Greek PM, opposition reach power-sharing deal

DEMETRIS NELLAS, ELENA BECATOROS

Asso­ci­ated Press

ATHENS, Greece (AP) — Greece’s embat­tled prime min­is­ter and main oppo­si­tion leader agreed Sun­day to form an interim gov­ern­ment to ensure the country’s new Euro­pean debt deal, cap­ping a week of polit­i­cal tur­moil that saw Greece face a cat­a­strophic default that threat­ened its euro mem­ber­ship and roiled inter­na­tional markets.

As part of the deal, Prime Min­is­ter George Papan­dreou agreed to step down halfway through his four-year term. He and con­ser­v­a­tive oppo­si­tion head Anto­nis Sama­ras are to meet Mon­day to dis­cuss who will become prime min­is­ter and the makeup of the Cabinet.

The new unity government’s main task will be to pass the Euro­pean res­cue pack­age, reached after marathon nego­ti­a­tions between Euro­pean lead­ers barely a week ago — a move con­sid­ered cru­cial to shoring up the euro. The interim gov­ern­ment will then lead the coun­try into early elec­tions, expected early next year.

Offi­cials had been anx­ious to reach some form of agree­ment before a meet­ing of euro­zone finance min­is­ters in Brus­sels on Monday.

“Of course it’s a break­through,” gov­ern­ment spokesman Elias Mossia­los said. “It is a his­tor­i­cal day for Greece, we will have a coali­tion gov­ern­ment very soon, early next week. The prime min­is­ter and the leader of the oppo­si­tion will dis­cuss tomor­row the name of the new prime min­is­ter and the names of ministers.”

Papan­dreou sparked the lat­est cri­sis by announc­ing last week that he was tak­ing the hard-fought debt agree­ment to a ref­er­en­dum. That out­raged Euro­pean lead­ers, who said such a vote could raise the specter of Athens leav­ing the com­mon cur­rency — set­ting off an unpre­dictable chain reac­tion that could drag down other Euro­pean countries.

They also warned a vote would jeop­ar­dize the dis­burse­ment of a vital $11 bil­lion (euro8 bil­lion) install­ment of Greece’s exist­ing $152 bil­lion (euro110 bil­lion) bailout, which the coun­try des­per­ately needs to avoid the poten­tial of a cat­a­strophic default within weeks.

In the ensu­ing mar­ket tur­moil, Italy — which also faces severe finan­cial dif­fi­cul­ties, but is con­sid­ered too big to bail out — saw its bor­row­ing costs spi­ral, spark­ing fears it could be dragged into the fray.

Papan­dreou with­drew the ref­er­en­dum plan Thurs­day in the wake of Euro­pean anger and after it sparked a rebel­lion among his own Social­ist law­mak­ers, many of whom called for him to resign. The tur­moil also pushed the con­ser­v­a­tive oppo­si­tion party to pub­licly declare it would back the debt agreement.

Any interim gov­ern­ment that is formed with the sup­port of both major par­ties will be almost guar­an­teed to push the Euro­pean res­cue pack­age through par­lia­ment, even if it has to be approved by a rein­forced major­ity of 180 of the legislature’s 300 lawmakers.

The new Euro­pean deal would give Greece an addi­tional $179 bil­lion (euro130 bil­lion) in res­cue loans and bank sup­port. It would also see banks and pri­vate investors write off 50 per­cent of their Greek debt hold­ings, worth some $138 bil­lion (euro100 bil­lion). The goal is to reduce Greece’s debts to the point where the coun­try is able to han­dle its finances with­out rely­ing on con­stant bailouts.

Greece’s law­mak­ers must now approve the pack­age, putting intense pres­sure on the country’s lead­ers to swiftly end the polit­i­cal cri­sis so par­lia­ment can con­vene and put it to a vote.

A planned meet­ing with the lead­ers of all polit­i­cal par­ties in par­lia­ment, which was to take place Mon­day evening, was can­celed after two left­ist par­ties refused to attend, the president’s office said.

Sunday’s agree­ment came after a late-night meet­ing between Papan­dreou and Sama­ras called by Pres­i­dent Karo­los Papou­lias at Papandreou’s request to end a two-day dead­lock. Direct talks had failed to get off the ground because Papan­dreou had said an agree­ment had to be reached on a new gov­ern­ment before he stepped aside, while Sama­ras insisted Papan­drepou resign before the start of nego­ti­a­tions and demanded quick elections.

An oppo­si­tion con­ser­v­a­tive party offi­cial said Sama­ras’ New Democ­racy party was “absolutely sat­is­fied” with the out­come of the talks and that party offi­cials were to hold meet­ings late Sun­day night with Finance Min­is­ter Evan­ge­los Venize­los and his advis­ers to dis­cuss how long it would take to final­ize the new debt deal and when elec­tions could be held.

“Our two tar­gets, for Mr. Papan­dreou to resign and for elec­tions to be held, have been met,” the offi­cial said, speak­ing on con­di­tion of anonymity to dis­cuss the process.

The Finance Min­istry said a late-night meet­ing between Venize­los and oppo­si­tion party mem­bers deter­mined the “most suit­able” date for elec­tions was Feb. 19.

Two tur­bu­lent years after com­ing to power in a land­slide elec­tion vic­tory, Papan­dreou has seen his pop­u­lar­ity plum­met as his gov­ern­ment has been forced to severely cut spend­ing while hik­ing taxes to tackle a run­away deficit and debt that led Greece to become the first euro­zone coun­try to seek an inter­na­tional bailout.

Ire­land and Por­tu­gal have since fol­lowed suit, but Euro­pean lead­ers have been des­per­ate to ensure other coun­tries with larger economies are not also dragged down.

Posted by AP News on Nov 6 2011. You can follow any responses to this entry through the RSS Feed. Comments can be made below.