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Greece schedules new elections in June

By Agence France-Presse
Wednesday, May 16, 2012 13:46 EDT
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Ripped EU and Greek flags flutter close to Parthenon temple on top of the Athenian Acropolis. Greece will go to the polls for the second time in less than two months on June 17, the Athens News Agency says, as fears grow of more instability over the country's eurozone future. (AFP Photo/Louisa Gouliamaki)
 
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Debt-laden Greece is headed for new elections next month following an indecisive vote and on Wednesday named a judge as caretaker premier amid growing fears over the country’s eurozone future.

Panagiotis Pikrammenos, the head of Greece’s top administrative court, was tasked with organising the next general election, which the semi-state Athens News Agency said would be held on June 17.

“This is clearly a caretaker administration whose sole purpose is to lead the country to elections,” Pikrammenos said after accepting the mandate from President Carolos Papoulias.

“It is clear to all that our homeland is going through difficult times. We must safeguard its prestige and assure a smooth transition,” said Pikrammenos, who was to be sworn in at 1700 GMT on Wednesday.

Tough austerity measures included in a 240-billion euro ($300 billion) EU-IMF deal for Greece saw voters on May 6 desert the main Pasok and New Democracy parties which had supported the bailout.

Since the poll, Greece’s parties have been unable to form a government.

Reports said that Pikramenos, the 67-year-old French-educated Council of State president, would bring a number of veteran technocrats and retired politicians into cabinet posts of his temporary administration.

Greece and the world’s financial markets had been anxiously awaiting the date for new polls amid growing fears the cash-strapped nation could be forced out of the 17-member eurozone.

“The country is on a knife’s edge,” said the Hellenic Federation of Enterprises, one of Greece’s main business lobby groups.

There is no guarantee that the new vote will produce a viable government and left-wing Syriza, which has threatened to tear up the EU-IMF deal, is tipped to win after surging into second place in the May 6 election.

News that about 700 million euros ($890 million) had been withdrawn from Greek banks on Monday has meanwhile stoked the tensions, with investors fearful that a Greek euro exit would be chaotic for everyone.

The European Central Bank would like Greece to stay in the eurozone, its president Mario Draghi said on Wednesday.

Christian Schulz of Berenberg Bank said the withdrawals suggested Greeks were “getting increasingly worried about the country’s future in the euro”.

He said they “do not indicate panic quite yet. However, this could change soon, so that the central bank would have to step in to save the banks.”

Commerzbank analysts said the risk of a “Grexit” — an uncontrolled Greek default and eurozone exit — had increased with the news of fresh polls.

Press reaction was subdued, reflecting the feeling that while most Greeks want to stay in the eurozone, they cannot live with more spending cuts which have already triggered strikes and sometimes violent demonstrations.

The centre-left daily Ethnos wrote Greece was heading for “elections in a minefield. The result will determine the country’s future in the eurozone.”

The election “will test the patience of Greece’s partners on whether the country will stay in the eurozone,” financial daily Naftemoporiki said.

There was little comfort found in a pledge by German Chancellor Angela Merkel, made alongside new French President Francois Hollande at their first meeting Tuesday, that “we want Greece to stay in the euro”.

Merkel said the two European powerhouses were also prepared “to study the possibility of additional growth measures in Greece” if Athens sought them.

But on Wednesday German Finance Minister Wolfgang Schaeuble insisted once again that it was not possible to renegotiate the EU-IMF deal, the second in two years aimed at averting bankruptcy.

“Greece must be ready to accept the (EU-IMF) aid… Those who win the elections will have to decide if they accept the conditions or not,” he said.

European Commission head made the same point.

“There is no way of changing the commitments taken by Greece and also by the other 16 euro area member states,” he said.

The euro tumbled Wednesday to a four-month low of $1.2681 but later recovered to $1.2748, edging up as stock markets steadied in afternoon European trade.

“There is a pervading sense of unease in financial markets,” National Australia Bank said, noting “increasing outflows from its (Greece’s) banking sector and broader discussion of contagion effects,” it said.

“The concern now is regarding contagion. It’s not Greece per se that is the problem but the credibility of the euro as a currency.”

That contagion effect was showing up most strongly in Spain, struggling to stabilise its banking sector and get its economy growing again, where government borrowing costs were rising sharply.

[Ripped EU and Greek flags flutter close to Parthenon temple on top of the Athenian Acropolis. AFP Photo/Louisa Gouliamaki]

Agence France-Presse
Agence France-Presse
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