ATHENS - Resisting mounting pressure from Europe to quickly resolve Greece’s political crisis, the leader of a left-wing party that placed second at the polls Sunday effectively ruled out forming a coalition with the two dominant parties, raising the prospect of new elections and increasing chances the country could default on its heavy debt load and potentially exit the eurozone.
Alexis Tsipras, the leader of the Coalition of the Radical Left, known as SYRIZA, was given a mandate from President Karolos Papoulias to try to form a government Tuesday, after the front-runner, Antonis Samaras, the leader of New Democracy, failed to do so Monday.
Yet, to the consternation of European leaders and financial markets, Tsipras held true to his party’s platform of opposing the loan agreement that Greece made with its so-called troika of foreign lenders: the European Commission, the European Central Bank, and the International Monetary Fund.
He called on the two dominant parties that backed the bailout, the Socialists, led by Evangelos Venizelos, and New Democracy, to revoke the deal.
He said ominously, for European leaders hoping for a quick resolution: “The popular verdict clearly renders the bailout deal null.’’
Such statements - and the results of Sunday’s elections, in which there were a groundswell of anti-austerity votes - have worried the country’s foreign lenders, who want Greece to abide by the commitments it made in exchange for the foreign financing it needs to meet expenses.
Although Tsipras has gone farthest in rejecting the bailout terms, both Venizelos and Samaras have called for modifications, especially to the time frame in which Greece is expected to meet deficit-reduction targets.
Still, if Greece fails to enforce the benchmark cuts and structural changes set in a second loan agreement reached in February, its lenders will withhold the next installment of aid it expects in May. Without that, it cannot pay a bond that comes due on May 17 or meet expenses past July.
“Greece must know that there is no alternative to agreed reforms if it wants to stay in the eurozone,’’ said Joerg Asmussen, a member of the executive board of the ECB, on Tuesday.
But as Sunday’s elections made clear, Greek voters have grown weary of such statements, which many believe are empty threats, and flocked to SYRIZA, which received nearly 17 percent of the vote by trying to carve out a space that is opposed to the loan agreement but in favor of Greece staying with the euro. SYRIZA came in second to New Democracy’s 19 percent and ahead of the Socialists’ 13 percent, both parties’ worst showing since their founding in 1974.
Tsipras has said that he would seek to form a leftist-led government based on five points: The abolition of the debt deal with foreign creditors and all related laws that have led to pension and wage cuts; the abolition of laws overruling collective labor contracts; the introduction of changes to the political system, including greater accountability for members of Parliament; the introduction of state inspections of the banking system; and the imposition of a moratorium on Greece’s debt repayments.
Bankers are particularly concerned about SYRIZA’s proposal to nationalize the banks as a condition of the still-uncompleted bank recapitalization, a move the party says is aimed at ensuring the banks lend to the real economy, not engage in speculation.
If Tsipras fails to form a government, the baton passes to Venizelos, a formality since Tsipras ruled out a coalition with the Socialists.
The most likely situation now is for Papoulias to appoint an interim government and call new elections in 30 days.
That would lead to more instability, since Greece has a number of crucial deadlines in the coming weeks.
These include paying a bond that comes due in May and identifying an 11.5 billion-euro financing gap from the 2013 and 2014 budgets - equivalent to 5.5 percent of Greece’s gross domestic product. It also has to complete a bank recapitalization.