The second act of the Greek/European tragedy/farce started this morning, with Syriza leader Alexis Tsipras telling President Karolos Papoulias that he is unable to form a governing coalition.

Tsipras, leader of the “radical left coalition”, which gained 52 seats out of 300 in the new parliament, had been given 72 hours to try to form a government, after the largest party — New Democracy, with 108 seats (58 plus a 50-seat bonus) — failed at the task almost immediately.

Tsipras had made clear that the election results have rendered the EU’s bailout austerity agreement “null and void” — as 60% of votes cast were for parties, from left and right, who rejected the bailout agreement.

Tsipras and Syriza had tried various options — trying to lure in PASOK with a “minimal program” in which the implementation of austerity measures would merely be frozen rather than decisively repudiated. They also approached the “Independent Greeks” right-wing breakout party for a minimal program agreement.

Neither would come to the party. PASOK is sticking to the line that the bailout conditions must be implemented, and Independent Greeks, filling out their image as obsessives, had stern views on the Muslim minority in Western Thrace and, God help us, the name of FYR Macedonia. The KKE Communist Party (with 26 seats) refused to even meet with Tsipras, but by then the point was moot.

Tsipras’ announcement that he can’t form government would normally pass the mandate to PASOK and its leader Yoda … I’m sorry Evangelos Venizelos. But he had already indicated that he would not even try for a mandate, preferring to go straight to new elections.

These would be held on either the June 10 or 17, and there was some hope that an inst-government could have been formed to try to overturn the now wildly unpopular “tiebreaker” rule — whereby the party with the largest vote gets a 50-seat bung — and thus make it more likely that a three-party spread could win enough seats for power.

But even that looks unlikely, with elements in New Democracy and PASOK wanting to keep the rule, in the hope that their vote will eventually return. Just to add to the confusion, it requires a 200-plus seat vote to withdraw the 50-seat bung for the next election. If the recension is only passed by a 150-plus seat vote, the bonus stays in for one more election.

The brief dominance of Tsipras and Syriza has sent the usual bevelled heads in the financial journalist community running wild — and a return of un-ironic anti-Greek chauvinism — with the notion that chaos somehow looms at the hands of a party of “Trotskyists, ex-Communists and Maoists”.

Given the hair-raising opportunism of the two major parties over the past year, this has been an absurd slur and shows how absolutely out-of-touch most financial journos are with what is really happening in Europe and the world.

It’s obvious to anyone watching that Tsipras has been the only leader of cool reasonableness in the whole spectrum — and more importantly the only one who isn’t some hack product of a political dynasty.

The bevelled-head assumption is that a new election will allow for calm reason to show through — meaning, I presume, that the two parties who have got the country into this mess in the first place will suddenly gain fresh majorities.

Well, maybe. Given the amount of terrifying rhetoric being directed at the Greek people by the euro-elite, some may well swing back to New Democracy — I can’t see anyone swinging back to PASOK. But what if that swing is only 2-3% and comes from within the ND-PASOK centre, i.e. from PASOK?

And what if the ratio of anti-troika/pro-troika vote remains about the same, with a majority to the former — yet the 50-seat bung ensures that a pro-bailout party has the front-running?

In that situation, Greece will be in crisis, with no easy answer as to how to make a working government. The President could appoint another caretaker PM and hope that he could persuade some members of Independent Greeks (which is an ND breakaway), into a working majority, but it would scarcely be the political stability that the EU is demanding as a condition of continuing the process.

The other possibility is that Tsipras’ solid leadership over the past three days will persuade 2-3% of voters in Syriza’s direction. At that point, Syriza would overtake ND (the result this time was ND 18.8%, Syriza 16.7%) and get the 50-seat bonus, and hold about 110 seats. They would have Democratic left support, and there would then be enormous pressure on Independent Greeks to drop their lunatic bullshit about what f-ckin’ Macedonia calls itself for God’s sake, and support the shared parts of a program rejecting the troika’s austerity conditions.

At the moment, this is the only result that would deliver democratic political stability in Greece and manifest a clear popular will. Such a result would put the pressure back on the euro-elite, who are doing everything to forestall it by terrifying the bejesus out of Greece.

Thus, all through the day, there was noises that the EFSF, the European Finance and Stability Fund (four words, four lies) would deny Greece the €5.2 billion emergency funds due tomorrow. Since the government of Greece has not yet changed, and the troika agreement remains in place, this was an outrageous threat, purely political. By the evening someone had worked out a way to honour the agreement (all of the money returns directly to the EU in any case) while still administering a slap:

“The board has confirmed the release of the outstanding amount of €5.2 billion from the first instalment of €39.4 billion by the end of June. An amount of €4.2 billion will be disbursed on May 10. The remaining funds of €1 billion are not needed before June and will be disbursed depending on the financing needs of Greece. As with previous disbursements to Greece, the EFSF will transfer the €4.2 billion into a segregated account which will be used for debt service payments.”

Well, at the moment Greece has the problem. If it decisively repudiates the deal, then it’s Europe’s problem and the world — for default would not only crash Greece but would trigger a whole series of credit default swaps, replaying 2008, with nations playing the role of banks. The bevelled heads treat financial markets like the weather, invariant. Hopefully wiser heads will prevail over bevelled heads and realise that this a manufactured crisis, arising from a monopoly on capital supply, and the refusal of Europe to provide sufficient funds at a fair rate and with fair conditions attached.

Like they did with Lehman Brothers. That went well.

STOP PRESS: True to form, having said he wouldn’t even try for a mandate, PASOK leader Venizelos is now, erm, trying for a mandate. He has three days to do it, and a base of 40 seats, so new elections look ever more likely.

Peter Fray

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