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Greece in turmoil amid doubts over euro membership

world Updated: May 10, 2012 00:20 IST

Athens raised the prospect Wednesday of renegotiating the terms of its bailout after voters roundly rejected austerity measures, raising fresh doubts over Greece's eurozone membership. The head of the radical left-wing Syriza party charged with forming a government was to warn in a letter Wednesday to Athens' international lenders that any cabinet resulting from his negotiations would renege on the terms of Greece's 240 billion euro (311 billion dollar) EU-IMF bailout.

Even the leaders of the outgoing Pasok-New Democracy coalition that signed off on the agreement on March 9 are beginning to suggest that the EU-IMF deal would have to be reopened. The uncertainty sent markets and the euro tumbling, as fears resurfaced of Greece quitting the eurozone before the year is out.

Questions also surfaced on whether international lenders would go ahead with the promised loans to save the country from default if Athens is not prepared to deliver on its promises. Syriza chief Alexis Tsipras has two more days to form a coalition, with meetings due Wednesday with the leaders of Pasok and New Democracy. But Tsipras has already made his position against the austerity measures abundantly clear.

"The public verdict has clearly nullified the loan agreement and (pledges) sent to Europe and the IMF," the 37-year-old said in a televised address on Tuesday following weekend elections that decimated the vote of the pro-austerity parties.

New Democracy leader Antonis Samaras conceded that it was "certainly realistic" to renegotiate the bailout terms in order to give the Greek economy some respite. His rival Evangelos Venizelos, who heads Pasok, said it was necessary to "look for the best amendment possible of the terms" of the austerity measures.

But outgoing PM Lucas Papademos' economics advisor said throwing the austerity measures out completely meant leaving the eurozone.