Greeks work out a coalition
Source: Agencies |
November 8, 2011, Tuesday
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Rival Greek political parties were hammering out a historic power-sharing deal yesterday to secure a 130 billion euro (US$179 billion) rescue package, but markets remained wary and European leaders kept up pressure by holding back a vital bailout loan.
Socialist Prime Minister George Papandreou and conservative leader Antonis Samaras held fresh negotiations on the telephone, hours after reaching the landmark agreement to form a coalition for the next 15 weeks.
The new administration's main job will be passing the new bailout package, agreed by international creditors on October 27, before holding early elections.
Papandreou, who was expected to resign later yesterday, also telephoned EU leaders and German Chancellor Angela Merkel, who were reacting warily to Athens' latest political drama.
"Europe, and the German government too, must be able to see that the Greeks are serious, that it is not just about announcements but about actions," Merkel spokesman Steffen Seibert said.
Greece has survived since May 2010 on a 110 billion euro rescue-loan program from eurozone partners and the International Monetary Fund, but all agree it's not enough. A second rescue package has been created that involves private bondholders agreeing to cancel 50 percent of their Greek debt.
Frustrated with Greece's political disagreements, the country's creditors have frozen the next critical 8 billion euro loan installment until Greece formally approves the new debt deal. The Greek government has said it could go bankrupt within weeks without the money.
In Athens, former European Central Bank Vice President Lucas Papademos was being tipped as the most likely new head of the Greek government that would serve until a February 19 general election. None of the people being considered have been announced publicly.
The power-sharing talks were due to end yesterday, with former EU Environment Commissioner Stavros Dimas, a conservative, also being considered for a senior government post, two conservative officials said.
The Athens Stock Exchange closed up 1.39 percent at 761.04, rebounding on speculation that troubled Italian Premier Silvio Berlusconi could soon resign, allowing another new government to press through economic reforms so that Italy can avoid financial disaster.
"What is clear is that the European partners are becoming more and more intransigent with Greece and they will want evidence of concrete advances," said Silvio Peruzzo, an analyst at Royal Bank of Scotland.
Papandreou agreed to step down midway through his term after his disastrous proposal to hold a referendum on the new bailout spooked markets worldwide. He withdrew the proposal under pressure.
Greece has endured 20 months of punishing austerity measures in exchange for the international rescue. The efforts by Papandreou's government to keep the country solvent have prompted violent protests, crippling strikes and a sharp decline in living standards for most Greeks.
"I don't expect anything," Athens resident Stavros Stournaras said of the new political agreement. "When people truly go hungry and there's an uprising, then things will change."
Socialist Prime Minister George Papandreou and conservative leader Antonis Samaras held fresh negotiations on the telephone, hours after reaching the landmark agreement to form a coalition for the next 15 weeks.
The new administration's main job will be passing the new bailout package, agreed by international creditors on October 27, before holding early elections.
Papandreou, who was expected to resign later yesterday, also telephoned EU leaders and German Chancellor Angela Merkel, who were reacting warily to Athens' latest political drama.
"Europe, and the German government too, must be able to see that the Greeks are serious, that it is not just about announcements but about actions," Merkel spokesman Steffen Seibert said.
Greece has survived since May 2010 on a 110 billion euro rescue-loan program from eurozone partners and the International Monetary Fund, but all agree it's not enough. A second rescue package has been created that involves private bondholders agreeing to cancel 50 percent of their Greek debt.
Frustrated with Greece's political disagreements, the country's creditors have frozen the next critical 8 billion euro loan installment until Greece formally approves the new debt deal. The Greek government has said it could go bankrupt within weeks without the money.
In Athens, former European Central Bank Vice President Lucas Papademos was being tipped as the most likely new head of the Greek government that would serve until a February 19 general election. None of the people being considered have been announced publicly.
The power-sharing talks were due to end yesterday, with former EU Environment Commissioner Stavros Dimas, a conservative, also being considered for a senior government post, two conservative officials said.
The Athens Stock Exchange closed up 1.39 percent at 761.04, rebounding on speculation that troubled Italian Premier Silvio Berlusconi could soon resign, allowing another new government to press through economic reforms so that Italy can avoid financial disaster.
"What is clear is that the European partners are becoming more and more intransigent with Greece and they will want evidence of concrete advances," said Silvio Peruzzo, an analyst at Royal Bank of Scotland.
Papandreou agreed to step down midway through his term after his disastrous proposal to hold a referendum on the new bailout spooked markets worldwide. He withdrew the proposal under pressure.
Greece has endured 20 months of punishing austerity measures in exchange for the international rescue. The efforts by Papandreou's government to keep the country solvent have prompted violent protests, crippling strikes and a sharp decline in living standards for most Greeks.
"I don't expect anything," Athens resident Stavros Stournaras said of the new political agreement. "When people truly go hungry and there's an uprising, then things will change."
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