Greece rejects president candidate, forcing snap election and risking bailout

Tuesday 30 December 2014

Photo: Opinion polls show Greek prime minister Antonis Samaras' candidate for president would not be victorious over the leftist Syriza party. (AFP: Louisa Gouliamaki)

Map: Greece

Greek prime minister Antonis Samaras has announced plans for an early general election next month after the country's parliament rejected his candidate for president, throwing the country's international bailout into doubt.

After three rounds of voting, the only candidate in the race, former European commissioner Stavros Dimas, fell short of the 180 votes needed to become president, triggering a procedure leading to the dissolution of parliament.

Mr Samaras immediately announced he would meet outgoing president Karolos Papoulias on Tuesday to propose holding parliamentary elections on January 25 and called on Greek voters to ensure stability was preserved.

Opinion polls point to a victory by the radical leftist Syriza party, which wants to wipe out a big part of Greece's debt and cancel the terms of a bailout from the European Union and International Monetary Fund (IMF) that Greece still needs to pay its bills.

"With the will of our people, in a few days, bailouts tied to austerity will be a thing of the past," Syriza leader Alexis Tsipras said after the vote.

"The future has already begun."

The result leaves 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.

Syriza held a steady lead in opinion polls for months, although its advantage over Mr Samaras' conservative New Democracy party has narrowed in recent weeks.

Weakness among potential coalition partners of both could mean that whichever party wins in January will struggle to form a government and may not survive long.

Markets tumble amid uncertainty

Underlining the potential volatility facing markets, the main Athens stock market index fell 7 per cent while Greek bond yields jumped above 9 per cent. The main banking stocks index was down more than 11 per cent.

"The outcome of the final vote extends the political uncertainty for at least one month," said Theodore Krintas, head of wealth management at Attica Bank in Athens.

"One cannot know if the result of early elections will be a viable government.

"No significant economic decisions can be made before there is a new government and this is already reflected in the markets today," he said.

Mr Samaras, who was pushing for an early end to the deeply unpopular bailout program, brought forward the presidential vote earlier this month, gambling that victory would ease the growing political pressure on his ruling coalition.

A negotiating team from the "troika" of creditors from the European Commission, IMF and European Central Bank, had been due to resume talks in Athens next month to wind up the 240 billion euro ($358.8 billion) bailout and agree an interim, post-bailout program.

In a bid to reassure international partners, leftist leader Mr Tsipras sounded a more moderate tone recently, promising to keep Greece in the euro and negotiate an end to the bailout agreement 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.

Reuters

Greece rejects president candidate, forcing snap election and risking bailout - ABC News (Australian Broadcasting Corporation)