Greece's New Democracy seeks coalition after election win

Antonis Samaras, leader of the centre-right New Democracy party, will attempt to form a coalition government in Greece after a narrow election victory on Sunday over the anti-bailout left-wing group Syriza.

Samaras, whose party's policy is to stick to the general terms of Greece's international bailout but renegotiate the details, said the result was a "victory for all Europe" and called for a "national salvation government". He said he would try to form an administration "as soon as possible".

With all the ballots counted, New Democracy won 29.7 per cent of the vote, ahead of Syriza on 26.9 per cent. The socialist Pasok party placed third with 12.3 per cent. With a 50-seat bonus for topping the poll, it gives New Democracy 129 seats in parliament to Syriza's 71 and Pasok's 33.

The Greek people had "expressed their will to stay anchored with the euro, remain an integral part of the eurozone and honour the country's commitments", Samaras said, adding: "There is not time for petty politics". Samaras received a mandate to form a government from the Greek President Karolos Papoulias this morning.

However, Syriza leader Alexis Tsipras, who pledged to abandon the austerity measures on which rescue loans totalling €240bn from the European Union and International Monetary Fund are conditional, said he would not take part in any coalition and would stay in opposition. It makes a government led by New Democracy and supported by Pasok, as well as the small Democratic Left, the most viable option.

New Democracy's victory was welcomed by EU leaders, who had previously warned that rejecting the bailout terms would have put the country's place in the eurozone in doubt.

In a joint statement, European Council President Herman Van Rompuy and European Commission President José Manuel Barroso said: "The Greek people have spoken. We fully respect their democratic choice. We are hopeful that the election results will allow a government to be formed quickly.

"Today, we salute the courage and resilience of the Greek citizens, fully aware of the sacrifices which are demanded from them to redress the Greek economy and build new, sustainable growth for the country. We will continue to stand by Greece as a member of the EU family and of the euro area."

The Eurogroup of the 17 countries that use the euro said the result should "allow for the formation of a government that will carry the support of the electorate to bring Greece back on a path of sustainable growth". The statement added that fiscal and structural reforms were "the best guarantee to overcome the current economic and social challenges and for a more prosperous future of Greece in the euro area".

It also called for the formation of a government that would "take ownership of the adjustment programme", and said the troika of the commission, the European Central Bank and the IMF would return to Athens as soon as an administration was formed.

Spanish Prime Minister Mariano Rajoy said the outcome was "good news for Greece, very good news for the EU, for the euro and also for Spain". And his Italian counterpart Mario Monti said: "This allows us to have a more serene vision for the future of the EU and for the eurozone."

It will be the second time in less than two months that Samaras has tried to build a workable coalition after New Democracy also came first in the inconclusive May 6 elections.

Rating agency Fitch said the latest result meant the "near-term risk of a Greek disorderly default and exit from the euro has fallen". But it warned that the crisis remained "intense".

"The pace of economic contraction is almost certainly accelerating," it said in a statement. "The country's liquidity position is fast deteriorating, underscoring the urgency of forming a new government and the resumption of disbursements under the EU-IMF programme.

"It will be challenging to significantly ease the austerity programme without receiving additional funds, although there is some room for manoeuvre on the financing profile of the existing programme."

The Greek people have made "great sacrifices", said European Parliament President Martin Schulz. "I hope the burden of the reforms will be spread more equally to achieve greater social justice." He said the new government, when it is formed, would "be able to count on our constructive cooperation in possible fine-tuning of its reform strategy and economic targets".

Joseph Daul, chairman of the centre-right European People's Party in the parliament, said that "the positive vote, the efforts and sacrifices of the Greek people, combined with European solidarity, will soon bring the country back on to the path of economic recovery".

And Hannes Swoboda, leader of the Socialists and Democrats group, said Greeks had "made it crystal clear that they want a strong coalition government to handle the crisis and ensure that Greece remains in the eurozone".

He added: "All pro-European political parties should be represented in the new government and work together for the future of Greece. The country has no time to waste and the new government must act immediately in close cooperation with the EU and its international partners to renegotiate the terms of the bailout."

Alliance of Liberals and Democrats leader Guy Verhofstadt said Greeks had "shown that they intend to follow the path of Europe and of change" and that in response the EU should "acknowledge this engagement and show good will by adjusting the memorandum that has so far been aimed at salary moderation and tax increases".

And in a joint statement the co-leaders of the Green group, Dany Cohn-Bendit and Rebecca Harms, said: "While the memorandum with the IMF, ECB and EU cannot be torn up, it is clear that it is in both Europe's and Greece's interests that its terms be revised.

"Once a government is formed, it must engage constructively with its EU partners with a view to making the terms of its bail-out workable. This means extending the unrealistic timeframe for meeting Greece's fiscal targets and reducing the social hardship under the current provisions."

The real winner was Tsipras – who increased Syriza's share of the vote from 4.6 per cent in 2009 to 26.9 per cent on Sunday – claimed European United Left/Nordic Green Left president Gabi Zimmer. She said German Chancellor Angela Merkel and other European leaders had "exerted unprecedented pressure" to turn the vote into a referendum on euro membership.

"The conservative party of Samaras, with 29.7 per cent of the vote, did indeed win the elections, but his margin for manoeuvre remains extremely limited. The results of the elections show that hostility to austerity remains a major factor in the country."

Greece's was not the only significant election in the eurozone on Sunday. In France, President Francois Hollande's socialist party won an absolute majority in the National Assembly, giving it control of both the lower house and the Senate – and ensuring that it will not need to rely on the support of the Greens or far left to implement policies.

Ahead of a summit of European leaders on June 28, Hollande is reported to have proposed a €120bn 'growth pact' drawing on unused EU structural funds, new capital from the European Investment Bank and project bonds.