ATHENS //Greece's New Democracy conservatives were poised last night to win a crucial election expected to determine the country's future in the euro zone.
They took 29.5 per cent of the vote with Syriza in second place with 27.1 per cent in an official projection from the interior ministry. The socialist Pasok followed in third place with 12.3 per cent.
The result translates to 128 seats for New Democracy and 33 for Pasok, giving the two pro-bailout parties a slender majority in the 300-seat parliament.
New Democracy leader Antonis Samaras supports the deep cuts in public spending imposed by international lenders as part of the bailout package to rescue Greece's debt-laden economy.
Syriza's leader Alexis Tsipras blames the austerity measures for deepening the recession and has vowed to scrap them.
Mr Tsipras's promise to renegotiate the deal with Europe has won him many supporters in a country in the throes of economic and social collapse, but he will struggle to find other parties who believe the country can pay for his radical programme, which includes raising the minimum wage, reinstating public employees and nationalising banks.
It is the second election in only six weeks after the leading parties failed to form a government last month, and days of complicated horse-trading are now expected as parties jostle for concessions.
Many in the international community are hoping for a New Democracy government. They fear Syriza's outright rejection of the bailout conditions could lead EU lenders to cut off funding to Greece, forcing it out of the euro zone.
A Greek exit has the potential to set off a chain reaction of panic through the rest of the euro zone, particularly in vulnerable economies such as Spain, that could trigger the collapse of the single currency and create chaos in global markets.
But even if New Democracy takes power, Greece's problems are far from over.
For a start, Syriza's journey from obscure fringe party to near-victory shows there is a huge wave of opposition to austerity, particularly among the young.
"We want to stay in the EU and we need to make serious reforms, but it is more than clear that these austerity measures have failed," said Filimon Roukos, a 35-year-old retail manager, as he emerged from a polling booth in Athens yesterday.
"Many people will not allow austerity to continue," he said, raising the spectre of a return to the mass riots that rocked Athens in October.
Meanwhile, economists wonder whether it is already too late to save Greece from an exit.
Analysts at Citibank said last week that even under a New Democracy government, there is a 50 to 75 per cent chance of Greece leaving the euro in the next year.
Massive overspending during the past decade, combined with the failure of successive governments to deal with the bloated and corrupt public sector, have left an almost impossible legacy for whoever takes power in the coming days.
"Ultimately, Greece needs to reform its entire socio-economic system from scratch," said Blanka Kolenikova, Europe analyst for the research group IHS Global Insight in London.
"Institutions are weak and entire sections of bureaucracy exist purely to cover up corruption. Lobbying groups have prevented any real reforms from taking place. You cannot make the sort of changes Greece needs overnight - you need a lot of time and funds."
In the meantime, she said, too much austerity "will be harmful. It affects consumer spending and sends the economy into a vicious cycle."
Despite widespread anger with the elite, fear of exiting the euro appears to have convinced many voters to back New Democracy.
"I have never voted for them before, but the alternatives are too bad to consider," said one businessman outside the polling station.
"Many people who have worked all their lives in the private sector are suddenly worried they may lose everything. In the end, Syriza only wanted to protect the same corrupt public sector that is the cause of the problems."
