All Greek to me: What may happen in crucial vote

Greeks will be heading to the polls on Sunday to elect a new government.

The vote was called after left-wing opposition Syriza and other lawmakers blocked the vote for a new president, leading the country to a snap election. Front-runner at the moment is Alexis Tsipras' Syriza, ahead of New Democracy, led by Prime Minister Antonis Samaras. But it's not likely to be a two-horse race – or anything that straightforward.

The Greek parliament has 300 seats – that's the easy bit. Under Greece's electoral law, the party with the most votes automatically gets 50 seats. The other 250 seats are handed out according to the share of the vote – so the leading party can still get more seats. Only political parties that have got at least 3 percent of the overall vote can get a seat in the parliament.

Antonis Samaras Greece
Odd Andersen | AFP | Getty Images

After all the math, the party that has secured a majority of 151 seats gets to form a government. This can be done either by one very successful party or a coalition. The party with most votes, but without an overall majority, gets the first chance to form a coalition. If it fails after three days, the party next in the vote gets a go and so on.

With us so far? In case all this sounds Greek to you, here are the possibilities that could come out of the Greek ballot on Sunday.

1) Outright majority for Syriza

The left-wing opposition party Syriza might gain outright majority – but even the current polls don't point to this. Syriza will have to get 42 percent of the vote to form a government on its own. But if Greece's smaller parties fail to capture the 3 percent of the vote to qualify for parliament, that percentage could go down to 34 percent. But such a share of the vote, though, would be very fragile and could lead to new elections soon.

2) Coalition with SYRIZA leading the government

This seems to be the most likely scenario and would also give Syriza some breathing space to back down on some of its pre-electoral promises. Syriza has risen in popularity thanks to its anti-bailout rhetoric -- which it might not be able to commit to when push comes to shove. A coalition could provide Syriza with a convenient excuse that it can't follow through with all its promises. Even though the European Union's contributions to Greece's 240 billion euros bailout is coming to an end, the country will still need a precautionary credit line. In addition, if Greece wants to benefit from the forecast European Central bank quantitative easing program, it will still have to stick to spending controls.

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If the first party doesn't achieve an outright majority, it is given a mandate to start talks with other parties to form a government.

"Possible coalition partners for Syriza would be any centre-left party of the political spectrum.", Paschos Mandravelis, political commentator for Greek newspaper Kathimerini told CNBC. These parties are the socialist PASOK party, the new founded party "To Potami" and former Prime Minister's George Papandreou's Movement of Democrat Socialists.

3) Coalition with New Democracy leading the government

According to the latest polls, Samaras' New Democracy is highly unlikely to form a government on its own. As it's heading for second place in the polls, the only way it can get into power is if the most popular party – in this case Syriza – fails to secure a coalition. But New Democracy would still need the support of almost all parties in parliament in order to build its own coalition. This would include the infamous right-wing Golden Dawn party and the Communist party. The latter has said it will not collaborate with anyone, while no one would dare to ally with the Golden Dawn, a party whose leaders have been indicted for criminal acts.

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According to Greek electoral law, if the second party doesn't manage to form a government, the mandate goes to the third party, which in this case might be Golden Dawn, and if that fails, too, the President will try to form a temporary caretaker government to prepare for new elections.

4) New elections in March

If all parties and the President fail to form a coalition, then new elections are announced. The Supreme Court appoints a temporary government and the country goes into campaigning season again that lasts for thirty days. This scenario will extend the period of political instability and market volatility. Greek stocks already lost more than 20 percent last year, when elections were announced, while yields have soared. The "Troika" of international organizations responsible for making sure Greece sticks to the rules of its bailout has said talks on the next payout will only start once there is a new government in place. "If the first party comes close to an outright majority, there is fear that some will be tempted to fail to form a coalition on purpose in the hope of making it in the next election. This will be bad for the country", said Mandravelis on the phone.

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Greek voters will head to the polls on Sunday 25th January. The ballots will close at 5 pm GMT and the first results will start coming out later that night.

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