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Athens fails to stem alarm

May 16, 2012

Greece was left on Wednesday to find a caretaker government and to fix a fresh election date for June as global markets reacted with alarm to Greek refusal to adopt austerity measures.

https://p.dw.com/p/14wLh
A businessman with briefcase walks past a Greek flag at Syntagma square in Athens
Image: picture-alliance/dpa

The failure of Greek political parties to form a compromise government left President Karolos Papoulias on Wednesday with task of appointing a caretaker administration and setting a date for fresh elections. The semi-official news agency ANA says June 17 has been picked.

At midday, Papoulias began further talks with the leaders of diverse political parties on whether an interim administration should comprise a senior judge plus non-party political personalities or revert to former European central banker Lucas Papademos. He led negotiations in November which staved off Greek bankruptcy.

Greece party leaders seated at large table with President Papoulias
Nine days of talks failed to yield any resultsImage: dapd

ANA later reported that political leaders had agreed on the appointment of the head of Greece's top administrative court, Panagiotis Pikrammenos, as caretaker prime minister.

Tuesday saw the collapse of nine days of talks between the parties over whether Greece should swallow harsh austerity measures proscribed by the European Union and International Monetary Fund (IMF) or pull out of a debt swap deal agreed by Greece's previous government on March 9.

#video#Throughout those talks, the Radical Left party otherwise known as Syriza, which came second in Greece's May 6 election, had insisted that the terms of the bailout be scrapped or largely renegotiated.

In recent days, surveys have shown a boost in Syriza's voter support.

Syriza's leader Alexis Tsipras has reportedly played down widespread reports that Greek bank account holders withdrew 700 million euros ($894 million) on Monday.

Market turmoil

On the currency markets, the euro remained subdued at around $1.27, after touching a four-month low late on Tuesday.

Tsipras arrives for a meeting at the Presidential Palace in Athens
Voters gave Radical Left's Alexis Tsipras the trump cardImage: dapd

And, compared to German bonds, borrowing rates in Italy and Spain hovered around the psychologically significant six-percent level as investors fretted that the two larger eurozone economies might suffer "contagion" from the Greek debt crisis. In Frankfurt, 10-year German bonds, known as "Bunds," were auctioned for just 1.47 percent on Wednesday.

Spanish Prime Minister Mariano Rajoy called on the European Union to launch a "clear and forceful" message in defense of the euro as the rate of Spanish bonds rose to 6.5 percent, up from 6.3 percent on Tuesday.

ipj/mz (AFP, dpa, AP)