Greece Steps Back From the Brink

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Taking party leaders’ statements at face value, it appeared that a coalition would be hard for New Democracy leader Antonis Samaris to form, because Syriza leader Alexis Tsipras said he would refuse to join a government, and Pasok leader Evangelos Venizelos said he wouldn’t join if Tsipras didn’t. But observers were betting that Venizelos would eventually either join a government headed by New Democracy or at least give it a vote of confidence. “A lot of people interpret it [Venizelos' statement] as posturing,” says Ioannides. Francesco Daveri, an economist at the University of Parma in Italy, said, “This seems to be a definite improvement compared to the last election.”

“New Democracy will have some heavy negotiating to do with Pasok if a government is to be formed in the next few days,” Charles Diebel of Lloyds TSB Bank said in a note on Sunday. “Clearly the tone adopted by Pasok is to do with internal politics as they try to avoid being marginalized in the new Greek political landscape.”

“We dodged a bullet, for now, if these results hold up,” wrote Wells Fargo (WFC) economist John Silvia.

Economides predicts that the troika—the European Commission, the European Central Bank, and the International Monetary Fund—will make some concessions to Greece as a reward to the nation for pulling back from outright confrontation, and as a way to give the choked economy some breathing room. He expects Greece will receive more government funds for infrastructure, and extra time to balance its budget—perhaps three or four years instead of one or two.

Whether such concessions will ultimately be enough to rescue Greece and keep it as a member in good standing of the single currency is another question. But for the moment, at least, a sudden and uncontrolled “Grexit” is a less immediate threat.

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