Greece Fails to Put Together New Government

Talks to form a new coalition collapse less than a week after elections.

Former Greek finance minister and socialist party leader Evangelos Venizelos acknowledged on Friday that his attempts to draw other left-wing parties into a ruling coalition had failed.

Venizelos’ was the third effort to form a coalition. Earlier, conservative leader Antonis Samaras, whose party came out the strongest in last week’s parliamentary election, and radical leftist Alexis Tsipras also failed to find a majority.

Tsipras has sworn to tear up Greece’s international bailouts and does well in the polls. In an election rerun, his far-left alliance could be the winner, robbing Samaras’ conservatives of the extra fifty seats they gained as a result of their victory on Sunday.

Venizelos, like Samaras before him, had tried to put together a unity government. The main conservative and socialist parties are just two seats short of a majority but other lawmakers, ranging from the far left to the far right, are united in their opposition to the austerity measures that have been implemented in exchange for two international bailouts.

The otherwise pro-European Democratic Left, which has nineteen seats in the current parliament, was seen as likeliest to join a coalition with the traditional ruling parties but refused to participate unless Tsipras’ radical left, which has 52 seats, also took part.

Tsipras brushed aside the notion of forming a unity government, describing it as scheme to salvage the bailouts which most voters rejected.

“It is not the left coalition that has refused this proposal,” the former communist and student leader said after the talks collapsed, “but the Greek people, who did so with their vote on Sunday.”

Despite strong resistance against the austerity measures, the conservatives and Venizelos’ Pasok party are still in favor of adhering to the conditions of their country’s bailouts.

In 2010, Greece received €110 billion in financial assistance from the European Union and the International Monetary Fund to prevent it from defaulting on its debt obligations.

A second package, worth €130 billion, was committed last February. More than half of Greece’s €350 billion debt was also subject to “haircuts” at the time. Banks and private investors were forced to write off billions in Greek bonds.

To qualify for continued financial support, Greece has to demonstrate progress on fiscal consolidation and market reforms. Its deficit this year is still projected to be above 10 percent of gross domestic product while economic liberalizations appears to have stalled.

If Greece fails to meet the conditions of the bailout, it could find itself unable to make good on its debt obligations as early as next month, when new elections will likely take place. A Greek bankruptcy would put its future in the European single currency at risk.