SNAP ANALYSIS-Greece faces snap election amid crisis

ATHENS (Reuters) - Greek Prime Minister Costas Karamanlis called a snap election on Wednesday, saying the global crisis was hitting Greece hard and he needed a fresh mandate to push through difficult economic measures.

His scandal-plagued conservative New Democracy government trails the main opposition socialist PASOK party by about 6 points in opinion polls. An election was not due until 2011 but PASOK had warned it would force one by March, when parliament elects a new president, forcing Karamanlis to pick his moment.

KEY POINTS

* The winner must deal with a global crisis that threatens to push Greece's economy into recession this year for the first time since 1993 while the national debt, the euro zone's second biggest after Italy's as a percentage of GDP, is ballooning.

* Polls show PASOK is likely to win the election but may not get enough votes to form a government on its own. Coalitions with smaller leftist parties are unlikely, and it has said it will call for a repeat election under a revised electoral law that makes it easier to get enough deputies in parliament with a smaller percentage of the vote.

* New Democracy, hit by numerous scandals and the economic crisis, is trailing badly in opinion polls, after winning the 2004 election on a pledge to clean up Greek politics. If it wins a surprise victory, it will probably need the backing of the far right LAOS party to form a government -- which Karamanlis has repeatedly rejected. An alliance with the populist LAOS would make it even more difficult for New Democracy to implement tough policies.

* Whoever wins must tackle low budget revenues, a growing deficit and a national debt seen at 103 percent of GDP in 2009 as the economy slows after years of steady 4 percent growth. New Democracy has given a 28 billion euro support package to the banks, but far less relief to the poor. An array of new taxes to plug big budget holes has angered the public and similar measures will not go down well, leaving more borrowing as the more palatable option.

* Seen by foreign investors as the euro zone's weakest link, Greece must submit a 2010 budget by November and must try to rein in deficits that have risen out of control.

* After briefly managing to bring its budget deficit below the 3 percent of GDP EU limit, Athens has been put back under supervision for breaching the ceiling. With unemployment rising and tourism taking a hit, it will take a brave government to cut the public sector, which employs one in 10 Greeks.

RISKY ELECTION

* Foreign experts say holding an election at all is risky, especially if a repeat vote is needed, as Greek governments spend freely to secure votes at such times and freeze policymaking. Greek socialists have a legacy of overspending but a socialist victory would not necessarily mean fiscal relaxation, they say.

* PASOK advocates a "green growth" economic model, saying it will use EU funds for environmentally friendly development, and will offer relief to the needy during the crisis. Rating agencies say they will watch the government's first moves closely and its policies at that point could affect Greece's credit rating.

* New Democracy completed some key privatizations in its five years in power, but was slow to implement other, much needed reforms in areas like social security, education and health. Youth unemployment fed the country's worst riots in decades in December and social unrest has simmered since.

* Whoever wins must tackle these reforms -- especially of pension funds which will go bust without changes -- despite protests. Although seen as more reluctant to implement harsh changes, the socialists control most major labor unions and are therefore likely to face less resistance.