Greek Socialists win landslide election victory

ATHENS (Reuters) – Greece’s Socialists yeterday won  a landslide election victory on promises they would tax and  spend to battle an economic crisis that the incumbent  conservatives failed to get to grips with.

In a clash between heirs of famous political dynasties,   socialist PASOK leader George Papandreou defeated outgoing prime  minister Costas Karamanlis at the third attempt, having lost the  last two elections in 2004 and 2007.

Cheering, drums and horns echoed through central Athens and  the streets were awash in green flags and dancing supporters.

“Today we change the course for Greece and for our lives.  Today we start a great national effort to put our country on a  course of recovery, development and creation,” Papandreou told  reporters after claiming victory in front of a cheering crowd.

According to an Interior Ministry projection, PASOK will  hold a comfortable majority in parliament at a time when the  Mediterranean country, seen as the euro zone’s weakest link,  needs a strong government to deal with an economy on the verge  of recession.

Papandreou, 57, had promised a 3 billion euro ($4.36  billion) stimulus package on a platform of taxing the rich and  helping the poor, while Karamanlis, 53, called for two years of  austerity.

Karamanlis conceded defeat at the election centre in central  Athens and resigned from his party’s leadership.

“I want to congratulate George Papandreou for his victory,”  he told reporters. “Our government faced the storm of the most  serious post-war crisis… Citizens did not approve my plan.”

Opinion polls had indicated Greeks were fed up with five  years of conservative rule that started with high hopes for  ending endemic corruption but soon sank into scandal.

“We feel like a heavy weight has been lifted,” said PASOK  supporter Litsa Moraitou, 55. “They had promised to fight  corruption but it was a lie. Now we can hope again.”

With 50 per cent of the ballots counted, PASOK had 43.6  per cent of the vote and New Democracy trailed behind with 35  percent. The ministry projection, which put PASOK at nearly 44  per cent of the final vote, gave the party 160 out of 300 seats.

The soft-spoken Papandreou, born in the United States, has  fought hard to escape the heavy shadow of his legendary father  and PASOK founder Andreas. Karamanlis, a powerful speaker, is  the nephew of elder statesman Constantine Karamanlis.

Markets were likely to be pleased with the result.

“Not because they have a preference between the two parties  but because a new government with a parliamentary majority will  have a fresh mandate to pursue its programme over a four-year  term,” said Alexander Moraitakis, president of the Greek brokers  association SMEHA.

Weakened by the scandals and a fragile parliamentary  majority, Karamanlis called the snap poll, gambling he had a  better chance of winning now than later in his four-year term.

Papandreou will face a budget deficit topping 6 per cent of  Gross Domestic Product, rising unemployment and deep unhappiness  with the education system, social security and immigration.

“The main challenge for the new government is to submit a  credible budget and a realistic timetable for reducing fiscal  imbalances,” said Nikos Magginas, an economist at National Bank.

After years of robust growth, Greece’s output, about 2.5  per cent of the euro zone’s total economy, is set to slow to zero  growth or even enter negative territory this year, with key  drivers and job providers like tourism particularly hard-hit.

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