Voters in Greece on Sunday let the world know that they were not quite ready to depart the euro. Despite the victory of the pro-bailout New Democracy party, however, markets were not appeased, worried that the country would once again fail to form a government.
Yields on Spanish and Italian bonds rose and analysts still predicted the likelihood of Athens leaving the joint currency, even as eurozone leaders hinted that they might be willing to cut Greece some slack on austerity conditions.
Reuters reported Monday that Sunday’s election saw New Democracy narrowly outpace the Syriza party of Alexis Tsipras, who had advocated tossing the bailout agreement while remaining in the euro. New Democracy took 29.7% of the vote, compared with Syriza’s 27%. Now the race is on to see whether a coalition government can be formed between New Democracy and PASOK, the party that finished third with 12.3%, and whether Syriza will be included or shoved to the side.
Antonis Samaras, head of New Democracy, was expected to meet with President Karolos Papoulias. PASOK has said it will support Samaras, but had not yet indicated whether its support would take the form of joining the government or simply offering backing in parliament.
Tsipras, meanwhile, refused on Monday to join a coalition government, and insists that he will continue to fight the bailout, which threatens the possibility that Greece will be able to form a governing coalition. All efforts to do so after Greece’s last round of elections had failed.
While world markets showed a brief surge of optimism over the results, they fell again as reality set in after only a couple of hours. Yields on Spanish 10-year bonds rose to 7.13%, above the level considered sustainable, and Italian bonds rose as well.