New Greek elections as coalition talks fail - Venizelos

Party leaders at talks in Athens (15 May) Party leaders had a final round of talks on Tuesday, but did not agree on a new government

Greece is set to go to the polls again after days of coalition talks failed to produce agreement on a new government, says the leader of the Socialist Pasok party, Evangelos Venizelos.

A final round of talks on Tuesday morning broke up without a deal.

In elections on 6 May, a majority of Greek voters backed parties opposed to austerity plans demanded by the EU and IMF in return for two bailouts.

The Greek president will appoint a caretaker government on Wednesday.

President Karolos Papoulias will meet all political leaders at 13:00 (10:00 GMT) on Wednesday to put in place an interim government until the new vote, which is expected to take place on 10 or 17 June.

"Unfortunately, the country is heading again toward elections," Mr Venizelos told reporters after the talks on Tuesday.

Next steps for Greece

  • 15 May: Greece meets deadline and redeems 436m euros of maturing bonds
  • 17 May: State opening of parliament; deadline for formation of new government
  • 10 or 17 June: Possible dates of new Greek elections
  • Mid-June: Date for Greece to receive its next tranche of bailout funds

The euro fell sharply on the news, tumbling from $1.2842 to $1.2771 shortly after 13:15 GMT - its lowest value since 18 January.

Greek shares also fell before recovering slightly.

The leader of the right-wing Independent Greeks Party, Panos Kammenos, said: "The pro-bailout parties would prefer a government which will further torment the Greek nation, rather than finding a solution. They have offered a proposal that is too rigid for me to accept".

Euro exit?

European leaders say that they will cut off funding for Greece if it rejects the bailout agreed in March.

This would mean effective bankruptcy for Greece and its all but certain exit from the European single currency, analysts say.

German Finance Minister Wolfgang Schaeuble again ruled out amending the bailout agreement.

"The people in Greece must know that what we have agreed for Greece and have set in train is an entirely unusual effort," he said after talks in Brussels on Tuesday.

Nobody I speak to outside Greece can come up with any route for Greece that is painless for its people. Stay in the euro: belt-tightening, more impoverishment; more reduction in living standards. Go out: the same kind of impact on living standards.

Maybe - and this is what some people believe - if they dropped the euro for a new drachma, and were able to retain some access to credit, perhaps from the IMF, the transition for Greece wouldn't be quite as painful.

There are quite a lot of serious people who take the view that a managed exit of Greece from the euro might be the way to go. The difficulty is that there's no obvious sign Germany, France and other countries will help Greece make that transition.

Polls suggest the leftist Syriza bloc, which came second in the 6 May vote and rejects all further cutbacks, could become the largest party after a new election.

Syriza wants to renegotiate the bailout package but also wants to keep Greece in the euro.

On Tuesday, Greece said it would make a "timely payment" on 435m euros' worth of debt due on 15 May.

The chairman of the eurozone group of finance minister, Jean-Claude Juncker of Luxembourg, said on Monday he wanted Greece to remain in the single currency but warned that Athens must keep to its commitments.

Pasok and New Democracy, which signed up to the bailouts and had previously dominated Greek politics for decades, saw their combined share of the vote drop from about 77% to about 33% on 6 May.

Greek election results graphic

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