Greek election a puzzle that could derail bailout

Reuters News

4/23/2012 11:32:38 AM - Reuters News

By Dina Kyriakidou

ATHENS (Reuters) - Greek voters are unlikely to pick a clear winner in a snap election that is expected to send a record number of parties to parliament next month and test the international bailout keeping the country afloat.

Political analysts say the outcome of the May 6 election is hard to predict. The conservative New Democracy party is seen ahead but not by enough to take sole charge of the indebted euro zone member.

This could lead to days or weeks of negotiations while it forges a coalition with the Socialist PASOK party to impose austerity and reforms to meet the terms of a second 130 billion euro bailout from Europe and the International Monetary Fund.

"It's a great puzzle," said Theodore Couloumbis of the ELIAMEP think tank. "I hope the pro-bailout parties will be able to form a government. This is the most likely scenario."

The two main parties have backed the coalition government of technocrat Prime Minister Lucas Papademos, formed in November, when ex-premier George Papandreou stepped down after an internal party revolt over his handling of the crisis.

Europe's debt troubles have had major political implications throughout the region. Ten euro zone governments have been swept from office since the start of 2009, many paying the price for drastic spending cuts aimed at improving public finances.

The crisis has also led to a rise in support for populist parties, with voters angry at unemployment, austerity or the cost of bailing out other debtors casting protest votes to make it harder for traditional political forces to govern.

The last Greek opinion polls published before Friday's cutoff date showed 8-10 parties may enter parliament, including extremists riding a wave of public discontent with bigger parties blamed for decades of scandals and mismanagement that brought Greece to the brink of bankruptcy.

New Democracy leads with about 23 percent of the vote and the Socialist PASOK comes in second with about 16 percent. The two - the only major parties to support the bailout - would need about 35-40 percent of the vote to form a government together.

After that, four smaller parties each garner about 10 percent of the vote - three leftist groups plus the Independent Greeks led by newcomer Panos Kammenos, an anti-bailout, New Democracy rebel.

GOLDEN DAWN

The ultra-nationalist Golden Dawn is expected to enter parliament for the first time with about 5 percent of the vote, tapping far-right LAOS voters angered by its support for the coalition government of Papademos in November.

In Greece, other smaller groups also have a chance of crossing the 3 percent of the vote barrier to get into the 300-seat house. Among them is the pro-bailout party of Dora Bakoyanni, a former foreign minister who splintered from New Democracy in 2010.

"For the first time in 40 years, people are not voting left versus right but pro-bailout versus anti-bailout," ALCO pollster Costas Panagopoulos said.

"We cannot exclude any scenario - the picture may stay the same or the two main parties may be boosted."

The "troika" of IMF, EU and ECB lenders have said the election is a big risk to the fiscal steps and reforms Greece needs to deliver to get cash and turn its ailing economy around, including 11 billion euros worth of new measures in June.

The outlook depends on whether New Democracy leader Antonis Samaras and PASOK leader Evangelos Venizelos can set aside differences and forge a viable coalition. One sticking point is who gets to be prime minister.

Samaras is hoping a last-minute polarization of voters will get him enough ballots, or at least get close, to ruling alone. If his numbers look good, he could force another election to see if can get a boost to give him an absolute majority but prolonging the political uncertainty for weeks.

If he is forced to cooperate with other parties, analysts say PASOK is his sole option as the only other pro-bailout party but he will insist on being prime minister.

Venizelos, hammered by EU peers as finance minister during the debt crisis, single-handedly revived the fortunes of PASOK after it plunged to fifth place in opinion polls under Papandreou.

Winning by a landslide in 2009, Papandreou's government underestimated the problem that plunged the whole euro zone into crisis. It dragged its feet, promising pay rises and other handouts instead of taking immediate measures.

Forced later to slash salaries, pensions and social benefits, it plunged the economy into its worst recession in decades. Unemployment has rocketed to over 21.8 percent, with one in two youths without a job.

VIOLENT PROTESTS

People frustrated with the measures and the impunity of politicians they hold responsible for the crisis have taken to the streets in violent protests, shaking fists at parliament and chanting "Thieves! Thieves!"

"They stole, they pocketed our money and I voted for these thieves for years. I feel betrayed," said pensioner Maria Bogiopoulou, 65. "I will vote for a small party."

Venizelos won the PASOK leadership battle uncontested last month. He has already said his goal is not to be prime minister and aides say he would rather find a figure of wider acceptance to lead the new government, which should include many parties.

But his main differences with Samaras are over policy. New Democracy angered EU partners when it voted against the first bailout, saying it would not work.

Feeling vindicated when Greece plunged into its fifth year of recession, Samaras, 60, said he supported the second bailout because of a bond swap that cut Greek debt by 100 billion euros.

But he has made clear that although he accepted the deal's goals, he could get there by offering some relief to the disaffected, reducing taxes and boosting the economy.

"The only thing we must do is to cut public sector waste," he told supporters on Sunday. "We are asking for a clear mandate so we can do what must be done, what the country needs."

Venizelos, 59, a constitutional law professor and socialist veteran, is more faithful to the measures he personally negotiated with the EU and the IMF. But he would spread them over three years instead of two to lessen the burden on people, an option that he has secured with partners, he said.

"The best scenario would be a Mario Monti-style coalition lead by a technocrat like Papademos," Couloumbis said. "The worst would be if the anti-bailout parties manage to forge a coalition but it's unlikely as they disagree with each other."

(Additional reporting by Renee Maltezou; editing by Anna Willard)