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Greek pro-euro parties may win a majority

Date: Sunday 17 Jun 2012

Greek pro-euro parties may win a majority

With almost 51% of the votes having now been tallied the centre-right New Democracy party and the Socialists (PASOK) seem to have obtained 30.24% and 12.69% of the same, according to projections provided by Greek daily Ekathimerini´s digital edition. The above counts would give those parties 130 and 34 seats each in the new parliament. In other words, it seems that they may have obtained a combined narrow majority in the 300 seat strong Athenian chamber.

That should be enough to allow the country to remain inside the Eurozone for now, but markets continue to be quite skeptical when looking out to the medium-term. Even so, it must be said that of late some very qualified observers have been holding out the possibility of a more controlled exit of Greece from the Euro (while remaining within the European Union) as a sort of "second-best" option.

Be that as it may, it is thought that Greece´s leaders wish to create as broad a coalition government as possible. For that reason it is worth pointing out how, in remarks to the Financial Times, the leader of the Democratic Left party (16 seats), Fotis Kouvelis, indicated his willingness to join such a coalition; although with some conditions. Mr.Kouvelis is reported by the FT to have said that, “this time, there has to be a government with a specific political mission that would be binding on adopting specific policy measures (…) we are prepared to participate provided a serious program is agreed.”

PASOK has also showed willingness to join a coalition although it seems wary of being the only left-wing party in it.

Alexis Tsipras´s anti-bailout party Syriza, on the other hand, looks likely to come in a very close second place today, with 26.3% of the vote and 70 seats in parliament.

The above results seem to come at a time when many Greeks are portrayed as aching for stability, although time will tell if a definitive solution to the country´s travails is at hand. In this regard, although it is by no means the only factor, several reports are citing the German Foreign Minister, Guido Westerwelle, as having shown somewhat limited flexibility when speaking today before the first poll results were published.

Mr. Westerwelle´s exact words were, “I can imagine we could do something in terms of the timeframe, because the standstill that has taken place over the past few weeks has done damage (…) but one thing must be clear: the treaties must be valid in substance. They can’t be canceled or renegotiated.”

Some of those reports however (with Bloomberg being a case in point) take exactly the opposite line, they believe Germany is trying to show some softening.

“It is not at all rare for IMF programs to be adjusted mid-course, although this is usually done when some targets have been achieved. Then again, the situation in Greece seems to be truly chaotic and excessive stringency may be self-defeating,” comment analysts at Digital Look.

Lastly, it may be worth pointing out that the euro/dollar cross is reacting slightly favourably to all of the above, rising by 0.5% to the 1.2705 dollar mark.

AB

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