Greek election victor to hold coalition talks

By Nicholas Paphitis

Associated Press

Published: Monday, June 18 2012 2:41 a.m. MDT

Supporters of the far right party of Golden Dawn celebrate the results of the elections outside their headquarters office in Thessaloniki, Greece Sunday, June 17, 2012. Official projections showed the Golden Dawn party returning to the 300-member parliament with 18 seats, just three fewer than it had won in an inconclusive election on May 6, when no party won enough votes to form a government amid a deep financial crisis that threatens Greece's place in the Eurozone and could hurt the global economy. The pro-bailout New Democracy party came in first Sunday in Greece's national election, and its leader has proposed forming a pro-euro coalition government.

Dimitri Messinis, Associated Press

ATHENS, Greece — Greek conservative leader Antonis Samaras will launch coalition talks Monday after coming first in national elections that follow weeks of uncertainty over the debt-crippled country's future in Europe's joint currency.

The campaign was closely watched by global leaders and markets, while central banks stood ready to intervene in case of financial turmoil as the Sunday's election was seen as a vote on whether Greece should stay among the 17 nations that use the euro.

A Greek exit would have potentially catastrophic consequences for other ailing European nations, while the fallout would hit the United States and the entire global economy.

Leaders of the European Union appeared relieved that a pro-austerity government could now be formed. The EU "is convinced that continued fiscal and structural reforms are Greece's best guarantee to overcome the current economic and social challenges," it said in a statement.

Asian stock markets climbed early Monday on the news, as did those in Greece with Athens stocks gaining 5.1 percent in early trading.

Sunday's vote "will probably ease fears of an imminent Greek euro exit," said Martin Koehring of the Economist Intelligence Unit. "But the key question is how quickly can a government be formed?"

With 129 of Parliament's 300 seats, Samaras' New Democracy party lacks enough legislators to govern alone, and must seek allies among the pro-bailout Socialists, who came third.

But the deal that evaded Samaras after first elections on May 6 looks more attainable this time. With the Socialists' backing he would control 162 seats, and could seek a further boost from the small Democratic Left party, which, while opposing the country's harsh austerity program, has said it will do what is needed to help form a strong government.

Samaras will receive the presidential mandate to start power-sharing talks shortly after noon, after President Karolos Papoulias is handed the final election results.

With 99.95 percent of the ballots counted so far, New Democracy has 29.66 percent, followed by the Syriza radical left coalition at 26.89 percent. The extreme far-right Golden Dawn party, whose members have been linked with violent attacks on African and Asian immigrants, came fifth with 6.92 percent winning 18 seats — down from the 21 legislators it elected on May 6.

Greece has survived for more than two years on rescue loans from its European partners and the International Monetary Fund. The vital bailouts are conditional on the country continuing with its deeply unpopular package of spending cuts, and pushing through new structural reforms.

A statement late Sunday by Luxembourg Prime Minister Jean-Paul Juncker, who heads the eurogroup, said representatives of the EU, the IMF and the European Central Bank would visit Athens soon to discuss the way forward.

The statement said the eurogroup "is convinced that continued fiscal and structural reforms are Greece's best guarantee to overcome the current economic and social challenges."

If Greece's funding is cut off, it will rapidly run out of cash as the government still spends considerably more every year than it receives in taxes and other revenues. That would create such practical difficulties that Athens could ask to leave the euro, adopting a deeply devalued local currency that would boost competitiveness — but at the same time wipe out savings and send the cost of vital imports skyhigh.

Syriza, which campaigned on a promise to renege on the bailout commitments, has ruled out cooperation with Samaras.

Speaking shortly after the result was announced, Samaras said Greeks voted to stay in the euro, foster growth and respect the country's international commitments.

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