Greece facing new elections as leaders fail to form coalition

Greece was facing the prospect of fresh elections yesterday (Monday) after the party that finished first in Sunday's vote failed to form a coalition to steer the country through the next round of negotiations with its international creditors.

Antonis Samaras, leader of the conservative New Democracy party, admitted defeat in talks to form a government after being rebuffed by anti-austerity parties who made spectacular electoral gains. His party finished first but with a much-reduced share of the vote.

"I did whatever I could to secure a result but it was impossible," he said in a televised address after a day of meetings with other leaders.

New Democracy and Pasok, which alternated control of Greece for 38 years, lacked the combined strength for an absolute majority in the 300-seat parliament after a being firmly rejected by voters angry at their six-month coalition, which passed the recovery plan.

Mr Samaras said he had "returned the mandate" to President Carolos Papoulias, who will today invite Alexis Tsipras, the charismatic 37-year-old head of Syriza, an acronym for the Radical Left Coalition, to form a coalition after it finished in a surprise second place.

Mr Tsipras said he would seek to form a Left-wing alliance to reject the loan agreement's "barbaric" austerity measures, which have led to government wages and pensions being cut by up to 30 per cent.

Two thirds of Greek voters backed Syriza and other anti-austerity parties, who between them could muster 151 seats. But the chances of them co-operating are regarded as near impossible.

Syriza and the Communist Party of Greece have been at daggers drawn for years and both are highly unlikely to co-operate with the Independent Greeks, a new nationalist party that finished fourth with 10 per cent and 33 seats in the proportional representation system.

If Mr Tsipras fails, Pasok, which was the only party that conditionally agreed to join New Democracy in efforts to pursue an austerity package for the next stage of the pounds 90?billion bail-out agreed with the European Union and International Monetary Fund late last year, would have the chance to lead a government, but would almost certainly fail for the same reasons that defeated Mr Samaras.

If no coalition emerges, Greece will hold another election, a prospect that would alarm its international creditors and further trouble the markets. The main Greek stock index fell almost seven per cent on Monday.

There are renewed fears that Athens may default on its debts and eventually leave the eurozone. Under the current bail-out plan, Greece must demonstrate by next month that it can find a further euros 11?billion (pounds 8.9?billion) of cuts in spending before the end of 2014.