Angry Greeks reject bailout, risk euro exit

Article By: Dina Kyriakidou and Harry Papachristou

Source: Reuters (Final Update)
http://www.reuters.com/article/2012/05/06/us-greece-idUSBRE8440DG20120506

(Reuters) - Greeks angry at years of austerity shrugged off the risk of a euro zone exit and punished their ruling parties, which failed to win enough votes to form a ruling coalition in Sunday's election.


With about 95 percent of the vote counted, conservative New Democracy and Socialist PASOK, who have dominated Greece for decades and are the only two major parties supporting an EU/IMF bailout program that keeps Greece afloat, won less than 33 percent of ballots and only 150 out of 300 parliament seats.

In order to renew their uneasy partnership, they would have to woo other reluctant parties. Any coalition is expected to be short-lived, plunging Greece into fresh political uncertainty and threatening to revive Europe's debt crisis.

As results trickled in, New Democracy leader Antonis Samaras called for a pro-European national unity government that would keep Greece in the euro zone. PASOK leader Evangelos Venizelos also called for a unity government, saying his party had paid the price for handling the sovereign debt crisis.

The small parties that gained in the election are all against the bailout, but they are too divided to form an alternative coalition.

"There is a lot of uncertainty at the moment about what kind of government there will be and if it will be supportive of the EU/IMF program," Diego Iscaro from IHS Global Insight said.

Once mighty PASOK was pushed into third place by the anti-bailout Left Coalition party, in a stunning vote against austerity policies that have caused deep hardship in one of Europe's worst postwar recessions.

New Democracy polled just over 19 percent and PASOK a humiliating 13.4 percent, while the Left Coalition captured 16.6.

In the 2009 election, PASOK won a landslide victory with 44 percent and the Left Coalition had just 5 percent.

"I cannot take it anymore, living as beggars in our own country. The Left Coalition can shake them up, and wake them up," said Kate Savvidou, 65, a pensioner who deserted PASOK.

Left Coalition leader Alexis Tsipras, at 37 Greece's youngest political leader, hailed a peaceful revolution and said German Chancellor Angela Merkel should understand that austerity policies had been defeated.

"Greek people gave a mandate for a new dawn with solidarity and justice, instead of barbaric bailout measures," he said.

In another indication of the extent of public anger, the extreme right Golden Dawn party was poised to take nearly 7 percent of the vote. This would allow such a party to enter parliament for the first time since the fall of a military dictatorship in 1974.

COALITION EFFORTS

Samaras was expected to be invited to try to form a government on Monday.

Under the constitution, Greek President Karolos Papoulias will give the biggest party three days to form a government. If it fails, the next largest group gets a chance and so on down the line. If they all fail, new polls would be called about three weeks later.

Greece faces an acid test as soon as next month when it must give parliamentary approval for over 11 billion euros in extra spending cuts for 2013 and 2014 in exchange for more EU/IMF aid.

That looks like a tough task even if a new government can be formed in time, given the success of anti-bailout parties. Several analysts said the unprecedented fragmentation of the vote could bode weeks of instability and force another election.

Greeks angry at record unemployment, collapsing businesses and steep wage cuts ignored warnings that a vote against the harsh terms of the bailout would push Greece towards bankruptcy.

Othon Anastasakis, director of southeast European studies at Oxford University told Reuters: "Greeks are sending a very strong message abroad, which is enough with austerity."

As they voted, many Greeks expressed their rage at the parties who accepted the harsh conditions of two bailouts that have kept the country from bankruptcy.

"I voted for Left Coalition, even if this means elections again in a month. I feel vindicated. Things are changing little by little because people decided to speak up," said 22-year-old student Klelia Avgerinopoulou.

THREATS IGNORED

The Greek electoral shock coincided with the victory of Socialist Francois Hollande in France's presidential election and was likely to add to pressure for resistance to German-led austerity policies.

Italian technocrat Prime Minister Mario Monti, who faces increasing resistance to austerity at home, phoned Hollande and other European leaders after the election results to push for pro-growth policies.

International lenders and investors fear success for the small anti-bailout parties could lead to Greece reneging on the harsh terms of the program, risking a hard sovereign default and dragging the euro zone back into the worst crisis since its creation.

Euro zone paymaster Germany has warned there would be "consequences" to an anti-bailout vote and the EU and IMF insist whoever wins the election must stick to austerity if they want to receive the aid that keeps Greece afloat.

But many voters bitterly dismissed such threats.

"I don't think that voting for a small party will make us go bankrupt. We already are," said 53-year-old Panagiotis, a craftsman, after voting for the conservative Independent Greeks.

(Additional reporting by Harry Papachristou, Karolina Tagaris, Deepa Babington, Ingrid Melander, Lefteris Papadimas and George Georgiopoulos.; Writing by Dina Kyriakidou; Editing by Stacey Joyce)