Early election

The move caught observers by surprise, as his scandal-plagued conservative New Democracy government clearly trails the main opposition socialist PASOK party in opinion polls.

"I am seeking a fresh political mandate," Karamanlis said in a televised speech to the nation.

"The consequences of the economic crisis are visible; we have two difficult, crucial years ahead of us," he added.

Karamanlis gave no date but a senior government source said it would be held on October 4th.

Potential political turmoil if no government is determined

On the day that two bomb attacks occurred in the country, one in Athens outside the stock exchange, the other in Thessaloniki in front of a government building, Karamanlis ended weeks of speculation on his intentions as his party continued to plummet in opinion polls.

Police suspect the attack was carried out by the far-left group Revolutionary Struggle. Similar anarchist groups have claimed responsibility for several attacks against businesses, cars, and police this year.

The government's ratings were hit even harder after wide criticism of its response to forest fires last month.

However, if the opposition socialist PASOK party doesn't gain enough votes to form a government alone, Greece would be plunged into political uncertainty.

"The country could not afford an extended pre-election period over six months until March. The economic situation wouldn't allow it. The government would not be able to take the tough measures required to fix the economy under these conditions," said Theodoros Livanios of the Opinion polling agency.

Seen by investors as the eurozone's riskiest bet, Greece is struggling to cope with the global slowdown that is threatening to push its economy into recession this year while its national debt continues to balloon.

Parliamentary elections were not due before 2011, but PASOK had been pressing for early elections before next March, when Greece elects a new president.

PASOK advocates a "green growth" economic model. They have said that if the election fails to win an outright majority, they will call for a second vote under a revised electoral law that makes it possible to form a government with fewer votes.

glb/Reuters/AFP
Editor: Chuck Penfold