Europe: New elections expected after Greek coalition talks fail; Hollande and Merkel to work together on Greece

Updated On: May 16, 2012

Talks to form a new coalition government have failed in Greece, meaning the country is heading into fresh elections, due by next month. A caretaker government has been appointed in the interim. Meanwhile, newly inaugurated French President Francois Hollande has met German Chancellor Angela Merkel. The two leaders pledged cooperation in dealing with the Greek situation, and will hold an informal summit next week on 23 May.

Coalition Talks Fail, New Elections for Greece

Greece is heading into a new month of political uncertainty after power-sharing talks between parties collapsed on Tuesday. The failure has triggered new elections that could determine whether Greece remains in the Eurozone.

The news follows nine days of fruitless talks to build a coalition government, after no party emerged from the original elections with enough parliamentary seats to lead outright.

No date has been set for the fresh round of elections, but they will have to be by the middle of June, the month in which Greece must make more spending cuts to ensure it meets the terms of its international bailout. A caretaker government has been appointed until then. Council of State president and judge Panagiotis Pikrammenos has been sworn in as interim Prime Minister.

Anti-austerity parties garnered some 60 percent of the vote in the last round of elections, but the vote was split among several parties and the pro-austerity New Democracy party still emerged with 30 percent of the vote. However in further elections, more of the vote could go to the left-wing Syriza - which previously came in second. This could lead to a government that rejects the EU and IMF's terms for Greece's bailout.

At a meeting on Monday, Eurozone finance ministers warned that Athens must stick to the terms of the bailout if it wants to receive further injections of funds to stave off state bankruptcy and avoid leaving the Euro. The chairman of the Eurozone group, Luxembourg Prime Minister Jean-Claude Juncker said he was "strongly against" a Greek exit from the single currency. "But the Greek public, the Greek citizens, have to know that we agreed on a programme and this programme has to be implemented," Mr Juncker told a news conference in Brussels.

Hollande and Merkel Pledge Cooperation

Elsewhere in Europe, newly inaugurated French President Francois Hollande has pledged to work with Germany to resolve the EU's economic crisis. He met with German Chancellor Angela Merkel yesterday, hours after being sworn in.

Both leaders said they wanted to keep debt-stricken Greece in the Euro, and would hold an informal summit on 23 May. Mrs. Merkel said France and Germany were willing to "study the
possibility of additional growth measures in Greece".

Earlier on Tuesday, Mr. Hollande was sworn in for a five-year term, becoming France's first Socialist president in 17 years. In his inauguration speech, Mr Hollande said he was fully aware of the challenges facing France: "Huge debt, weak growth, reduced competitiveness, and a Europe that is struggling to emerge from a crisis". But he said he wished to deliver a "message of confidence".

Report: Greece to head to polls again after talks collapse [Businessweek (AP), 15 May 2012]

Analysis: Could the euro survive a Greek exit? [BBC, 14 May 2012]

Report: Hollande and Merkel hold euro talks in Berlin [BBC, 15 May 2012]

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