US Edition Although the New Democracy party won the largest share of the vote, it will have to rely on its discredited socialist rivals Pasok to form a coalition government to accept the bail-out, keeping Greece in the single currency.
Both parties, which have ruled Greece for 38 years, are widely blamed for a crisis that has taken the country to the brink of economic collapse. Between them they won only about 40 per cent of the vote. By contrast, parties that opposed the bail-out increased their share of the vote to over 46 per cent, with Syriza, the radical Leftist coalition that wants to discard the agreement, almost winning outright.
Last night, Syriza insisted it would not join any kind of national unity government and promised to provide strong opposition to any pro-bail-out coalition.
Alexis Tsipras, the Syriza leader, said he would help the government if it took measures to alleviate the burden on the people. “But it must understand that austerity measures and the selling off of public wealth cannot be imposed,” he said. “Anti-austerity is the only viable solution.” Any New Democracy-led government will be under intense pressure to renegotiate the terms of Greece’s bail-out to stave off another political collapse and civil unrest.
Financial markets are expected to react to the tight election results, with speculation mounting that Greece may yet be forced out of the single currency. A weakened government will struggle to implement the austerity measures demanded by its EU and IMF creditors.
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.
David Cameron, who left for the G20 summit in Mexico late last night, is today expected to warn that global leaders must now “fight for the future of our world economy”.
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.
An indication of the difficulties he faces came last night when Pasok insisted that Syriza should join a coalition.
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: “We will not be reigned by fear, and espcially the sacrifices the Greek people have made will be realised.”
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 pledged 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 last night 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 so long as it stuck to credit agreements with 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.”
Angela Merkel, the German chancellor, said she expected Greece to stand by its “European obligations”. Didier Reynders, the Belgian deputy prime minister, said: “We can negotiate with the Greeks, there is space.” 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.
Germany and France are prepared to give Greece a “breathing space”.
Herman Van Rompuy, president of the EU, and Jose Manuel Barroso, president of the European Commission, said they saluted the courage and resilience of the Greeks.
The White House said it hoped a new Greek government would make “timely progress” on the economic challenges.