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Leftist Greek leader ready to walk away from EU bailout deal

Alexis Tsipras has the presidential mandate to end the Greek political impasse by forming a governing coalition by Thursday.

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Greece has depended on rescue loans from its European partners and the International Monetary Fund since May 2010, after decades of profligate state spending and poor financial management priced it out of money-lending markets.

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To secure the bailouts, Athens took a hatchet to pensions, salaries, health care and pretty much everything else, while repeatedly raising taxes. But more than two years of austerity have left the economy deep in recession and unemployment at a record high 21 percent.

Tsipras urged Samaras and third-placed Socialist leader Evangelos Venizelos to renege on their support for the bailout commitments, asking them to "honestly repent for their disastrous choices that tore our society apart."

Greece has promised to pass new austerity measures worth €14.5 billion ($18.9 billion) next month and to implement other swift reforms. These will promptly be reviewed by its creditors, who will then decide whether to release or withhold the next batch of bailout funds.

But Samaras quickly blasted Tsipras' proposal as "unbelievably arrogant," warning it would "drag the country into chaos" and see it expelled from the eurozone.

"Mr. Tsipras is doing everything to prevent a government being formed," Samaras said. "Nothing can be done if we leave the euro, because the country's catastrophe would be certain and unprecedented."

He added: "He is asking me to place my signature on the destruction of Greece. And that I will not do."

Analysts agreed that Tsipras was wading into dangerous waters.

Athanasios Vamvakidis, a strategist at Bank of America Merrill Lynch, said Greece's rescue creditors are unlikely to agree easily to a renegotiation of the two bailout programs worth €240 billion ($312 billion).

Just two months ago, banks and other private creditors wrote off over €100 billion ($130 billion) in Greek debt — the largest debt writedown in history.

However, other analysts suggested that the eurozone and IMF could give Athens a minimal lifeline of credit while Greece sorts out its political impasse or holds new elections.

But even then, there is little reason to believe that angry Greek voters would change their minds in a second ballot and give a comfortable majority to the pro-austerity parties New Democracy and PASOK, said Neil Mellor, an analyst at the Bank of New York Mellon.

Even if the two eked out a slim majority in the next election, they could not enforce the current bailout terms, he added.

Dimitris Mardas, an associate professor of economics at Thessaloniki University, said he believed there was room to negotiate a coalition government.

"They are professionals, not children," he said.

But it would be mathematically impossible for Tsipras to govern without the support of Samaras' conservatives, because the isolationist Communists have ruled out any participation in government and no party will work with the neo-Nazi Golden Dawn.

If Tsipras fails, the mandate would then pass to Venizelos. If he is also unsuccessful, party leaders will hold a final effort to reach consensus. And if nothing comes from that, elections will take place within a month.

IN PICTURES: Athens protests

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