Greece Set For More Elections Amid Stalemate

Greece looks set for more elections next month unless the leader of the left-wing Syriza bloc can bring together the parties who campaigned on an anti-austerity message.

Alexis Tsipras, whose party came second with 16.8% of the vote and 52 seats in the 300-seat parliament, will officially be asked to try to form a government on Tuesday afternoon.

"We will exhaust all possibilities to reach an understanding, primarily with the forces of the left", he said.

But ideological differences between the parties will complicate the task and, even if he does draw together enough support, the rejection of the previous government's cuts and the international bailout deal could cause political and financial instability.

Greece's international creditors have warned that whoever emerges to lead the country will be bound by its existing commitments.

German Chancellor Angela Merkel, the chief proponent of austerity as the main way out of the eurozone crisis, said it was "of utmost importance" that Greece sticks to its reform path while conceding this was "difficult".

In a week's time, the new Greek government is supposed to redeem 436m euros (£351m) of debt, held by private creditors who turned down a swap last month.

It must also recapitalise Greek banks that sustained heavy losses in that swap, which cut some 106bn euros from Greece's near and mid-term debt of more than 350bn euros.

And Greece's previous administration had already promised its EU-IMF creditors that in June it would find another 11.5bn euros ($9.3bn) in savings through 2014.

If rescue loan funding is cut off, the country will find itself unable to pay salaries and pensions, and would face defaulting on its debts and potentially leaving the euro.

Mr Tsipras is being given three days to put together a coalition after the failure of the New Democracy party, one the two parties in the government that forced through the bailout deal, to gather support.

The mandate will pass to third placed party Pasok, headed by former finance minister Evangelos Venizelos, if Mr Tsipras cannot form a government.

If no agreement can be found new elections will be called, probably for June.