Greece election vote leaves Euro in balance

Central banks across the world are thought to be ready to pump billions of
dollars, euros and pounds into the global economy today if it becomes
necessary.

European leaders including Angela Merkel, the German chancellor, and François
Hollande, the French president, delayed leaving for the summit as they
assessed the impact of the Greek result last night in a conference call.
France said the discussions had been “intense”. They will both come under
strong pressure from Mr Cameron and Barack Obama to develop a coherent and
agreed plan to stop the eurozone crisis spreading to bigger economies such
as Italy.

Germany may have to provide billions of euros for a new rescue package.

Senior German figures indicated within minutes of official Greek exit polls
last night that they were prepared to renegotiate the terms of the bail-out
with Greece. However, the fragile nature of the Greek government means this
strategy could threaten the crisis dragging on and continuing to undermine
other economies. Antonis Samaras, leader of the New Democracy party, vowed
to create a pro-euro unity government and said Greece would honour its
bail-out commitments.

However, an indication of the difficulties he faces came last night when Pasok
insisted that Syriza should join a coalition. Alexis Tsipras, the leader of
Syriza, swiftly ruled out that possibility.

New Democracy may also need to look to the Democratic Left, a party that talks
about “gradual disengagement” from the austerity drive. In his victory
speech, Mr Samaras said Greece had “voted to stay in the euro”. He said:
“The sacrifices of the Greeks will not be in vain. We will continue with our
European partners to combat the huge problem of unemployment. But Greece’s
position in Europe will not be in doubt.”

He invited any party that shared his goal to “participate in a government of
national salvation”. The appeal is likely to be answered only by the
Democratic Left, which should finish with 17 seats.

Greek voters returned to the polls after elections last month and days of
negotiations failed to deliver a government.

However, despite dire warnings from European leaders, official exit polls
suggested that the Left-wing Syriza party which has vowed to block the
austerity programme received 27.1 per cent of the vote. In total, the share
of the vote for other anti-austerity parties appeared to have risen to more
than 46 per cent.

Golden Dawn, a neo-Nazi party with squads of thugs, was predicted to win seven
per cent again and enter parliament for the first time.

However, the official exit polls suggested that the New Democracy party would
be given the opportunity to lead a new coalition government after receiving
29.5 per cent of the vote. It receives a 50 seat bonus for coming first,
giving the party the initial opportunity to form a government.

Mr Tsipras ruled out joining a New Democracy-led coalition, suggesting his
party would better serve the country to “ensure the government acts in the
best interests of the Greek people”.

He said: “The Greek people condemned the memorandum twice in six weeks so
other parties should accept it is non-viable. Our rejection of the
memorandum is the only solution, not only for us but for the rest of Europe.”

Germany last night offered to allow a New Democracy led coalition a longer
period to make spending cuts — if it promised to stick to agreement with
international creditors, the EU and IMF.

Guido Westerwelle, the German foreign minister, said: “There cannot be
substantial changes to the agreements, but I can well imagine talking again
about timelines.”

Didier Reynders, the Belgian deputy prime minister, said: “We can negotiate
with the Greeks, there is space. Spain was also given an extra year.”

A Greek government must agree 77 austerity measures and sack 150,000 civil
servants to get the next instalments of a €240 billion EU-IMF bail-out by
the end of the summer.

Both Germany and France are prepared to give Greece a “breathing space”.

It is thought that France, under the Socialist leadership of Mr Hollande, may
favour a more dramatic softening of the austerity programme. The French are
also pushing for new European-wide bonds to be issued, effectively
underwritten by Germany.

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