Shocked by fires, Greece heads for close election

ATHENS, Sep 14 (Reuters) Voters fed up with Greece's main parties and shocked by devastating forest fires may decide whether a gamble by Prime Minister Costas Karamanlis pays off in Sunday's parliamentary election.

Conservative Karamanlis, who swept to power in 2004, called the election six months before his term ended, confident the economic record of his New Democracy party would secure victory.

But the government's response to the fires that killed 65 people last month has angered voters, who appear to be switching to smaller parties, raising the chances that a coalition will be needed to form a government.

''Once they get elected, politicians don't care about the people, they only care about themselves,'' said Christina Bakou, 41, an undecided voter in the central Greek town of Kirra.

The Socialist PASOK party, led by George Papandreou, son of the charismatic late prime minister Andreas, was a close second in opinion polls published before a September 1 blackout, although it was struggling to capitalise on the government's problems.

The polls showed more than 10 per cent of Greek voters were undecided about which party they would back. Analysts say these people, disillusioned by the two parties that have ruled Greece for more than 30 years, will probably decide the election.

''Many are deciding in the last week, on the last day, in the last hour,'' said political analyst Dimitris Sotiropoulos of the ELIAMEP think tank. ''This is a mass that will make a decision based on the economic benefits offered.'' Praised by the EU for cutting deficits and turning around Greece's economy, the nephew of the late statesman Constantine Karamanlis has vowed to push on with the reforms the country needs to catch up with its euro zone partners.

Greek per capita GDP is the lowest next to Portugal's and 20 per cent of the population lives below the poverty line.

Although down to 7.7 per cent in May, unemployment remains one of the euro zone's highest, despite 4.4 per cent GDP growth in the first half of the year.

FOREST FIRES Papandreou has attacked New Democracy over its handling of the forest fires and for widening the gap between the rich and poor. PASOK favours a pro-business economic model coupled with strong social protection.

''We had such destruction as a result of the mistakes made by the government,'' he told Reuters in a recent interview. ''Greek people have been affected, elections are close and we will win.'' Even if the ruling New Democracy wins, it may not get enough votes to form a government. Karamanlis, 51, has ruled out forming a coalition with the far-right LA O S party, which may enter parliament for the first time.

''There is no chance of cooperation,'' Karamanlis told Antenna TV today. ''The country will be led to new elections.'' Whoever wins must urgently tackle a pension system that could collapse within 15 years. Both parties have made pre-election pledges not to raise contributions or age limits, measures experts say are necessary.

Economic analysts say Greece's EU commitments, such as balancing its budget by 2010, tie the election winner to maintaining existing economic policies but New Democracy is likely to be faster and more determined than PASOK.

What could really hold things back, they say, is a coalition.

''For the reforms it would be best if one party had a comfortable majority,'' said economist Theodor Schoenebeck at Deutsche Bank.

REUTERS SBC BST1700