Crisis-hit Greece votes under threat of snap poll

[November 06, 2010]  ATHENS, Greece (AP) -- In a major test of support for austerity measures, voters in crisis-hit Greece will cast ballots in local elections Sunday that could force the Socialist government to call a snap general election.

The vote pits Prime Minister George Papandreou's 13-month-old Socialist government against an array of opposition parties upset with the terms of a rescue loan from the European Union and International Monetary Fund.

On Friday, Papandreou repeated a pledge to call early elections if his government loses significant support -- spooking bond markets over Greece's ability to cope with its massive debts.

"Several months ago, we saved Greece from bankruptcy, but the state of alert is not over," Papandreou told an election rally.

"I have no desire to go to national elections," he said. "But for this massive effort by the country to succeed we must have public unity and dedication when faced with this great challenge."

The Greek government has endured waves of strikes and disruptive protests against cost-cutting reforms demanded to start receiving the euro110 billion ($140 billion) in international emergency loans. Papandreou's popularity slipped in recent months, hurt by the ongoing recession and a surge in unemployment and small business failures.

Pressure for deeper cuts is likely to increase, when the EU later in November will revise Greece's 2009 budget deficit to 15 percent of gross domestic product -- or even higher -- from the current projection of 13.6 percent.

The Socialists still appear unlikely to suffer a heavy defeat Sunday, as opinion polls predict a roughly even split with main opposition conservatives in 13 regional governor races.

Conservative leader Antonis Samaras urged the government on Friday to "change course" and replace austerity with a policy of state investment to stimulate the economy.

"The prime minister should visit ordinary people and realize how much they are suffering," he said in his final campaign appearance.

Gauging the results of Sunday's election and run-offs on Nov. 14 will be obscured by local party alliances and rebel candidacies likely to cost the Socialists a victory in greater Athens.

The political uncertainty has sent market borrowing costs sharply higher, with the interest-rate gap between Greek 10-year bonds and Germany's benchmark equivalent exceeding 9 percentage points on Friday.

Sunday's election will be the first held following far-reaching changes in Greek local government that reduced the number of administrative regions from 54 to 13 and municipalities from 1,014 to 325 and will extend the terms of mayors and regional governors from four to five years.

State-run and private broadcasters in Greece are not doing exit polls for this year's election, citing budget cuts.

[Associated Press; By DEREK GATOPOULOS]

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