News Analysis: Greece plunges into uncertainty with snap elections called after third bailout

Greece plunged into political and economic uncertainty yet again after the resignation of the Leftist government on Thursday evening.

As outgoing Prime Minister Alexis Tsipras forces snap general elections in September, the best case scenario is it could accelerate the implementation of the third bailout program.

Under the worst case scenario, efforts to stabilize the Greek economy and restore growth could be derailed once again and the specter of a Greek default and Grexit will return, if the sixth elections in five years do not result in a strong, stable pro-reform government, analysts warned.

The outgoing leader said Thursday he felt it was his moral duty to ask voters' opinion on the painful, but "necessary" bailout deal his government reached with international lenders.

His critics accused him of a risky gamble aimed to resolve inter-party disputes. Among them was conservative opposition New Democracy party leader Evangelos Meimarakis who received Friday a mandate to try to form a government coalition until Monday to avoid fresh polls.

Regardless of the genuine motives behind Tsipras' decision to step down, fresh elections just a few months after the Jan. 25 polls that brought the radical left Syriza party in power seemed almost certain.

January's ballot and recent opinion surveys showed there are two dominant political forces -- Syriza and New Democracy. However, none of the two appears able to secure an absolute majority. This means that stability can only be achieved through cooperation, political analyst Costas Iordanidis noted in an article in Kathimerini (Daily) newspaper.

Iordanidis said he hoped a grand coalition between ND and Syriza would be formed to help the bailout program produce tangible results.

In this case, the implementation of the further fiscal adjustment policies and structural reforms under the three-year 86 billion euros (97.6 billion U.S. dollars) bailout would run more smoothly.

If a Syriza-ND ruling coalition seems hard to imagine, the prospect of another more stable pro-bailout ruling coalition does not seem far-fetched, according to other analysts who expect Tsipras to win the bet by rolling the dice.

Prominent Syriza members have implied that by resorting to the elections, Tsipras expects to clear the party from the rebels who opposed his turn to realism and emerge stronger to govern.

On Friday, 25 Syriza hardliners formally broke away from the party's 149-strong parliamentary group and formed a new anti-bailout parliamentary group under former Energy Minister Panagiotis Lafazanis. In statements to the press a few hours later, he openly called for "an end to extortions and bailouts" and a return to the drachma.

For political analyst Yorgos Karellias the elections, whenever they will take place, will be decided among other factors by the performance of the new Leftist party which could "steal" valuable votes away from SYRIZA.

Ever since SYRIZA joined the pro-bailout forces, the anti-bailout camp seems to have lost ground. Whoever wins the first place in the elections, the pro-bailout camp will most likely have the overwhelming majority in the new assembly this time, commentators noted.

The main element of concern for analysts who fear further instability regardless of the outcome of the polls and the composition of the next coalition is the Greek political parties' poor record of achieving consensus and cooperating for long, as an editorial on Vima (Tribune) daily stressed on Friday.

With an unstable, complex coalition, the next Greek prime minister will struggle to implement the policies foreseen by the new bailout. In the best case there will be delays, in the worst the program could be put at risk and doubts be revived over whether Greece can stay in the euro zone.

It will take time and great efforts to restore the tarnished image of the country and the national economy, political commentator Panos Polyzoidis underlined.

However, the country does not have the luxury of time. Through the marathon negotiations over the current bailout that lasted eight months, the Greece economy continues to suffer, among others, from the impact of capital controls introduced late June to avert a banking sector collapse.

In October, Athens faces the first review of reforms it is required to make in exchange of vital funds and the start of talks on debt relief.

The elections will undoubtedly cause delays in the initial timetables and the real economy will bear the cost of the few more weeks of uncertainty. The only hope is that the instability of the elections will not last long so that efforts to heal the wounds of the economy resume quickly. Endit