Greece took a step closer to default on Tuesday, after parties announced they were unable to break a nine-day deadlock in coalition talks. The president will appoint an emergency government to hold renewed elections.
Socialists and conservatives, who ruled as a coalition for seven months, were unable to find a single ally from among five other parties to continue an austerity programme which is obligatory under Greece’s bailout loan. This means that economic legislation will remain frozen for several more weeks, and 15 billion dollars’ worth of austerity cuts may not be passed on time next month. That will delay Greece’s bailout instalments and could lead to salaries and pensions not being paid, as public coffers are due to run empty as early as mid-June. It also casts into doubt a planned refinancing of banks, which will remain short of cash.
The breakdown in talks also defines the battle lines for the next election. The moderate camp of socialists and conservatives says it’s fighting to soften the austerity programme and ensure Greece’s place in the eurozone.
It denounces the radical left Syriza party as arrogant, petty and opportunist for refusing to enter into a coalition and triggering elections. Socialist leader Evangelos Venizelos called them "traders in illusion, who've misunderstood the May 6 vote."
"Europe now understands that one-sided austerity is a dead end," said conservative leader Antonis Samaras. "The hour of our vindication is near, as long as we remain with in Europe. We have economic strengths – shipping, mineral wealth, human resources- but we can only use these if we remain in Europe" He accused Syriza and the broader left of undermining Greece's European course.
Syriza has risen fast thanks to its anti-austerity message. It would reverse salary and pension cuts, tear up the loan agreement with Europe, and hope to redraft it from scratch. It accuses the socialists and conservatives of blackmailing Greeks into backbreaking austerity.
"They are terrorising and threatening the Greek people," said Syriza party leader Alexis Tsipras. "But a people so tested cannot be blackmailed any more"
Syriza gutted the socialist party in the last election, and dreams of replacing it. Four separate opinion polls taken in the last week suggest that Syriza is set to make further gains in a repeat election, but not to win outright. So moderates and hardliners may have to bridge their differences sooner or later. But Syriza holds out hope that it may instead unite the communists and broader left into a historic coalition.
Tsipras left no doubt as to the broad sweep of his ambition. "We made a significant step on May 6," he said. "Now it is time to complete that step. We must form a government of the left, so as to permanently end the policies destroying the country. We owe it to history and the coming generations"