Greek government talks in final stretch

[May 11, 2012]  ATHENS, Greece (AP) -- Greece's wrangling politicians were locked in last-ditch efforts to form a coalition government Friday, with chances of a deal appearing slim and the country's future in Europe's common currency at stake.

Voters on Sunday punished both main parties, the conservative New Democracy and socialist PASOK, for their handling of the country's protracted financial crisis, deserting them for a myriad of smaller parties on the right and left of the political spectrum. The result left a hung parliament, with no party able to form a government.

Unless an agreement is found, the country will head to new elections next month. The political instability has alarmed Greece's European creditors, who have warned that Greece's international bailout package, and its continued presence in the euro, could be threatened.

Hopes for a deal between election winner New Democracy and third placed PASOK with the small Democratic Left party of Fotis Kouvelis suffered a setback when Kouvelis insisted he could not be part of a government with just the conservatives and socialists.

Kouvelis insisted any coalition must include election runner-up Alexis Tsipras, whose anti-bailout Radical Left Coalition, or Syriza, won 16.78 percent of the vote and 52 seats in the 300-member parliament.

So far, Tsipras has refused to join any government that does not reject the austerity terms of Greece's bailout, saying the spending cuts and tax cuts are destroying the country's chances of recovering from its deep financial crisis.

"It is clear from its reaction that from the first moment, Syriza wanted elections," Kouvelis told his deputies in a speech Friday. "And without Syriza, a government cannot be formed that is in harmony with the popular will, representing the strength of each political party."

"We have made our position clear. In a government with (only) New Democracy and PASOK, we will not take part," Kouvelis said.

The statements dampened hopes that Kouvelis could have made a deal with Antonis Samaras, whose New Democracy holds 108 parliamentary seats, and former finance minister Evangelos Venizelos' PASOK, which suffered its worst election result in nearly 40 years to gain just 41 seats.

Venizelos, who currently holds the mandate to seek coalition partners, met with Kouvelis on Thursday night and had indicated a meeting of minds. Samaras, who met with Venizelos on Friday morning, had also indicated a solution was possible.

"Our only condition is that we remain in the euro. And the proposal made by Mr. Kouvelis is close to our own," he said. "So there is a basic agreement. The problem is that Syriza is not taking up its responsibility ... and is preparing for elections."

But Kouvelis insists he wants a broad coalition that would include more parties. He also risks being branded as a left-wing traitor, if he helps the pro-austerity parties to govern without Tsipras' support.

If new elections are held, Tsipras is expected to make gains. An opinion poll published late Thursday indicated Syriza would come first with nearly 28 percent of the vote in a new election -- up from 16.8 -- and win 128 seats.

The Marc survey for private Alpha TV gave New Democracy 20.3 percent and 57 seats, and showed the extremist right-wing Golden Dawn declining to 5.7 percent, with 16 seats instead of its current 21.

The May 8-9 nationwide survey was the first published after Sunday's vote. It gave no margin of error.

[Associated Press; By ELENA BECATOROS]

Derek Gatopoulos in Athens contributed.

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