Athens: Greece`s prime minister warned Tuesday the financially-stricken nation may be forced out of the eurozone if January`s parliamentary election hands hard-left party Syriza power to reverse years of austerity measures.
"This struggle will determine whether Greece stays in Europe," Antonis Samaras said, as he asked the outgoing president to dissolve parliament ahead of an election set for January 25.
Fears of a potential Greek exit have already rattled markets and sparked concern throughout European Union capitals.
Syriza has pledged to reverse reforms imposed by Greece`s creditors -- the so-called "troika" of the International Monetary Fund, European Commission, and European Central Bank -- cut taxes, and increase state aid and public services.
Polls indicate Syriza leads Samaras` conservative New Democracy party by three to six points.
The January election was called Monday after lawmakers failed in a third attempt to elect a successor to 85-year-old President Karolos Papoulias, whose five-year term ends in March.
The last election plunged Greece into weeks of political uncertainty, and there are fears of a repeat next month given the close race between Samaras` New Democracy conservatives and front-running Syriza.
"In an unprecedented twist, the new parliament could elect a president and be dissolved again for new elections (immediately afterwards) if a government cannot be formed," the Kathimerini daily wrote Tuesday.
If Syriza were to win they would still need to form a coalition and tone down some of their rhetoric to find a partner, according to Manos Papazoglou, a professor of political science at the University of the Peloponnese.
"Syriza will have to move towards the centre," Papazoglou told AFP.
It also remained unclear who the prospective coalition allies would be, as a handful of small parties are vying for parliament.
These include the recently-formed centrist party To Potami (The River), led by a former journalist. There are also rumours that former prime minister George Papandreou is about to form a party.
Greek stocks closed down almost four percent on Monday -- having lost a massive 11 percent earlier -- amid fears that Syriza would roll back austerity measures if it wins the election.
The stock market appeared though to have digested the news by Tuesday, closing down just 0.45 percent. Syriza had dismissed warnings that its electoral programme would rattle markets and creditors, but within hours of the election being called on Monday, the International Monetary Fund said it was suspending further bailout payments to Greece until a new government was formed.
"Discussions... will resume once a new government is in place, in consultation with the European Commission and the European Central Bank," said IMF spokesman Gerry Rice.
Greece recently secured a two-month extension to February from its EU-IMF creditors to conclude a fiscal audit that will determine the release of some 7.0 billion euros ($8.6 billion) in loans.
Syriza, which declined to vote in the presidential ballot in order to force snap legislative polls, says hope rather than fear is in order as the election nears.
Avgi, a newspaper aligned with Syriza, says a leftist government would give "hope to the peoples of Europe and nightmares to the elites oppressing them."
"This is the beginning of the end of a regime that plunged Greece into poverty, unemployment, misery and despair," Syriza leader Alexis Tsipras told supporters on Monday, promising a "real negotiation" with the country`s EU creditors.
But the spectre of the hard-left party forming government led Athens` euro partners to encourage Greek voters to stay the reformist course.
The European Union has renewed its calls on Greeks to stick by the often painful reforms adopted as part of a massive international bailout for the eurozone member state.
"A strong commitment to Europe and broad support among the Greek voters and political leaders for the necessary growth-friendly reform process will be essential for Greece to thrive again within the euro area," EU economic affairs commissioner Pierre Moscovici said.
"Greece must stick to its commitments not only because the troika imposes them but also because it is good for the future of the Greek economy," Spanish Economy Minister Luis de Guindos told radio Cope Tuesday.
German Finance Minister Wolfgang Schauble used sterner language, warning Monday the cash-strapped country against abandoning the agreed economic reforms, saying "they have no alternative".