Greece vote may end paralysis

ATHENS — Weeks of political paralysis look set to end in Greece with the election of parties that support the country’s international bailout agreements, but the question now turns to whether a fragile new government can deal effectively with a tanking economy and popular unrest.

The conservative New Democracy party eked out a slim victory in Sunday’s parliamentary elections over Syriza, the radical-left group that vowed to ditch Athens’ multibillion-dollar rescue deals and the harsh austerity measures they entailed. European officials had warned that such a move would result in Greece’s expulsion from the Eurozone.

The imminent threat was alleviated somewhat by New Democracy’s first-place finish. Although the center-right party did not garner enough seats in Parliament to govern on its own, it has a strong shot at forming a coalition or coming to some sort of arrangement with other parties willing to honor the bailout deals, including the socialist party PASOK, which came in third.

But time is of the essence as recession and social deterioration worsen in debt-ridden Greece. Gripped by political instability since an inconclusive election last month and burdened with an increasingly dysfunctional government, the country is in danger of slipping further behind in meeting the deficit-cutting targets demanded by its creditors, spurring speculation it may yet have to seek its third bailout in three years.

Antonis Samaras, the New Democracy leader and potential new prime minister, urged his rivals to join him in a new government dedicated to promoting economic recovery. Talks will start in earnest Monday; with more seats for his party in Parliament this time, Samaras hopes to succeed where he failed after topping the polls May 6.

“We are determined to do what it takes, and do it fast,” Samaras told supporters Sunday night after declaring victory.

He said that Greeks had voted “to stay anchored with the euro, remain an integral part of the Eurozone, honor the country’s commitments and foster growth. This is a victory for all Europe.”

Any administration headed by Samaras, however, is likely to enjoy only a weak mandate. New Democracy won 29.8% of the vote, just ahead of Syriza’s 26.8%, with 94% of the vote counted; only a 50-seat bonus automatically awarded to the first-place party gives New Democracy a large leading bloc in the 300-member Parliament.

The results also confirmed the stridently anti-austerity Syriza as Greece’s main opposition party, consolidating its breakthrough second-place finish in last month’s voting, which shocked many Greeks and other Europeans as well. The party’s leader, 37-year-old Alexis Tsipras, now has an official platform from which to keep up his populist hammering at the bailout agreements and to strengthen his power base among young people and others fed up with cronyism and corruption in Greek politics.

Tsipras, a charismatic former student activist, gave no indication Sunday night of any intention to join a power-sharing government alongside those he denounces as yesterday’s leaders. Instead, he pledged to hold Samaras’ feet to the fire.

“We will not sacrifice our position,” Tsipras said. “We will also demand that … the government take note and take action for the benefit of the country. We should all know that austerity measures … cannot continue, because they have not been ratified by the people.”

Locked out of the financial markets, Athens has had to accede to brutal spending cuts in exchange for foreign loans to stay afloat, including a $145-billion bailout package in 2010 and a second rescue deal last year that was worth $170 billion. The country is into its fifth consecutive year of recession, a breathtaking economic contraction marked by galloping rates of unemployment, poverty and homelessness.

In a measure of how much Syriza has shifted the terms of debate, even New Democracy now insists on the need to modify some elements of the bailout package that it previously approved together with PASOK, the socialist party.

“We will work together with our partners in Europe in order to supplement the current policy mix with growth-enhancement policies,” Samaras said.

European capitals greeted Samaras’ victory with relief and a hint that they might be willing to bend a little, perhaps by offering Greece more time to meet its spending and loan-repayment targets. Within weeks, Athens is supposed to detail about $14 billion in further budget cuts.

In a joint statement, Eurozone officials said they remained “convinced that continued fiscal and structural reforms are Greece’s best guarantee to overcome the current economic and social challenges.” But Foreign Minister Guido Westerwelle of Germany, Europe’s de facto paymaster, told German radio that, though “there cannot be substantial changes to the agreements,” he could “well imagine talking again about timelines.”

The White House issued a statement expressing hope that Sunday’s results would “lead quickly to the formation of a new government that can make timely progress on the economic challenges facing the Greek people.”

Foreign governments were taking no chances, however. Fear that a Syriza win or another protracted stalemate could spark investor flight from other troubled Eurozone economies such as Spain and Italy prompted pledges by various central bank officials to intervene if necessary.

The euro debt crisis and the situation in Greece will be at the heart of discussions at the Group of 20 summit taking place Monday and Tuesday in Mexico.

Samaras, who has a degree from Harvard, is likely to seek parliamentary support from PASOK, his party’s traditional nemesis, once a dominant force in Greek politics but now a wraith of its former self. PASOK might not formally join a coalition government, but could agree to support Samaras’ administration in the Parliament.

Senior New Democracy officials said Samaras would also try to woo Fotis Kouvelis, the moderate leader of the Democratic Left party, to broaden his government’s appeal.

“No one wants to be the spoiler who will take the country to a third round of elections,” said political analyst John Loulis. “So it will force the parties to come to a coalition agreement.”

One of the biggest impediments to forming a coalition could be Samaras himself. He is deeply unpopular with many Greeks, who see him as a power-hungry politician.

Indeed, some of those who cast their ballots for his party and for PASOK on Sunday did so with distaste, motivated more by dread of the consequences of a Syriza victory.

“I voted for a protest party the first time around,” said Vicky Argyropoulou, a middle-aged volunteer worker. “This time I went back to one of the two main parties, casting a vote in their favor and then feeling like I wanted to chop my hand off.”

henry.chu@latimes.com

Special correspondent Carassava reported from Athens and Times staff writer Chu from London.