A Left supporter waits for the election result in central Athens. (Reuters)
Athens, June 17 (Agencies): The pro-bailout New Democracy party came in first today in Greece’s national election and could gather enough support to form a coalition to keep the country in the eurozone and prevent an economic tsunami at home, in Europe and around the world.
As central banks in several parts of the world stood ready to intervene in case of financial turmoil, Greece held its second national election in just six weeks to try to select a new government after an inconclusive ballot on May 6.
Today’s vote was seen as crucial for Europe and the world, since it could determine whether Greece is forced to leave the joint euro currency, a move that could have potentially catastrophic consequences for other ailing European nations and the global economy.
Official vote projections showed New Democracy winning 29.5 per cent and 128 seats. The radical Left Syriza party, which has vowed to repeal Greece’s international bailout deal, was expected to come in second with 27.1 per cent and 72 seats. The socialist Pasok trails with 12.3 per cent and 33 seats.
A coalition would need at least 151 seats to form a majority government. New Democracy and Pasok, Greece’s two traditional parties, have both expressed a willingness to work with other European nations to stay in the 17-nation eurozone.
New Democracy and Pasok have committed to a 130-billion euro ($164 billion) EU-IMF bailout that could keep the country from immediate bankruptcy. Syriza, led by a 37-year-old former communist, has vowed to tear up the punishing terms of the deal, potentially sending the country crashing out of Europe’s single currency and rocking the euro to its core.
New Democracy and Syriza have starkly different views about what to do about the bailout loans. Syriza wants to void the harsh austerity measures demanded by lenders that have caused Greek living standards to plummet. The other backs the bailout deal but wants to amend it.
The choice — the most critical in decades — could determine whether Greece abandons the joint euro currency used by 17 nations and returns to its old currency, the drachma.
But there are no rules governing a country’s exit from the eurozone, and a Greek pullout could spark such a panic that other debt-strapped European nations like Portugal, Ireland, Spain and Italy might also have to leave.
That domino scenario — known in economic parlance as contagion — could engulf the euro, causing global financial panic.
Finance officials in the eurozone have discussed limiting the size of withdrawals from ATM machines, imposing border checks and introducing eurozone capital controls as a worst-case scenario.
The big question today was how deep Greek anger at the bailout terms would propel the anti-bailout Syriza, led by Alexis Tsipras.
Tsipras, a former student activist, has vowed to rip up Greece’s bailout agreements and repeal the austerity measures, which have included deep spending cuts on everything from health care to education and infrastructure, as well as tax hikes and reductions of salaries and pensions.
But his pledges, which include cancelling planned privatisations, nationalising banks and rolling back cuts to minimum wages and pensions, have horrified European leaders, as well as many Greeks.
Tsipras’s opponents argue that the inexperienced young politician is out of touch with reality. Greece has been dependent on the rescue loans since May 2010, after sky-high borrowing rates left it locked out of the international markets following years of profligate spending and falsifying financial data.