the election -- faces an uphill battle on several fronts.
“New Democracy will try to form an austerity-supporting pro-European coalition government, perhaps with a third party, because it would not gain enough with PASOK to form an absolute majority,” he said.
“But the anti-bailout party Syriza will also try to form an alternative coalition government. There could be a clash of the two -- we could be facing fresh elections within weeks.”
Lowen added ominously that Greece is now “placed into a period of intense political instability - and by extension the euro zone as a whole.”
Indeed, Syriza leader Alexis Tsipras declared that: The parties that signed the memorandum (with the EU and the IMF) are now a minority. The public verdict has de-legitimized them. Our proposal is a left-wing government that, with the backing of the people will negate the memorandum and put a stop to our nation's predetermined course towards misery.
Another party, Democratic Left, which scored about 6 percent of Sunday’s vote, refuses to enter into any coalitions with either PASOK or ND.
We rule out participating in a PASOK-New Democracy government,” party leader Fotis Kouvelis told Reuters.
We would [only] participate in a coalition government with other progressive forces.”
In a stark reflection of just how disillusioned the Greek public is with mainstream politicians, the extreme right-wing, anti-immigrant Golden Dawn party gained almost 7 percent of the vote -- meaning it will be able to place about 20 members into the Athens parliament for the first time.
It is time for those that betray [Greece] to be afraid, warned Golden Dawn leader Nikolaos Mihaloliakos.
We are coming. We are Greeks, nationalists, and we will allow no one to doubt this.
Palash has worked as a business journalist for 21 years in New York.