Greek Elections Seen Leading to Instability

Angry Voters Are Set to Punish Main Parties, Leading to New Polls Within Months and Threatening Bailout Package

ATHENS—Greece's election on Sunday is expected to usher in such political instability that officials from the country's major parties are planning another possible election within months.

That, in turn, could threaten the viability of Greece's latest bailout package from the European Union and the International Monetary Fund and aggravate the euro zone's financial woes.

A nation eager to punish its political establishment for Greece's financial and economic meltdown is set to give the country's two major established parties a drubbing this weekend. Even before the first vote is cast, senior officials from both parties say privately that any new coalition government between the conservative New Democracy and the center-left Socialists, known as Pasok, could be short-lived—and that more elections will be needed soon.

Many of these party officials expect elections by the fall. Some, especially in New Democracy, say fresh elections could happen as early as June.

New Democracy and Pasok typically dominate Parliament, and take turns governing. But on Sunday they will be lucky to reach a majority of the 300 seats in Parliament between them, thanks to booming support for protest parties, ranging from Marxist-Leninists to neo-Nazis.

With 10 parties polling above the 3% threshold for winning seats, Greeks are likely to elect the most fragmented Parliament since the restoration of democracy and fall of Greece's military junta in 1974.

"We are probably going to wind up with a New Democracy-Pasok coalition if they get the seats, which they might not," says David Lea, an analyst at Control Risks, an independent risk-consulting firm. "Either way, another round of elections before year-end is entirely possible."

In March, Athens agreed with the EU and the IMF on a bailout package of €173 billion ($228 billion). The aid loans require Greece to find another €11.5 billion of public-spending cuts by June, on top of two years of drastic austerity that has helped drive the country's economy into a deep recession. Greece's economy has shrunk by about 14% in the past three years, while unemployment has risen to 22%.

The June cuts will require politically painful decisions, such as closing unprofitable state enterprises and laying off swaths of public-sector employees, finance-ministry officials say.

If Greece doesn't have a sufficiently stable government by June to push through controversial cuts, Europe and the IMF are likely to suspend aid payments needed to cover the Greek government's operating costs, potentially escalating the political and social crisis in the country.

Mounting political instability in Greece would add further uncertainty to the euro zone's financial and economic crisis, in which a growing number of European leaders are being ousted by parties or voters against a backdrop of public anger over austerity and recession.

New Democracy is expected to emerge from Sunday's election as the biggest party in Greece's Parliament, putting its leader, Antonis Samaras, in position to become prime minister. But Mr. Samaras is reluctant to share power with Pasok, even though the parliamentary arithmetic may force him to do so.

Some of Mr. Samaras's advisers are arguing that a greatly weakened Pasok could implode after Sunday's election, threatening the stability of a coalition government.

New Democracy could win an outright victory in a second election, these officials believe. They say that after venting their fury in the polls, Greeks will want a return to stable government.

"If Samaras doesn't get a clear win this time around, he is convinced he can do it in another election," says a New Democracy official. Some conservatives argue they could win a second election in early June—allowing the party to take power alone before the midyear deadline for enacting new austerity measures.

Many Pasok officials are resigned to instability because of what they see as Mr. Samaras's restless ambition. "I don't expect a coalition to serve a full term," says a veteran Pasok politician. "Samaras wants to govern alone, so we believe he will gamble on another election."

In the last days of the campaign, Mr. Samaras has appealed to Greeks to give him an outright majority. He has bluntly warned that a coalition with Pasok would be unworkable and would tie his hands in reforming the country.

Opinion polls suggest the voters aren't responding. About 22% of Greeks say they plan to vote for New Democracy, while about 18% say they will back Pasok, according to the last polls published in Greek media.

—Marcus Walker contributed to this article.