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Wednesday, May 9, 2012

Greece: No coalition government in sight as yet



Alexis Tsipras leader of the 2nd place Styriza party has so far been unable to form a coalition government. Given that the two other largest parties support the bailout deal while his party opposes it, it seems unlikely that he can form a government. If he fails then the task will fall upon the third place PASOK socialist party. However, it too is unlikely to be able to form a coalition. If this happens there will need to be new elections in June.

The leader of the New Democracy party Samaras was himself unable to form a coalition earlier. International creditors have been warning Greece that if the austerity measures are not implemented then bailout money will not be forthcoming in June. The uncertainty resulting from Greek politics is one of the reasons stock markets in many countries have declined of late. Greece has also promised that it will pass new austerity measures worth 18.9 billion next month as well as implement agreed upon measures. Given the political situation it seems quite unlikely that this will happen.

The Communist Party has refused to join any coalition government and the right wing New Dawn party has not been contacted by any one as yet since it is regarded as too extreme apparently. Tsipras wants Greece to pull out of the bailout agreement. This position puts him at odds with both New Democracy and PASOK. The New Democracy leader said"Denouncing the agreement, as [Tsipras] proposes, will lead to immediate internal collapse and international bankruptcy, with the inevitable exit from Europe," However, Samaras was open to amending the agreement.

Greece received two bailouts worth 312 billion dollars. In return salaries and pensions have been cut, state jobs eliminated, and new taxes imposed. The result has been continued recession now lasting five years.

The German foreign minister said that Greece will not obtain any further loans unless it continues its austerity policies. He said:"Germany would like to keep Greece in the euro zone but whether Greece actually does remain in the euro zone or not lies in its own hands," However it looks more and more as if Greece will not meet the demands of the EU and will end up bankrupt and leaving the Euro zone. For more see this article.

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