By Dina Kyriakidou
ATHENS (Reuters) - Greece's embattled socialist Prime Minister George Papandreou is clinging to power after losing a deputy in the effort to impose a fresh wave of austerity on an angry public, but his grip is weakened by problems at home and abroad.
A shrinking parliament majority, street protests and lack of wider consensus are testing Papandreou's resolve, as will any failure on the EU's part to come up with a comprehensive solution to Greece's biggest post-war economic crisis.
Snap elections now would be disastrous for his ruling Socialists, who won polls two years ago on tax-and-spend pledges and found themselves unprepared to deal with the debt crisis threatening to take down the euro and derail the global economy.
"He won't call a snap election unless he has to. He'll stay on even if he loses two more deputies," said Theodore Couloumbis of the ELIAMEP think tank. "He doesn't want to be the leader who brought his party to second or even third place in one term."
Faced with a huge debt mountain and shut out of bond markets, Greece took international bailout deals in exchange for strict fiscal measures to avoid default. Foot-dragging has prompted lenders to ask for more belt-tightening, angering a public which says only the poor are paying for the crisis.
Papandreou's parliament majority was cut to 153 out of 300 seats late Thursday, after he was forced to expel a senior party member and family friend for voting against part of a bill calling for EU/IMF prescribed wage cuts and tax hikes.
As over 100,000 protesters screamed expletives at parliament, more and more Socialist deputies made clear it was the last time they were blindly voting for measures they did not believe in and asked Papandreou to form a multi-party government.
"There won't be a next time," said PASOK deputy Sofia Giannaka. "PASOK voices saying it is impossible for a single-party government to impose future measures are multiplying."
Analysts said that unless the street protests turn violent, they will continue to poison the political climate but not topple the government.
"Greeks tend to express their rage even though there are no other political alternatives. Regardless how big, these protests cannot change the government's policies," said the head of ALCO pollsters, Costas Panagopoulos.
Government officials say thoughts this summer of calling snap elections were put on the back burner, as opinions polls started to show the conservative opposition New Democracy may eventually manage to win elections alone.
Polls show New Democracy rising fast, riding a wave of public discontent with belt-tightening and perceived lack of social justice, and getting about 22 percent of the vote compared to about 15 percent for PASOK.
That would not win the conservatives the election outright but it would strengthen their hand in demanding a repeat poll, which they may well win on their own. That means PASOK faces the prospect of not only losing the election but being left out of government altogether.
"The opinion polls changed the government's thinking and Papandreou will try to avoid elections at all costs," said a government official who requested anonymity. "But in every battle he fights, he loses a deputy. It's no longer an issue of what he wants but what he can do."
Government officials had said a year ago that Papandreou, who initially won 160 seats in parliament, was determined to call snap elections if his majority dropped to 153 deputies. This is no longer the case, they now say.
CONTENTIOUS BILLS AHEAD
With a tax bill and the 2012 budget due in parliament by the end of the month, more defections are possible before the end of the year. This has prompted even pro-government newspapers to urge Papandreou to heed his deputies and try to forge a coalition government.
"It is imperative that the prime minister consider the demands by many deputies and take political initiatives," said the daily Ta Nea. "The country must exit the dead end."
Analysts say New Democracy, brought down by scandals in 2009, can taste victory. It has refused to back government policies, saying austerity is only stifling growth and cannot get Greece out of the crisis.
"The two political leaders are like two kids at kindergarten, fighting over marbles while the country is near the edge of the abyss," Couloumbis said.
Its leader, Antonis Samaras, turned down an offer from Papandreou in June to step down as prime minister if that would get New Democracy to join a coalition government. Party officials say Samaras is adamantly opposed to any cooperation with the Socialists despite criticism from Brussels.
"In a democracy we must have alternatives. The opposition leader can't waste the country's prospect for another solution," Samaras was quoted by party officials as telling Papandreou in a recent discussion.
Even if Papandreou weathers the storm at home, his political future rides on what European leaders decide in two summits next week.
A rift between EU powerhouses Germany and France on how to deal with the crisis that started in Greece but spread to the rest of the euro zone periphery may hamper efforts to reach a comprehensive solution soon.
Papandreou is counting on the EU coming to the rescue soon to give his government time to turn things around and Greeks to see the light at the end of the tunnel of austerity measures before he calls snap elections, now expected next year.
"The threat of a snap election is now being used more as a threat against his MPs: help out or you're out," Couloumbis said. "If elections are held now, about 80 percent of them would lose their seats."
(Additional reporting by Renee Maltezou)