Hopes rise for Greece

ATHENS, Greece - Hopes rose slightly Thursday that Greece could end its post-electoral deadlock without having to hold new elections, as international partners warned that Athens must stick to its hugely unpopular austerity program or abandon the euro.

Socialist leader Evangelos Venizelos, who received the presidential mandate to try and form a government after two other party chiefs failed, said a meeting Thursday with a left-wing potential kingmaker had proved encouraging.

If this third mandate fails, President Karolos Papoulias will convene party leaders in a last-ditch effort to get a deal - otherwise new elections will be held in a month.

New polls would greatly delay Greece's commitments to pass further austerity measures and reforms, without which creditors will cut off the country's rescue loan lifeline. If Greece runs out of cash, it could be forced to leave the euro, reverting to a grossly devalued version of its old drachma currency and facing long years of misery.

Venizelos, whose once-dominant PASOK party finished third in Sunday's elections, said he and pro-European Democratic Left leader Fotis Kouvelis were "very, very close in our views."

The leftist Kouvelis wants a broad coalition to keep Greece in the euro and "launch a gradual disengagement" from the austerity program with a mandate until mid-2014. Venizelos said that "almost coincides" with his own position.

Voters angered by crushing income cuts imposed to secure Greece's rescue loans abandoned mainstream politicians on Sunday and backed parties promising to end the belt-tightening. They even gave 21 seats to the extreme-right Golden Dawn, which wants to send illegal immigrants to labor camps.

The coalition-building talks exclude Golden Dawn, but the other six parties elected have failed to come up with a working government.

If Kouvelis' party joined with PASOK and first-placed conservative New Democracy party - both which have pledged to respect their preelection commitments for protracted austerity - their coalition would control 168 of parliament's 300 seats.

But the situation remains highly volatile, as Kouvelis would risk being branded as a left-wing traitor if he helps the pro-austerity parties to govern without the second-paced Radical Left Coalition, which is staunchly anti-bailout.

And some party leaders might be inclined to bet on new elections, hoping to gain a stronger position. An opinion poll published late Thursday indicated that the Radical Left Coalition would come first with nearly 28 percent of the vote in a new election - up from 16.8 - winning 128 seats.

The Marc survey for private Alpha TV gave New Democracy 20.3 percent and 57 seats, and showed Golden Dawn declining to 5.7 percent, with 16 seats. The May 8-9 nationwide survey was the first published after Sunday's vote. It gave no margin of error.