Greek government in peril as parliament fails to elect new president

Greece’s embattled government failed Wednesday in its first of three attempts to elect a new president, raising the specter of snap elections and the rise of Europe’s first anti-austerity party.

The parliamentary vote comes amid fresh market turmoil and stalled negotiations with international lenders pressing Greece for yet more economic austerity measures, including trimming 6,500 public sector jobs and making further cuts in pensions.

Despite a dramatic, last-minute plea, Prime Minister Antonis Samaras won the support of just 160 lawmakers for his nominee, Stavros Dimas, falling well short of the 200-vote supermajority needed to secure election. Five deputies were absent from the vote, due to be followed by a second, similar ballot on Dec. 23.

Although the Greek presidency is largely ceremonial, failure to agree on the replacement of Karolos Papoulias, 85, by the end of the month would trigger a general election. That in turn, opinion polls suggest, could potentially propel the leftist Syriza party into power on a promise to undo four years of severe austerity.

“That possibility alone has put Europe and its markets into panic mode,” says Miranda Xafa, a leading economist and chief executive of EF Consulting in Athens. “It’s just the start of what could be a very, very bumpy ride ahead.”

The bar for victory falls to 180 in a final vote if needed on Dec. 29 -- a make-or-break ballot that has the government scrambling to find support from two small opposition parties and 25 independent lawmakers, including a duo of former neo-Nazi lawmakers.

In an extraordinary move late Tuesday, a supreme court prosecutor granted special prison leave for seven neo-Nazi deputies who have been jailed pending trial on a rash of criminal charges linked to the fatal stabbing of a leftist musician last year.

The extraordinary ballot was brought forward last week by Samaras in a bid to restore political stability gripping the crisis-crippled country since Syriza and its populist leader, Alexis Tsipras, came in first in European elections last May, trumpeting an austerity-free vision of Greece.

Still, Samaras’ political gamble has Greece and the Eurozone bracing for a game-changing vote.

Although the government has three shots at winning parliamentary support for Dimas, a former European commissioner, it controls only 155 seats, well short of what it needs.

Ahead of the vote, Samaras, a skillful tactician, appealed to Greece’s 300 lawmakers to elect a president and avert “political escapades that could prove fatal for the country’s stay within Europe.”

The financial community has been especially worried about the outcome.

Already last week, news of the impending vote sent Greek stocks plunging 20%, their steepest loss since 1987, while yields on government bonds soared.

“If investors see that Samaras collects anything less than 160 votes for his candidate in the first round of voting, then expect them to unload another wave of Greek stocks, and even more if the vote fails him entirely,” said Andreas Koutras, director of ITC Markets.

“Worst yet,” Koutras added, “loads of institutional investors eyeing projects in Greece will be left on the sideline, keeping real growth and development from truly setting in for months.”

In six years of depression, Greece has seen incomes squeezed by 25%. Unemployment has rocketed to 27% and one in three businesses has shut down.

Tsipras, 40, a civil engineer from a wealthy family, has given voice to popular resentment of austerity. He wants to restore minimum wages to pre-crisis levels and offer free electricity, food, shelter and healthcare to devastated Greeks as part of a $17-million stimulus package.

Although 60% of Greeks predict Syriza will rise to power, nearly the same share say they want to see elections averted, fearing instability and a prolonged political crisis, according to recent opinion polls.

From Berlin to Brussels, creditors are watching nervously. Still, warnings sounded by European officials on the potential rise of Syriza have irritated Greek lawmakers, even in the governing camp.

“The concerns of European officials and creditors may be credible and understandable,” says John Loulis, a leading political strategist. “But whenever outsiders intervene, they do more harm. And in this case, it has backfired.”

“Going to vote, more deputies may feel annoyed than fearful of the outcome that could follow,” he said.

Carassava is a special correspondent.