October 5, 2009

Greek socialists win snap poll as voters punish conservatives

By Elena Becatoros, Reuters, in Athens

Outgoing Prime Minister steps down as party leader

Greece's Socialists trounced the governing conservatives in a landslide election yesterday with voters, angered by scandals and a faltering economy, ousting the Prime Minister Costas Karamanlis halfway through his second term.

Humbled by his New Democracy party's worst electoral performance ever, Mr Karamanlis, 53, resigned as its leader and said a new chief is now needed for the party that was founded by his late uncle, Constantine Karamanlis, 35 years ago.

The Socialist leader and former foreign minister George Papandreou, 57, now follows in the footsteps of his father, Andreas Papandreou, and grandfather and namesake George Papandreou, both of whom served several terms as prime minister.

Results with 49.8 per cent of votes counted showed Mr Papandreou's Panhellenic Socialist Movement, or PASOK, winning with 43.6 per cent, compared just under 35 per cent for New Democracy.

The result gives PASOK a comfortable majority of about 159 seats in the 300-member parliament, bringing the party back to power after five years of conservative governance.

Mr Papandreou's victory, along with a recent election win by socialists in Portugal, bucks a European trend that has seen a conservative surge in the continent's powerhouse economies, including most recently in Germany, where Chancellor Angela Merkel won re-election last week.

"This is a historic victory for PASOK, which means great responsibility for us," said senior party official and former minister Evangelos Venizelos outside the party's headquarters. He spoke surrounded by jubilant supporters lighting flares and waving PASOK flags bearing the party's symbol of a green rising sun.

Mr Papandreou will now have to deal with a faltering economy that is expected to contract in 2009 after years of strong growth, while the budget deficit will probably exceed 6 per cent of economic output.

In contrast to Mr Karamanlis, who advocated an austerity program of freezing state salaries, pensions and hiring, Mr Papandreou has promised to inject up to €3bn (£2.8bn) to jump-start the economy. However, his government will likely have to borrow heavily just to service the ballooning debt - set to exceed 100 per cent of GDP this year - and to keep paying public sector wages and pensions. He has pledged to limit borrowing by reducing government waste and going after tax dodgers.

Thousands of cheering supporters mobbed a smiling Mr Papandreou as he arrived at the central Athens headquarters while the results trickled in. Others drove through the city honking their horns.

Mr Karamanlis, looking tired and downcast, congratulated his rival in a brief speech. "We hope he succeeds in the great challenge of facing the economic situation," he added.

The prime minister was already trailing in opinion polls when he called the election last month, sparking criticism within his own party. In addition to the financial crisis, many conservative voters were angered by rising crime and the authorities' failure to control recent anti-police rioting.