Greek stalemate signals new election

GREEK lawmakers failed to elect a new president in a final round of voting yesterday, leaving the country facing an early election that could derail the international bailout programme it needs to keep paying its bills.

Alexis Tsipras and his politicians applaud after the last round of the presidential vote. Picture: Reuters

The only candidate in the race, former European Commissioner Stavros Dimas, matched the result achieved in the second round of voting before Christmas but fell short of the 180 votes needed to become president.

Under Greek law, a parliamentary election must now be called, leaving financial markets and Greece’s European Union partners facing weeks of uncertainty that could undermine fragile signs of economic recovery and derail its public finances.

A general election is now expected to be held by early February.

The radical leftist Syriza party, which wants to tear up Greece’s bailout agreement with the EU and International Monetary Fund and wipe off a big part of its debt, has held a steady lead in opinion polls for months, although its advantage has narrowed in recent weeks.

Divisions among potential post-election coalition partners for both Syriza and prime minister Antonis Samaras’s conservative New Democracy party have also complicated the outlook, increasing the risk that any new government would be short-lived.

Underlining the potential volatility facing markets, the main Athens stock market index accelerated losses to fall 10.7 per cent after the vote, while Greek bond yields jumped above 9 per cent. Mr Samaras urged politicians at the weekend to elect Mr Dimas to succeed the 85-year-old head of state Karolos Papoulias and allow the final round of bailout talks to be completed. But, having offered a deal to bring forward elections scheduled for mid-2016 to the end of next year, he ruled out new concessions and said he was confident of winning any election.

Mr Samaras, who had been pushing for an early end to the deeply unpopular bailout programme, brought forward the presidential vote earlier this month in a bid to end gathering political uncertainty hanging over his ruling coalition.

A negotiating team from the “troika” of creditors from the EU, IMF and European Central Bank had been due to resume talks in Athens next month to wind up the €240 billion (£188bn) bailout deal and agree an interim programme. In an effort to reassure international partners, Syriza leader Alexis Tsipras has sounded a more moderate tone recently, promising to keep Greece in the euro and bring about an end to the bailout agreement through negotiation rather than scrap it unilaterally.

But he has stuck to his promise to reverse many of the tough austerity measures imposed during the crisis, reversing cuts to the minimum wage, freezing state layoffs and halting the sale of state assets.

Yesterday, the European Central Bank said it was seeking views from Greek authorities on how to proceed with the review of the country’s bailout.

In a statement, it said: “It’s now for the Greek electorate to decide about the future composition of the parliament and the government.

“We will not interfere in, or comment on, this democratic process.”

“We will wait for the views and suggestions of the Greek authorities on how to best proceed with the review, and we will discuss this with the European Commission and the IMF,” it added.

The bank said Greece had made “impressive progress in stabilising its public finances and reforming its economy over the last years” and that the country was expected to return to growth next year.