Poll shows Greece electing pro-bailout government

ATHENS Thu May 17, 2012 5:15pm EDT

1 of 2. Newly appointed caretaker Prime Minister Panagiotis Pikrammenos (2nd R) shakes hands with Greece's President Karolos Papoulias during their meeting in Athens May 16, 2012.

Credit: Reuters/John Kolesidis

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ATHENS (Reuters) - Greek voters are returning to the establishment parties that negotiated its bailout, a poll showed on Thursday, offering potential salvation for European leaders who say a snap Greek election next month will decide whether it must quit the euro.

The poll, the first conducted since talks to form a government collapsed and a new election was called for June 17, showed the conservative New Democracy party in first place, several points ahead of the radical leftist SYRIZA which has pledged to tear up the bailout.

EU leaders say that without the bailout, Greece would be headed for certain bankruptcy and ejection from the common currency, which would sow financial destruction across the continent. The prospect SYRIZA would win the election has sent the euro and markets across the continent plummeting this week.

The poll predicted New Democracy would win 26.1 percent of the vote compared to 23.7 percent for SYRIZA.

Crucially, it showed that along with the Socialist PASOK party, New Democracy would have enough seats to form a pro-bailout government, which it failed to win in an election on May 6, forcing a new vote and prompting a political crisis that has put the future of the euro in doubt.

Polls last week had showed SYRIZA well in front, with anti-bailout voters rallying behind its charismatic 37-year-old leader Alexis Tsipras. First place comes with a bonus of 50 extra seats in the 300-seat parliament, so even a tiny edge would be pivotal in determining who forms the next government.

The election is still a month away, and Greek voters have been fickle. Experts warned against drawing any strong conclusions from a single poll. Nevertheless, a trend that had shown SYRIZA surging ahead appears to have turned.

"It seems people vented their anger in the election and then they got scared. They disliked that there was no government and they got worried about a possible exit from the euro," political analyst John Loulis said of the surprise poll result.

"Still, voters are far from enthusiastic with New Democracy. Things are still volatile. The outcome of the elections will depend on who will make the fewest mistakes."

Rating agency Fitch underscored the high stakes, downgrading Greece's debt a further notch below investment grade to CCC.

"In the event that the new general elections scheduled for 17 June fail to produce a government with a mandate to continue with the EU-IMF program of fiscal austerity and structural reform, an exit of Greece from (the euro) would be probable," the ratings agency said in a statement.

Earlier on Thursday Tsipras predicted his party would sweep next month's election and refused to give up his demand for an end to "barbaric" austerity policies he said were bankrupting the nation.

"They are trying to terrorize the people to make SYRIZA cave in. We will never compromise," the ex-Communist student leader told his party's lawmakers, often addressing them as "comrades".

"We will never participate in a government to rescue the bailout," he said. "The Greek people voted for an end to the bailout and barbaric austerity. They ignored the threats and the cheap propaganda. And we are certain they will do the same now."

"HUMILIATING EXIT"

An emergency government led by a judge and made up of mainly professors, technocrats and a few politicians was sworn in on Thursday in a ceremony presided over by the Archbishop Ieronimos of Athens.

The government has been tasked solely with taking the country to the next election and will not be permitted to take political decisions, meaning Greece will fall further behind on the reforms it has pledged to carry out to receive rescue loans.

At his first cabinet meeting, caretaker Prime Minister Panagiotis Pikrammenos told ministers they would receive no salary and urged them to dispense with frills like limousines or business trips.

The parliament that was elected on May 6 also convened for a brief session on Thursday, when lawmakers from the far-right Golden Dawn party marched into parliament for the first time.

Deputies from the party, whose members give Nazi-style salutes, refused to stand when three Muslim lawmakers were sworn in on the Koran during the oath ceremony.

The parliament is expected to be dissolved later this week ahead of the election in June.

Pikrammenos's predecessor Lucas Papademos implored Greeks to choose wisely in the vote, since their nation now stood at the edge of an abyss with its euro zone membership at stake.

"Some would like to see Greece become weak and out of the eurozone and the European Union. Some are expecting to take advantage of the chaos that would follow a humiliating exit of the country from the eurozone," the former prime minister wrote in an open letter posted on his website.

"We must not give them the chance to speculate against Greece." ($1 = 0.7828 euros)

(Additional reporting by Lefteris Papadimas, Karolina Tagaris and Tatiana Fragou; Writing by Peter Graff; Editing by Michael Roddy)

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