Greece stalls on cabinet as EU pressure mounts

As EU paymaster Germany threatened to cut off the country\'s loan lifeline, party leaders failed to break ground on coalition talks which now hinge on an anti-bailout radical leftist party that shot to second place in the ballot.

Conservative New Democracy leader Antonis Samaras said Friday a government cannot be formed without the Syriza party that opposes the terms of the 240 billion euro (311 billion dollar) EU-IMF bailout.

"There must be a durable government," Antonis Samaras told a meeting of his party. "The Syriza party must participate, or give a vote of tolerance. It\'s in their hands to decide what they want to do," he said.

Socialist leader Evangelos Venizelos, who participated in the last government in a coalition with Samaras\' party, has been tasked with forming a coalition by late Saturday after earlier efforts by Samaras and Syriza leader Alexis Tsipras failed.

He was scheduled to meet with the Syriza leader at 1600 GMT.

Venizelos, who as finance minister oversaw the bailout but like Samaras suffered a voter backlash at the weekend, had Thursday pinned his hopes on forming a coalition with New Democracy and the small Democratic Left party.

But Democratic Left, which has 19 seats, scuppered that hope on Friday when it announced it would not join a government without fellow leftists Syriza.

The Athens stock exchange had shed 2.65 percent by midday after closing with up 4.19 percent on Thursday.

Failing a breakthrough, hopes for the formation of an emergency coalition rests on a final meeting between President Carolos Papoulias and the leaders of all the parties, which is likely to take place late Saturday or Sunday.

New elections will then have to be called if the parties cannot agree a compromise by next Thursday.

Sunday\'s election punished the mainstream parties for their insistence on crippling austerity measures introduced in the wake of the bailout and alarmed Greece\'s eurozone partners amid fears that vital reforms may be at risk.

Even mainstream parties have publicly called for a revision of Greece\'s EU-IMF loan agreement.

Samaras on Friday repeated his assertion that the loan agreement must be "modified" to boost growth in a country mired in a five-year recession.

"We have asked for changes to measures that have caused incredible recession," he said. "One after another, European leaders are also asking for changes."

But the EU has warned that Greece must honour the bailout conditions of budget cuts and deep reforms.

Earlier in the week, the eurozone announced it was blocking 1.0 billion euros ($1.3 billion) out of 5.2 billion euros in bailout loans for Greece until Monday amid uncertainty over the country\'s political future.

German Finance Minister Wolfgang Schaeuble suggested in an interview published Friday that the eurozone would cope if Greece left the currency union, and Foreign Minister Guido Westerwelle added that Athens could expect no more money without reforms.

"We want Greece to remain in the eurozone," Schaeuble told the regional Theinische Post. "But it also has to want this and to fulfill its obligations. We can\'t force anyone. Europe won\'t sink that easily."

Westerwelle added in parliament: "We want to help Greece and we will help Greece. But Greece has to want to be helped. If they deviate from the agreed reform path, then the payment of further tranches of aid is not possible."

Many in Greece believe parties will opt for repeat elections rather than toe the austerity line.

"We will probably have elections in two months" even if a cabinet is formed, said Communist party leader Aleka Papariga.

A poll published Friday showed that Syriza could even emerge as the victor if repeat elections are held in June.

The poll for Alpha television gave Syriza 27.7 percent of the vote, far above their score of just under 17 percent in Sunday\'s elections.

Over 35 percent of respondents said they were dissatisfied with the result, and 62.7 percent favoured the formation of a coalition government, while 32 percent called for fresh elections.

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