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Wednesday, May 9, 2012

Second attempt to form a Greek coalition government fails



The leader of the second place finisher in Greek elections the Syriza party has admitted failure today in his attempts to form a coalition government. Alexis Tsipras said he failed because he insisted on rejecting the austerity measures required by the Troika in return for new bailout money.

Tsipras talked only with New Democracy and PASOK the first and third parties in election results. He might have tried a left coalition but the Communist Party has indicated it would not join in a coalition.

The leader of the third running party Evangelos Venizelos now has his turn although it seems unlikely he can be successful. If he fails then there will be elections in June and a long period of crisis. There may be a great deal of pressure on PASOK and New Democracy to form another coalition to avoid elections and carry on with reforms.

If Athens rejects the austerity deal the money that was promised in June will probably not be given. Both the EU and Germany have made it clear they expect Greece to keep its commitments if it expects to have new money.

In the short term the EU will provide an installment of 6.7 billion to meet immediate debt obligations. Representatives of the Troika (European Commission, European Central Bank and International Monetary Fund) have aborted a trip to Athens that was to happen in mid May. No date has been set for another meeting. The Troika are obviously standing by until the situation in Greece becomes more stable or at least clearer! For more see this article..

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