Greek leftist ends bid to form coalition government

A second round of talks to form a coalition government collapsed Wednesday, with Greece's future in the euro and commitment to its international bailout deal in the balance and the spectre of new elections looming ever larger.

Sunday's election threw the country's political scene into turmoil after voters angered by years of Europe's harshest austerity programimplemented to secure vital international bailouts and fend off bankruptcy hammered mainstream politicians, butleft no party with enough seats in Parliament to govern alone.

Alexis Tsipras, head of the runner-up Radical Left Coalition, or Syriza, met with heads of parties across the political spectrum as he tried and failed to win support for Greece's first left-wing-led government in four decades of democratic rule.

"We saw that our proposal enjoys broad social support, but weak parliamentary backing," Tsipras, 38, told a meeting of party lawmakers. "We can't make our dream come true, and form a left-wing government."

Tsipras' insistence that a new government denounce the bailout deal with the International Monetary Fund and other European countries provoked a backlash from the other two main parties, who argued the move would see Greece leave the common European currency and endure years of poverty and isolation.

Anxiety among global creditors

The political uncertainty has alarmed Greece's international creditors, who have insisted the country must stick to the cost-cutting terms of its bailout.

Athens has promised to pass new austerity measures worth $18.9 billion next month and to implement other reforms.

These will be reviewed by its creditors, who will then determine whether to continue releasing rescue loans that are keeping Greece solvent.

The eurozone's bailout fund, the European Financial Stability Facility, approved the release of a $6.73 billion batch in rescue loans Wednesday. Greece will receive $5.44 billion of that Thursday, while another $1.3 billion is expected in June depending on Athens' needs.

German Chancellor Angela Merkel stressed she still wants to keep Greece in the eurozone.

"I have always wanted to solve (the debt crisis) in such a way that Greece remains a member of the eurozone. Nothing about that has changed," she was quoted as saying in an interview with the daily Passauer Neue Presse.

Merkel has been a leading advocate of austerity as a cure for Europe's debt troubles, but that course has become hugely unpopular in Greeceand Sunday's election has generated new political instability.

Bailout agreement 'road back to stability'

Merkel insisted Greece must stick to its agreements with creditors and its reform course.

"Only this way can we imagine Greece's road back to stability and economic strength," she said.

In Athens, the efforts for stability and economic strength struck a road bump.

Conservative New Democracy leader Antonis Samaras, who won the elections with a meagre 18.85 per cent and 108 seats in the 300-member parliament, said it was impossible for him to agree to the demands laid down by Tsipras.

"I explained to Mr. Tsipras that the conditions he set do not lead to a renegotiating of the bailout policy, but to a unilateral denunciation of it and to the country's immediate bankruptcy," Samaras said.

"By repudiating the agreement, Mr. Tsipras is asking for somethingthat will isolate Greece. He's not asking me to withdraw my signature. He's asking me to accept Greece's exit from the euro and the country's bankruptcy. I will not do that."

No majority without New Democracy

Given that the Communist Party refuses to join any government and no parties are talking to the extreme right Golden Dawn, which won 21 seats, no majority coalition can be formed without Samaras.

Samaras said he was prepared to back a minority government that his party would not participate in, on condition that the country stays in the eurozone.

"The Greek people voted for two things: to remain in the euro and for a change of policy," he said.

The conservative leader gave up the task of trying to form a government a few hours after receiving the mandate on Monday. Next in line is former finance minister and socialist PASOK party leader Evangelos Venizelos, who takes over on Thursday.

PASOK, which has dominated Greek politics along with the rival conservatives for four decades, came a humiliating third in Sunday's elections, with 13.18 per centits lowest since 1974 when it was formed after the fall of a seven-year dictatorship. It has just 41 seats a quarter of its pre-bailout strength.

Venizelos said he will continue negotiations Thursday, despite the lack of agreement in meetings the past few days.