Socialists hand Conservatives a Major Defeat in Greece

Greek Prime Minister Costas Karamanlis conceded defeat in Sunday's general election after early results showed the opposition socialists of George Papandreou leading by over seven points, his party said.

"Mr Karamanlis communicated with Pasok leader George Papandreou by telephone, congratulated him for his party's victory and wished him every success," the New Democracy press office said.

With one in three polling stations accounted for, Papandreou's Pasok party won 43.53 percent of the vote against 35.62 percent for the ruling New Democracy conservatives, interior ministry figures showed.

The ministry's official analysts earlier calculated that the socialists could win as many as 162 seats in the 300-member parliament.

"This is a great victory, a historic victory," Pasok's second-ranking official, Evangelos Venizelos, told reporters.

"If things are as they appear, then we must each consider whether the tactic followed was the correct one," outgoing New Democracy Interior Minister Prokopis Pavlopoulos told Mega television.

The Pasok victory makes its leader the third Papandreou to govern Greece since World War II after his father Andreas -- who founded the party -- and his grandfather and namesake George Papandreou, Greece's first prime minister after the country's liberation from German occupation in 1944.

The conservatives' defeat at the Sunday polls -- ironically on the 35th anniversary of New Democracy's founding -- is one of the worst suffered by Karamanlis's party in the last three decades.

New Democracy had fallen to a low point of 35.86 percent in 1981, during an election campaign that saw George's father Andreas sweep to power for the first time.

Karamanlis called the snap election two years ahead of schedule after his administration became mired in scandal and hamstrung by a one-seat majority in parliament for months.

He said a government with a fresh mandate was needed to deal with the effects of the economic crisis with the Greek economy barely hovering above recession.

Buoyed for years by annual growth of about four percent, partly attributed to EU funds, Greece's output growth is now at near zero.

Greece's public debt, one of the highest in the eurozone, is set to exceed 100 percent of gross domestic product this year, and the European Union placed the country under supervision in April over its excessive budget deficit.

To help solve the crisis, Karamanlis, 53, had promised a two-year austerity policy coupled with a crackdown on tax evasion.

Papandreou, 57, proposes to invigorate the economy with salary and pension hikes above the rate of inflation in 2010. He has also announced a 100-day plan to boost the market, create jobs and clean up public finances.

"Massive sums are being lost (to corruption)," Papandreou told AFP in an interview ahead of the election.

"We cannot push the economy deeper into recession. At this moment there is a lack of liquidity, unemployment, businesses without turnover and companies that are shutting down," he said.

"If we freeze wages and pensions we'll have an even bigger crisis."

Early results showed that PASOK had managed to keep its voters from flocking to other left-wing parties and to a fledgling Green party which gained visibility after fires which killed 77 people in 2007 and scorched Athens' eastern suburbs earlier this year.

Analysts had earlier warned that a high level of support for the Greens, who need three percent of the vote to enter parliament, could have doomed PASOK's aim of forming a government on its own.

On the other hand, Karamanlis' party lost voters to Pasok and the nationalist Laos party which capitalised on immigration fears and a surge of youth violence after the fatal shooting of a teenager by police in December.

The Communist party KKE occupied their customary third party position with over seven percent of the vote. Laos followed with over five percent, leapfrogging over the Syriza leftists -- the party most closely associated with the December protests -- which comes fifth at four percent.

The Greens garnered over two percent of the vote but most analysts doubt they will make it to parliament.

Sunday's election was notable for the introduction of a faster results transmission system employing closed-circuit cellphones at over 4,500 polling stations.