Socialist leader Evangelos Venizelos leaves the Presidential Palace after a meeting in Athens
Socialist leader Evangelos Venizelos leaves the Presidential Palace after a meeting in Athens Reuters

Less than two weeks after fractured parliamentary elections, Greek leaders threw in the towel on Tuesday and called for another poll in the wake of their repeated failures to form a coalition government and address the country’s monumental debt crisis.

Leaders of five political parties met in Athens with President Karolos Papoulias on Tuesday in a last-ditch effort to form a unity government. But lawmakers are bitterly divided over the austerity program the government has imposed to get huge bailout loans from the European Union and the International Monetary Fund.

Unfortunately, the country is heading again toward elections, Evangelos Venizelos, leader of the Socialist Pasok party, told reporters.

Panos Kammenos, the head of the nationalist Independent Greeks Party, said: The pro-bailout parties would prefer a government that will further torment the Greek nation, rather than finding a solution. They have offered a proposal that is too rigid for me to accept.

The radical left-wing Syriza party -- the group most adamantly opposed to further austerity cuts -- finished with an impressive second place in the recent election and may actually win the next round, according to polls.

In the absence of an agreement on austerity and the terms of the rescue loans, the likelihood of Greece defaulting on its debt and exiting the euro zone increases.

Our future is under threat, Antonis Samaras, the boss of the center-right New Democracy party, told state-run NET TV. We will not lay down our arms. Europe understands now that one-way austerity destroys growth.

European officials have warned that if Greece does not abide by the terms of the bailouts, it will cut off further financing, which could lead to a bankrupt Greece and -- as yet unquantifiable -- shocks across the continent

Papoulias himself warned the country's bickering party leaders of fatal consequences for Greece should they fail to arrive at some kind of compromise.

I am telling you that the danger is real, he told the party chief.

We have already lost valuable time, and the absence of a government is a serious risk to the financial security of the Greek people and our national existence.

Papoulias added: I have been informed by the prime minister, the director of the Bank of Greece and the minister of Finance for the country's cash position and the risk of collapse of the banking system if withdrawals of deposits from banks continue due to the insecurity of the citizens generated by the political situation.

Meanwhile, a caretaker government will be named on Wednesday.

IHS Global Insight analyst Blanka Kolenikova warned that the results of a new election would be difficult to predict.

“Greece may be bracing for further instability in the weeks, or even months, to come,” she said.

Moreover, in the event Syriza wins the election, the picture gets even murkier.

“Syriza's blunt opposition and rejection of continuing on the austerity path may therefore stop [foreign] lenders from providing further cash injections to Greece, making the country's position in the euro zone very fragile,” she added.