Political parties supporting Greece’s international bailout begin forging a government on Monday after an election victory over radical leftists staved off the prospect of the debt-laden country leaving the euro and brought relief to global markets.
Conservative New Democracy leader Antonis Samaras called for broad support after winning Sunday’s election over the Syriza party, which said it would cancel the aid deal agreed in March to avert bankruptcy in defiance of the country’s lenders.
The result boosted the euro to a one-month high and Asian shares gained nearly 2 percent, but a pro-bailout coalition could be short-lived if it tries to squeeze more austerity measures from a population who says they cannot give any more.
“There is no time to waste,” Samaras told reporters in Athens as jubilant, chanting supporters waved blue party flags. “A national salvation government must bring economic growth and reassure Greeks the worst is over.”
Greece's two main pro-bailout parties clinched enough votes to form a government in knife-edge elections on Sunday, as world powers pushed for a new cabinet as soon as possible to ease global fears.
“Today the Greek people expressed their will to stay anchored with the euro,” said Samaras, the leader of the conservative New Democracy party which preliminary official results showed in the lead with 30.04 percent.
“We ask all political forces which share the aim of keeping the country in the euro... to join a government of national unity,” he said.
“The country does not have a minute to lose.”
Asian markets surged in opening trade Monday and the euro rose after the Greek result emerged. Tokyo stocks jumped 1.96 percent, Hong Kong surged 1.79 percent, Sydney was 1.52 percent higher and Seoul advanced 2.05 percent.
The news boosted the single currency, which surged to morning highs of $1.2715 and 100.75 yen – up from $1.2644 and 99.47 yen in New York trade late Friday – before easing slightly to $1.2676 and 100.49 yen.
Samaras pledged to honor Greece's commitments but said he wants to ease the terms of an unpopular EU-IMF bailout deal which has imposed harsh austerity measures in return for a multi-billion rescue package.
The International Monetary Fund is pressing for urgent talks with Greece as early as next week and the Eurogroup in Brussels urged parties to move “rapidly” to set up a new government that would implement key reforms.
The IMF and the European Union pledged support for the next Greek government.
European Union leaders urged New Democracy and its likely coalition partner, the socialist Pasok party, to urgently form a new administration that can lead Greece out of its debt crisis.
“We are hopeful that the election results will allow a government to be formed quickly,” said the president of the European Council and the chairman of the European Commission, Herman Van Rompuy and Jose Manuel Barroso.
“We will continue to stand by Greece as a member of the EU family and of the euro area,” they added, in a statement issued in the Mexican town of Los Cabos on the eve of the G20 summit of the world's leading economic powers.
Finance chiefs from the Group of Seven industrialized economies applauded European support for the next Greek government and said it was vital that Greece stay in the eurozone.
“We hope this election will lead quickly to the formation of a new government that can make timely progress on the economic challenges facing the Greek people,” White House spokesman Jay Carney said in Washington.
International financial markets are watching the election closely because of its potential domino effect on other weakened eurozone economies and some analysts warn Greece may eventually have to leave the euro anyway.
Samaras's main rival Alexis Tsipras, head of the leftist anti-austerity party Syriza, conceded defeat and ruled out joining any coalition.
“We represent a majority of people opposed to the bailout deal,” said Tsipras, whose party came second with 26.57 percent of the vote.
Coalition talks are now expected to start Monday, with the most likely ally for New Democracy being Pasok. The two have dominated Greek politics for decades and are blamed by many for the current woes.
With the sense of crisis hanging over Greece, there was little celebration for New Democracy on the streets of Athens.
Only around 100 supporters greeted Samaras in central Syntagma square.
As the first results filtered through, Germany said it could discuss giving Greece more time to meet budget targets and Belgium said there was “room for manoeuvre” while France said Europe should “accompany Greeks towards growth.”
“There needs to be discipline but there also needs to be hope,” French Foreign Minister Pierre Moscovici said in an interview with France 2 television.
New Democracy would hold 129 seats in Greece's 300-seat parliament because of a 50-seat boost for the victor under the Greek system, the early results showed.
Syriza would hold 71 seats and the pro-bailout Pasok party 33 seats.
The neo-Nazi party Golden Dawn, which has been condemned for violent attacks and won votes on a wave of anti-immigrant sentiment, was on track for 18 seats.
Pasok leader Evangelos Venizelos said he was ready to join with New Democracy but only on condition that other leftist parties were included.
Venizelos said the new government should be one of “national responsibility.”
Analysts say Pasok is concerned about instability if a narrow majority is called on to pass unpopular reforms under pressure from street protests.
Exit polls had shown a dead heat between New Democracy and Syriza which could have left Greece in the political gridlock between bickering parties which followed elections last month and triggered the new vote just six weeks later.
Greece has been forced to seek bailouts twice, first for 110 billion euros in 2010 and then for 130 billion euros this year plus a 107 billion euro private debt write-off – for a total of 347 billion euros ($439 billion).
For many Greeks a fine-tuning of the terms of the bailout may not be enough as public anger is rising against the steep pay and pension cuts seen since the crisis first exploded in 2009, setting off a chain reaction across Europe.
The nation is now in its fifth year of recession, prompting many young Greeks to vote with their feet by emigrating, while local media warn the state will run out of cash to pay public-sector salaries and pensions on July 20.