The parties elected to Greece’s parliament last week either oppose the austerity measures the country is implementing or fear paying the political price of supporting them alone. The situation is unlikely to lead to a viable governing coalition

A new election next month seems increasingly likely in Greece, as numerous attempts to form a governing coalition after the inconclusive 6 May elections have failed.

Yesterday evening Greek President Karolos Papoulias convened the leaders of the three parties – out of the seven winning seats in parliament – who have not yet ruled out taking part in a coalition. The outcome of the meeting was not yet known at the time of going to print, but each party has been wary of forming a government without the participation of other parties.

The three parties – centre-right New Democracy, the Pan-Hellenic Socialist Movement (PASOK) and the Democratic Left (DIMAR) – have enough seats to secure a parliamentary majority on their own. But they are well aware that the new government would likely have to implement unpopular measures to ensure that Greece remains afloat and in the eurozone, and are not enthusiastic about seeing other parties make political gains at their expense while sitting pretty in opposition.

The results of this month’s election provided some evidence to back their concerns, as ND and PASOK both took a beating after having, in a grand coalition convened last November after the ruling PASOK government was close to losing a parliamentary majority, helped ensure further cuts were implemented.

ND came first, but with just 18.9% of the votes, while PASOK could only manage third place with 13.2%. In previous elections, the two typically accounted for around 80% of the total vote.

This time round, however, left-wing coalition Syriza came second with 16.8% after insisting that the bailout agreement should be done away with. The right-wing Independent Greeks (ANEL), the Communist Party (KKE) and the far-right Golden Dawn – which has frequently been described as “neo-nazi” – also performed strongly on an anti-austerity platform, obtaining 10.6%, 8.5% and 7% of the votes respectively.

DIMAR is the only other party to surpass the 3% threshold required to gain seats in parliament. A party formed from Syriza defectors and boosted by PASOK defectors, it is somewhat anti-austerity, but also strongly in favour of remaining in the eurozone.

According to Greek electoral law, 250 parliamentary seats are distributed proportionally, while another 50 are awarded to the party coming first. This left ND with just 108 seats, far short of a majority.

The party had the first go at forming a government, being tasked to do so within three days on 7 May. It quit trying that very same day.

The buck was subsequently passed to Syriza, whose attempt to form a left-wing coalition which would reject the measures failed to attract the support of any other party, and subsequently to PASOK, which also failed to form a coalition.

The next step was for President Karolos Papoulias to attempt to broker a deal between parties, and on Sunday he invited the leaders of all parties – even Golden Dawn. But the party had no intention of reaching an agreement with any other – a sentiment which was mutual.

The Sunday talks were inconclusive, as both ANEL and the KKE expressed no desire to take part in a coalition, and Syriza refused to join a coalition government which would implement the austerity measures Greece had agreed to in order to receive bailout payments.

“Syriza refuses to be a left-wing alibi for a government that will continue the policies the people rejected on 6 May,” leader Alexis Tsipras said.

As a result, President Papoulias invited just ND, PASOK and DIMAR for a second round of talks yesterday evening. All three have insisted that they would refuse to form a coalition without Syriza’s participation, although their leaders attended the talks regardless.

All three argue that the leftist group had to share joint responsibility in the government, and not benefit from leading the opposition at a time when unpopular decisions have to be made. Syriza was also being pressured to prove that their declaration that they want Greece to remain in the euro is heartfelt.

As a result, an agreement seems unlikely. A new government has to be formed by Thursday – when the state opening of parliament is set to take place – or fresh elections will have to be called.

A poll commissioned by a Greek newspaper suggested that Syriza would actually overtake ND and gain the largest vote share if an election is held, although its share would still be far too low to secure a parliamentary majority.

In the same poll, however, an overwhelming majority of respondents also agreed that the new government must do anything necessary to keep Greece in the euro. Denouncing the bailout agreements, as Syriza and a number of other parties want to do, may make this impossible.

Through the agreements, Greece is receiving €240 billion in rescue loans from the EU and the International Monetary Fund, loans which are crucial in ensuring Greece does not go bankrupt. But in return, the country has to impose severe spending cuts which have left Greece in a lengthy recession.

The three parties which may yet form a coalition all argue for a revision of the agreements, even though they are the ones least hostile to them.

ND leader Antonis Samaras has been promising a “renegotiation of the terms,” even though European leaders have been telling Greece to stick to its commitments so far. These commitments include implementing €14.5 billion worth of cuts next month to receive the next instalment of rescue loans.

Austerity measures were implemented under PASOK rule – the party had discovered Greek finances were worse than believed as soon as it returned to government in 2009. Its present leader, Evangelos Venizelos, has pledged to stick to the agreements: But argues that implementing fast reforms would enable Greece to do away with the agreements’ restrictive measures by 2015.

DIMAR’s Fotis Kouvelis, meanwhile, insists that it is possible do away with such restrictive measures right away without going bankrupt, through substantial reforms and a growth plan. But no such arrangement would be possible without the EU’s blessing.

Changing European sentiment?

The Greek election coincided with the second round of the French presidential election, which saw incumbent Nicolas Sarkozy defeated by Socialist Party candidate François Hollande, who believes that the fiscal compact signed by 25 countries just two months ago should be reviewed to allow for government-funded stimulus programmes.

German chancellor Angela Merkel, who steered the EU’s austerity drive along with Mr Sarkozy, has repeatedly insisted that the treaty was non-negotiable since Mr Hollande’s election. Mr Hollande and Dr Merkel will be holding their first meeting today.

Dr Merkel has been seeing her CDU party suffer a number of defeats in regional elections, including last Sunday’s regional election in North Rhine-Westphalia – Germany’s most populous state. Dr Merkel has been portraying the regional government led by a coalition of Social Democrats and Greens as irresponsibly spendthrift, but the parties boosted their support to obtain an absolute majority of votes.

The elections suggest that the tide is shifting against austerity, whose effectiveness in ensuring Europe weathers a financial crisis has been questionable given its impact on countries’ economies.

Austerity will be put to a test in Ireland – which has also received bailout funds – on 31 May, through a referendum which asks the public to approve the fiscal compact, in line with a constitutional requirement. The Irish government is pushing for a yes vote, while nationalist Sinn Fein is leading opposition to the treaty.

Germany is staying put, but may become increasingly isolated should the crisis spread or deepen.