Greece seals deal on new coalition under EU pressure

ATHENS/PARIS Sun Nov 6, 2011 6:53pm EST

1 of 12. Greek Prime Minister George Papandreou waves from his car as he leaves the presidential palace after a meeting with President Karolos Papoulias and Conservative leader Antonis Samaras in Athens November 6, 2011.

Credit: Reuters/Yannis Behrakis

ATHENS/PARIS (Reuters) - Greece's politicians agreed on Sunday to form a unity government to approve a euro zone bailout, with Prime Minister George Papandreou due to step down to break an impasse after the EU demanded its parties join forces to avert bankruptcy.

Discussion on who would lead the new government would continue on Monday, the office of the Greek president said after the European Union gave Greece 24 hours to show how it will enact its 130 billion euro ($179.3 billion) emergency funding package.

"Today was a historic day for Greece," Greek government spokesman Ilias Mossialos told reporters. A new government would be sworn in and hold a confidence vote within a week if all went to plan, he said.

The two sides agreed February 19 would be the most suitable date for elections, said the finance ministry, where the politicians met to discuss the timeframe for the new government.

Beyond that, Papandreou's agreement with conservative leader Antonis Samaras was thin on details.

"Tomorrow there will be new communication between the prime minister and the opposition leader on who will be the leader of the new government," said the presidency statement.

Papandreou and Samaras -- who were once U.S. college room mates -- had to bury their deep differences and personal animosity, as Greece is deep in economic, political and social crisis, its future in the euro zone is in question, and their reputations among ordinary Greeks are at rock bottom.

"The two leaders had no other choice. If elections were held now, nobody would turn out to vote for them," said Elias Nikolakopoulos, political science professor at Athens University.

"New elections will probably be held at the end of February or early March. They have no time to implement the EU bailout deal before then," he added, speaking before the Feb 19 date was announced.

PILING ON THE PRESSURE

Brussels has piled pressure on Athens to approve the bailout, a last financial lifeline for Greece, fearing that its crisis will spill into much bigger euro zone economies such as Italy and Spain -- which would be much harder to rescue.

Papandreou and Samaras had been scrambling to reach a deal before finance ministers of euro countries meet in Brussels on Monday, to show that Greece is serious about taking steps needed to stave off bankruptcy.

Earlier, European Economic and Monetary Affairs Commissioner Olli Rehn told Reuters finance ministers from countries that use the single currency would insist on hearing a plan for a unity government from their Greek colleague Evangelos Venizelos at Monday's meeting in Brussels.

"We have called for a national unity government and remain persuaded that it is the convincing way of restoring confidence and meeting the commitments," he told Reuters. "We need a convincing report on this by Finance Minister Venizelos tomorrow in the Eurogroup."

Many Greeks, who have suffered pay and pension cuts and massive job losses in the past two years, remained distrustful about politicians of all colors.

"Elections won't solve any of our problems now. These parties don't represent us anymore," said Michalis Skevofylakas, 47, a teacher.

Papandreou, who heads the socialist PASOK party, and New Democracy chief Samaras are due to discuss on Monday morning who will be the new prime minister. Greek media tipped Lucas Papademos, a former deputy president of the European Central Bank, as a possible candidate.

President Karolos Papoulias, who led the talks that produced Sunday's deal, will summon the head of all leading parties for more negotiations at 1:00 p.m. EST on Monday.

(Additional reporting by Lefteris Papadimas, Rene Maltezou and Harry Papachristou; writing by David Stamp; editing by Philippa Fletcher)

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Comments (18)
“Europeans don’t trust us anymore, they will throw us out,” said Tassos Pagonis, a 48-year-old Athens taxi driver. “I hope we don’t return to the drachma.”

Make THAT guy PM. At least he knows his way around.

Nov 06, 2011 8:23am EST  --  Report as abuse
Darkstar wrote:
A new Marshall Plan to help Europe! Send our complete House of Representatives and Senate to Greece.

They will work together to solve the problems in Greece just as they have to solve the US problems.

After all, the US problems are the same as the Greek problems. Over paid “entitlements” unsupportable “public employee pensions and benifits” Unwillingness to pay fair and reasonable taxes by those who are best able to pay more.

It appears that the “first” democracy and what may be the “last and greatest democracy” are being led down the path of distruction by their “democratecly elected politicians.

Nov 06, 2011 10:04am EST  --  Report as abuse
Geojames wrote:
Abolish the eurozone, that is the answer to solving the euro crisis.
The idea, much like the ideal(ist) of Communism is an EPIC FAIL. The euro is a model of socialism itself, the same currency utilized by vastly differing cultures, levels of education and work ethics.
CANNOT and DOES NOT work. I liken the failure to the 1998 merger of Daimler-Benz and Chrysler. FAILED. Why? Company philosophies.

German vs American ideals and ideas. I’m not taking any sides, just pointing out that the cultural differences are rooted in each persons being. The Greeks are traditionally, less inclined to invent, work hard and lead. More inclined to follow, work less and be more reliant on government.

VASTLY different from German culture. Spain more like Greece, Portugal, similar. France, somewhere in the middle. Germany, because of their innovation, work ethic and leadership now have to carry most of Europe because of the inferiority of those other EU nations. It is illogical to believe that a single currency can satisfy the needs and fiscal requirements of so MANY differing cultures and nations.

It CANNOT, therefore you have this economic and social chaos that has led to a much more unstable EU than when each nation utilized their own currencies. Hopefully the eurozone collapses. The EU can still be productive, but a single currency is not one of the aspects to a prosperous Europe.

Nov 06, 2011 11:29am EST  --  Report as abuse
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