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Friday 21 October 2016

Greek opposition tries to form government amid Syriza split

Published 21/08/2015 | 06:23

Alexis Tsipras has announced his government's resignation and called early elections (AP)
Alexis Tsipras has announced his government's resignation and called early elections (AP)

Greece's president has asked the head of the main opposition party to try to form a new government.

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It comes a day after prime minister Alexis Tsipras resigned and called an early election next month to deal with a governing party rebellion over Greece's third bailout deal.

The opposition has few chances of uniting and forming a government, meaning that after more than five years of a worsening financial crisis, Greece is headed for its fifth national election in six years.

Although Mr Tsipras is widely tipped to win the vote, if he fails to secure an outright majority he would have to seek a complex coalition that could hamper his ability to govern.

Hardline politicians in Mr Tsipras's radical left Syriza party announced on Friday they were splitting from the party and forming their own movement, which becomes the third largest group in parliament.

Outgoing government officials say the likeliest election date is September 20, just eight months after Mr Tsipras was elected on promises to fight creditor-demanded spending cuts and tax hikes, terms he later agreed to in order to secure Greece a third bailout and keep it from falling out of the euro.

President Prokopis Pavlopoulos met conservative New Democracy party head Evangelos Meimarakis on Friday morning and asked him to try to form a government.

Mr Meimarakis has three days to seek coalition partners before having to return the mandate, which would then go to the third largest party in parliament for a further three days at most.

The third largest party is now the new movement formed by the 25 politicians who split from Syriza on Friday. The group, named Popular Unity, will be led by former energy minister Panagiotis Lafazanis.

Mr Meimarakis said he would also seek a meeting with the speaker of parliament to seek her contribution in trying to cobble together a government and avoid early elections.

He said he wants to see "if we can find an essential, serious political solution from the current parliament, so as to avoid ... all the negative issues that can be caused for a long time by this electoral process that, in my opinion, isn't helping in anything".

However, it is unlikely that Mr Meimarakis or the new party will be able to form a government. At that point, parliament will be dissolved and a caretaker government appointed to lead the country to early elections within a month.

Announcing his resignation in a televised address late on Thursday, Mr Tsipras said he secured the best deal possible when he agreed to a three-year, 86 billion euro (£61 billion) bailout from other eurozone countries to save Greece from a disastrous exit from the shared euro currency.

But the deal came with strict terms for more belt-tightening.

Mr Tsipras's reversal in accepting the demands by creditors led to outrage among Syriza hardliners. About one in four Syriza politicians refused to back the bailout's ratification in parliament last week, which was only approved with backing from opposition parties.

Greece's European creditors did not appear dismayed by Mr Tsipras's move, which was widely expected.

But some analysts said it could make it more difficult for Greece to implement the terms of its latest bailout.

Teneo intelligence analyst Wolfango Piccoli said while Mr Tsipras's gamble could pay off politically, it will probably delay the first review of the new bailout programme - expected in October - because "the caretaker government will not be able to implement any meaningful policy measures".

The political uncertainty is taking its toll on Greece's stock market, with the Athens Stock Exchange down 0.5% in mid-day trading, after closing 3.5% down on Thursday on election speculation.

Mr Tsipras had delayed a decision on whether to call a new election until after Greece received its first instalment from the new bailout and made a debt repayment to the European Central Bank; it did both on Thursday.

"Now that this difficult cycle has ended ... I feel the deep moral and political obligation to set before your judgment everything I have done, both right and wrong, the achievements and the omissions," he said.

Mr Tsipras insists he had to accept the unpalatable bailout terms to keep Greece in the euro, the EU's common currency. He is betting on a stronger mandate if polls are held before voters feel the impact of the new steep tax hikes and spending cuts.

He acknowledged on Thursday the bailout deal was not what his government had wanted.

"I wish to be fully frank with you. We did not achieve the agreement that we were hoping for before the January elections," he said. "But ... (the agreement) was the best anyone could have achieved. We are obliged to observe this agreement, but at the same time we will do our utmost to minimise its negative consequences."

Money transfers and withdrawals are still restricted under controls imposed in late June to stem a bank run. There are weekly limits on cash withdrawals and Greeks can only transfer up to 500 euro (£359) abroad per month. Companies have faced problems paying suppliers abroad, with all international payments requiring a laborious approval process.

Press Association

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