Chaos fears grow as Tsipras threatens Greek austerity deal

THE left-wing politician struggling to form a Greek government has declared his country was no longer bound by its pledges to impose crippling cutbacks in return for rescue loans.

Alexis Tsipras spoke yesterday – two days after Greek voters rejected mainstream pro-austerity politicians, backing a mix of parties from the Stalinist left to the neo-Nazi right but producing no clear winner in parliament.

Mr Tsipras also demanded an examination of Greece’s still-massive debt and a moratorium on repayment of the part of it that is “onerous,” statements that rattled investors and drove Greek shares down further.

“The pro-bailout parties no longer have a majority in parliament to vote in destructive measures for the Greek people,” said the 38-year-old, whose anti-austerity Radical Left Coalition party came out of nowhere to reach second place in Sunday’s vote. “The popular mandate clearly renders the bailout agreement invalid.”

Mr Tsipras is the second Greek party leader in as many days to try to form a government. If no coalition can be found, elections will be held in a month, with the instability boding ill for Greece’s hopes of keeping solvent and within the 17-nation eurozone.

Moving to stamp out signs of discontent in crisis-hit countries, the European Union and Germany urged members to stick to their agreed budget cuts.

“The end of the debt policy has been agreed in Europe. It has to stay that way,” said German foreign minister Guido Westerwelle, while European Commission president Jose-Manuel Barroso stressed member states must implement their promised spending cuts and tax rises.

Mr Tsipras’s party came second on Sunday, winning 52 of 300 seats with 16.8 per cent of the vote. He has the presidential mandate to end the political impasse by forming a governing coalition by Thursday. Antonis Samaras, head of the winning conservatives who hold 108 seats, gave up on the same task after just a few hours on Monday when Mr Tsipras spurned him.

Greece has depended on rescue loans from the EU and the International Monetary Fund since May 2010, after decades of profligate state spending and false accounts priced it out of money-lending markets.

To secure the bailouts, Athens slashed pensions, salaries, healthcare and pretty much everything else, while raising taxes. But more than two years of austerity have left the economy deep in recession and unemployment at a record high of 21 per cent.

Mr Tsipras urged Mr Samaras and third-placed socialist leader Evangelos Venizelos to renege on their support for the bailout commitments, asking them to “honestly repent for their disastrous choices that tore our society apart.”

Greece has promised to pass new austerity measures worth €14.5 billion (£1.17bn) next month and implement reforms. But Mr Samaras blasted Mr Tsipras’ proposal as “unbelievably arrogant,” warning it would “drag Greece into chaos” and see it expelled from the euro.

Mr Samaras said. “He is asking me to place my signature on the destruction of Greece – and that I will not do.”

It would be impossible for Mr Tsipras to govern without Mr Samaras, because the Communists have ruled out co-operation and no party will work with the neo-Nazi Golden Dawn.

If Mr Tsipras fails, the mandate would then pass to Mr Venizelos. If he fails and no other deal is made, elections will take place within a month.