Greek party moves to quit coalition over state TV debacle

ATHENS (REUTERS) - The smallest party in Greece's ruling coalition could pull out of the government on Friday after a row over the abrupt closure of the state broadcaster, plunging the indebted nation into fresh turmoil.

Lawmakers from the small leftist party, the Democratic Left, were meeting to decide whether to continue backing Prime Minister Antonis Samaras, who addressed Greeks after midnight to say he was ready to press ahead without the leftists.

"I want us to continue together as we started but I will move on either way,"Mr Samaras said in a televised statement following the collapse of three-party talks on the future of the ERT radio and television station.

"Our aim is to conclude our effort to save the country, always with a four-year term in our sights. We hope for the Democratic Left's support."

Party officials said Democratic Left leader Fotis Kouvelis had advised lawmakers to pull their two ministers and two deputy ministers out of the cabinet. Splits emerged before the meeting among the party's 14 parliamentarians, with one saying it should stay in government and another that it should quit.

The row coincided with a new hitch in Greece's international bailout with the discovery of a potential funding shortfall due to the reluctance of some euro zone central banks to roll over their holdings of Greek government bonds.

Ten-year Greek government bond yields rose to their highest since late April, on course for their biggest daily rise since July 2012, while Greek stocks fell nearly 3 per cent.

Mr Samaras's conservative New Democracy party and its Socialist PASOK ally jointly have 153 deputies, a majority of three in the country's 300-member parliament.

That means they could manage without the Democratic Left, but a departure of the party would be a major blow, leaving the coalition with a thin parliamentary majority and making it tougher to pass unpopular reforms demanded by foreign lenders.

"The government can't last for long in its new shape. The horse-trading will begin, there will be more crises, they won't be able to push reforms," said John Loulis, a political analyst.

"At some point we'll have early elections whose outcome can't be predicted."

Officials from all three parties ruled out snap elections for now, which would derail the bailout programme.

An ongoing inspection visit to Greece by the European Union and the International Monetary Fund needs to be completed as planned in July to avoid funding problems, lenders said on Thursday.

At least two independent lawmakers have suggested they would back Mr Samaras's government, which came to power a year ago in an uneasy pro-bailout coalition aimed at ensuring Greece stayed in the euro zone after nearly going bankrupt.

The coalition has regularly bickered over a range of issues from austerity policy to immigration, and lawmakers from Mr Samaras's parties have openly accused Democratic Left of blocking public sector reforms needed to secure bailout funds.

The latest crisis began 10 days ago when Mr Samaras abruptly yanked ERT off air and fired its 2,600 workers, sparking an outcry from his two allies, unions and journalists.

Calling it a "sinful" and "wasteful" hotbed of political patronage, Mr Samaras said the move was necessary to hit public sector layoff targets set by Greece's EU and IMF lenders.

After initially refusing to restart ERT, Mr Samaras on Thursday said he offered during talks with his allies to re-hire at a new broadcaster about 2,000 workers, a compromise accepted by PASOK but rejected by the Democratic Left.

"We will no longer have black screens on state TV channels but we are not going to return to the sinful regime," Mr Samaras said. "At this point we had a serious disagreement over ERT."

But Fotis Kouvelis, leader of the Democratic Left, insisted that all workers be rehired, saying the issue at stake was far bigger than state television broadcasts.

"This issue is ... fundamentally an issue of democracy,"said Mr Kouvelis. "We are not responsible for the fact that no common ground was reached."

Evangelos Venizelos, leader of PASOK - which has heavily suffered from Greece's debt crisis and would lose further in a new election - also called on Mr Kouvelis to stay in the coalition.

"The situation for the country, the economy and its citizens is especially grave," said Mr Venizelos. "We want the government to continue as a three-party government."

PASOK would continue backing the government even without the Democratic Left, party spokesman Dimitris Karydis said.

Greece's top administrative court on Thursday confirmed an earlier ruling suspending ERT's closure and calling for a transitional, slimmed-down broadcaster to go on air immediately.

ERT remains off air despite Monday's court ruling ordering it back on, though workers have continued broadcasting a 24-hour bootleg version on the Internet from their headquarters.