Left-wing leader rejects Greek commitment to austerity in attempt to form coalition government

Leftist leader rejects austerity plan

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ATHENS, Greece — After making a stunning gain in Sunday’s national elections, Greece’s leading leftist party on Tuesday appeared to run aground in its attempt to form a coalition government, adding to the turmoil in stock markets and raising the prospect that Greek voters will be back at the polls next month.

Greek leader of Coalition of the Radical Left party Alexis Tsipras issued a program as would-be prime minister that would renege on Greece's bailout agreement.  KOSTAS TSIRONIS/ASSOCIATED PRESS
KOSTAS TSIRONIS/ASSOCIATED PRESS
Greek leader of Coalition of the Radical Left party Alexis Tsipras issued a program as would-be prime minister that would renege on Greece's bailout agreement.

Just hours after Alexis Tsipras, of the Radical Left or Syriza party, issued his program as would-be prime minister – to renege on the bailout agreement
Greece reached last year with the European Union, halt further austerity steps and nationalize Greece’s banks – the main centrist party issued a stinging rebuff.

“Mr. Tsipras asked me to put my signature to the destruction of Greece,” said Antonis Samaras, the head of New Democracy, which remains the single biggest party in Parliament despite its battering in the polls. “I won’t do this.”

On Monday, Samaras, as leader of the biggest vote-getter in Sunday’s election, had been offered the first chance to form a government. He announced his failure six hours later.

Tsipras’ leftist coalition won 52 seats in the 300-seat Parliament – four times its number in the previous Parliament – but it is doubtful he can form a government without New Democracy’s 108 seats.

Tsipras was rebuffed by the Greek Communists, who have 26 seats, and even by the Ecologist Greens, who fell just short of the 3 percent of the vote needed to win seats in the chamber. Only the Democratic Left splinter party, which has 19 seats, agreed to join Syriza.

Tsipras demanded an examination of Greece’s still-massive debt and a moratorium on repayment of the part of it that is “onerous.”

Greece has promised to pass new austerity measures worth $18.9 billion next month and to implement other swift reforms. These will promptly be reviewed by its creditors, who will then decide whether to release or withhold the next batch of bailout funds.

“The pro-bailout parties no longer have a majority in parliament to vote in destructive measures for the Greek people,” said Tsipras. “The popular mandate clearly renders the bailout agreement invalid.”

Tsipras has until Friday to assemble his coalition, but it now seems beyond reach. The once mighty PASOK party, which voters reduced to an ignominious third place Sunday, has even slimmer prospects, and the sole hope for avoiding elections is if the parties agree to a government of national unity, which is uncertain at best.

Moving to stomp out signs of increasing discontent in crisis-stricken countries, the European Union and Germany – the biggest contributor to the EU’s crisis fund – urged members Tuesday to stick to their agreed budget cuts.

“The end of the debt policy has been agreed in Europe. It has to stay that way,” said German Foreign Minister Guido Westerwelle. European Commission President Jose Manuel Barroso stressed that member states must implement their promised spending cuts and tax increases.

Both offered the consolation of new efforts to revive struggling economies. EU President Herman Van Rompuy called for an informal summit of the EU’s 27 leaders May 23 to discuss economic growth and to prepare for a summit in June focused on job creation.

In voting no confidence in the main centrist parties Sunday, Greeks made clear that the EU austerity program, imposed largely at German behest, isn’t working and that no one wants the tough measures still to come.

Since September, diners at restaurants have seen a 23 percent tax added to their bills, a move that is sure to reduce the country’s competitiveness in tourism, its single biggest money-earner.

Public servants already have taken substantial pay cuts, and national health care has been trimmed back. Next month, as a condition for release of international funds needed to pay government bills, some 300,000 public servants in the army, police, the fire brigades, courts, universities and health care service are to take salary cuts of $1,300 a month, and there are to be additional cuts in pensions and allowances on top of sharp reductions already imposed.

PASOK and New Democracy leaders, who had been in an uneasy coalition since November, had no choice but to make those cuts under the EU bailout agreement. Yet after Sunday’s vote, it isn’t clear how any future government can sign up for more austerity.

Walking away from commitments already made could be a different matter. Voters asked Sunday about reneging on the agreement said the country shouldn’t walk away from its sworn obligations, a position New Democracy officials stuck to Tuesday.

“We can go to the lenders and say that we need to renegotiate the timing of the salary cuts, but we cannot tell them, ‘I am not bound by any of this,’” said Stavros Papastavrou, the international secretary for New Democracy. “If the Radical Left insists on its maximalist goal, that is something the two main parties cannot support, and I’m sure the EU cannot support.”

Papastavrou told McClatchy Newspapers that if the Radical Left adopted a more pragmatic stance of trying to get the EU to agree to changes in the timing of the cuts yet to come, New Democracy would agree. “We’d say, ‘Good luck, go to Brussels, bring your revolutionary spirit there, you have our support,’” he said. But if Tsipras insists on withdrawing binding letters of guarantee unilaterally, New Democracy could not be supportive. Lenders would tell Greece to “take a hike” if a Greek government were to announce it was reneging on the deal, he said.

The other possibility, though it seems remote, is for Germany to agree to the demand by France’s new president-elect, Francois Hollande, to add a plan to stimulate the European economies, something that would have the wholehearted backing of all the eurozone countries in fiscal hot water – Greece, Ireland, Italy, Portugal and Spain.

EFFECT ON MARKETS

Political uncertainty in debt-hobbled Europe spread to financial markets Tuesday, as European indexes closed near their lowest levels in months, and the euro neared a five-month low against the dollar.

The Dow Jones industrial average was down almost 200 points at its low point for the day before recovering most of its loss to finish down 76. It was the average’s fifth consecutive decline.

Prices plummeted for commodities such as oil and copper that depend on the health of the world economy.

– Associated Press


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