ATHENS (Reuters) - Greece moved closer to a second snap election on Wednesday when the head of the biggest party launched a new attack on radical leftist Alexis Tsipras, saying his plans for a new government would push the country out of the euro zone.
New Democracy leader Antonis Samaras said in a televised statement that he hoped Tsipras would "come to his senses" before they met for coalition talks later on Wednesday.
Tsipras, riding a wave of public disgust with economic hardship in last Sunday's election, has demanded that Samaras and socialist PASOK leader Evangelos Venizelos tear up their 130-billion euro bailout deal with the EU and IMF.
Samaras said this would be "a certain and immediate disaster".
Tsipras, whose Left Coalition SYRIZA came second in the election, received a three-day mandate on Tuesday after Samaras gave up after only a few hours.
He was due to meet both Venizelos and Samaras later on Wednesday but there seems virtually no chance of agreement on a workable coalition to end Greece's post-election limbo.
Samaras added: "The Greek people did not give a mandate for the country to collapse or exit the euro zone. The exact opposite." He said Tsipras's stance indicated he was ruling out an alliance with New Democracy.
Tsipras, 37, refused to budge, saying coalition talks with the mainstream parties would only have meaning if Samaras and Venizelos agreed to revoke "barbaric austerity measures".
In a speech to trade unions and employers as part of his coalition talks, Tsipras added: "If the euro and the eurozone is threatened, it is threatened because of the austerity measures which were first applied in this country, as it was chosen to serve as a guinea pig."
Tsipras aides said he would send a letter to European Central Bank chief Mario Draghi, European Commission head Jose Manuel Barroso and EU Council President Herman von Rompuy on Wednesday saying that the rescue deal - the only thing keeping Greece from bankruptcy - was no longer binding because Greeks had voted against it.
He has also asked to meet French president-elect Francois Hollande, aides said. Analysts say the success of Hollande, who wants to challenge German-led austerity policies in Europe, had encouraged Greeks to vote against the bailout.
EUROPEANS RULE OUT NEW DEAL
European leaders have said repeatedly since the election that there is no alternative to the bailout if Greece wants to stay in the euro.
If Tsipras fails, the baton will pass to Venizelos, and if that doesn't produce a government, Greece is likely to have a new poll in around three to four weeks, with major questions over whether that would clarify or worsen the situation.
Greek newspapers attacked politicians for playing dangerous games and said elections loomed.
Many Greeks seemed unaware of the depths of the crisis created by the election but some expressed alarm.
"People voted with anger not with reason," said 51-year-old widow Maria Savelona.
"Tsipras lives in his own world. God help us, what is this? I'm afraid we will be kicked out of the euro and he thinks he is our saviour?"
Investment bank J.P. Morgan said in a note that if support returned to PASOK and New Democracy in a new poll, Greece might stay in the euro, with possible modifications to the bailout deal. But otherwise "exit from the Euro area will become very likely."
Megan Greene, senior economist at Roubini Global Economics, said that even if a pro-bailout coalition could be formed after a second election it would be weak and face extreme hostility from other parties in trying to meet austerity targets.
"A pro-bailout coalition could therefore provide a solution that might last for months, not years," she said.
New Democracy and PASOK had been ruling jointly in an uneasy coalition that negotiated last year's bailout, which saw lenders demand ever-deeper spending cuts in a country already suffering its fifth year of recession.
GREEKS WANT EURO
Most Greeks say they want to keep the euro currency - widely seen as impossible without the bailout - but they are furious with the two mainstream political parties they blame for the recession, record high unemployment and endemic corruption.
Most believe cuts demanded by the EU and International Monetary Fund are only making the situation worse by increasing unemployment and preventing economic recovery.
Greece's crisis fuelled fears of a resurgence of the euro zone debt crisis on Wednesday, driving the euro towards a three-month low and pushing down global shares.
EU, IMF and ECB chief inspectors, collectively known as the "troika", will wait for a new government to be in place before coming for an inspection visit and making any decision on releasing more aid.
Greek finance ministry officials have warned the country might run out of cash by end-June if it does not have a government in place to negotiate a next aid tranche.
A key condition for more aid - and one which looks extremely difficult to meet after anti-bailout parties obtained 151 seats out of 300 in parliament - is to agree to more than 11 billion euros in extra spending cuts for 2013-2014 by June.
Published Date: May 09, 2012 23:15 PM | Updated Date: May 09, 2012 23:15 PM