Greece Elects Pro-Bailout Party

Greece’s conservative party New Democracy gained a victory over leftist Syriza party in Sunday’s Greek elections, alleviating fears of a Greek exit from the euro zone and restoring confidence that Greece will remain committed to its bailout package.

Greece held its second national election on Sunday in two months after an inconclusive election result on May 6th and the sudden collapse of coalition talks.

Antonis Samaras, leader of New Democracy, described his party’s win on Sunday as “a victory for all of Europe.” 

 Samaras spoke about his desire to get Greece back on the right track to prosperity and growth.

“I will make sure the sacrifices of the Greek people will bring the country back to prosperity” Samaras told his supporters on Sunday.

New Democracy gained 29.9% of the votes (129 seats) compared to 26.7 (71 seats) with Syriza and 12.4% (33 seats) with Pasok, according to data compiled from the Greek Interior Ministry. Extremist far-right Golden Dawn party received 6.9% (18 seats) of the vote.

The election result helped to ease fears from Greece’s Troika (ECB, IMF, and European Union) creditors who feared a Syriza victory may result in Greece ending its commitment to the previously agreed EU bailout package and move out of the euro zone.

New Democracy has three days to form a coalition and develop a new government in parliament. It is expected that New Democracy will work together with third place Pasok, another pro-bailout party, to gain 162 seats in the 300-seat parliament, in a joint alliance that will be committed to the 130 billion euros ($164 billion) bailout package.

Since 2010 Greece has received €240 billion ($300 billion) in bailout loans from the Troika.

Greece’s bailout funds come with attached austerity measures that previously elected Greek governments reluctantly accepted in exchange for the loans.

Alexis Tsipras, leader of leftist Syriza, who campaigned to end imposed EU austerity and the international bailout package, acknowledged his party’s defeat but vowed to continue the struggle against the bailout package.

Tsipras emphasized that Syriza would not take part in the new government led by New Democracy and would instead become a powerful anti-austerity force in the opposition.

“Overturning the memorandum is the only viable solution, not just for the Greeks, but for the other peoples of Europe. It is the only solution for Europe,” Tsipras said in a post election speech.

The fragility of a new government in Athens combined with strong opposition to unpopular public spending cuts and tax increases to gain the euro-zone bailout loans means the Greek crisis is still not over and will likely continue in some form in 2012.

Greece has witnessed its economy contract 7% last year and its unemployment level rise to 21%.

Many economists believe that Greece faces massive structural challenges that will make it difficult to repair their fragile economy in the midst of drastic austerity measures and political uncertainty.

International Support

The victory of Greece’s pro-bailout New Democracy party was welcomed by world leaders, including U.S. President Barak Obama.

The U.S. press secretary issued a statement offering broad support to Greece:

We congratulate the Greek people on conducting their election in this difficult time. 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. As President Obama and other world leaders have said, we believe that it is in all our interests for Greece to remain in the euro area while respecting its commitment to reform. Going forward, we will engage Greece in the spirit of partnership that has guided our alliance and the friendship between our people.

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