Greeks agree on coalition without Papandreou

Prime minister to step down after agreement reached with opposition leader on formation of a unity government.

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al- Jazeera,

7 November, 2011

George Papandreou, Greece's prime minister, and opposition leader Antonis Samaras, have agreed on a new coalition government, which will not be led by Papandreou, the office of the country's president has said.

The agreement came after the two leaders held talks on Sunday with President Carolos Papoulias.

"An agreement was reached to form a new government to immediately lead the country to elections after ratifying the decisions taken by the European Council," the Greek president's office said in a statement.

The politicians had been holding meetings throughout the weekend in an effort to break the political deadlock and thrash out a deal for a national unity government demanded by the country's European partners.

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The presidential statement said the leaders will meet again on Monday to discuss who would lead the coalition government, but that Papandreou would not lead the new administration.

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

Greece's main political parties have also agreed that elections should be held on February 19, the finance ministry said on Monday.

Finance Minister Evangelos Venizelos and Deputy Finance Minister Filippos Sachinidis met with representatives from the New Democracy opposition party to discuss the timeframe of a coalition government to help Greece push through a bailout deal it needs to avoid running out of cash next month.

Al Jazeera's Jonah Hull reporting from Athens said a bare bones deal has been reached but there is awful lot of detail that still needs to be hammered out before a meeting with eurozone finance ministers in Brussels on Monday.

"This is in order to give the eurozone some sense of confidence that Greece was able to play its part in the game. Samaras [the opposition leader] has made some issue on the past about how reforms and cuts have been handled in the past. There will also been some haggling over the precise composition of this coalition - with such a sensitive balance between the two main parties. The New Democracy [party] will also want to know that ministries will be equally weighted and carefully handed out," our correspondent said.

"The prime minister who is picked to run the coalition government must be someone who does not carry too much support on one side or the other. They do not want anyone who poses a threat in the run-up to a general election next year. And the name most featured among analysts is Lucas Demetrios Papademos, a 64-year-old technocrat, an economist who has been a governor of the Bank Of Greece and a former vice president of the European Central Bank." 

Earlier, Papandreou - who had come under fire at home and abroad for his short-lived plan to put a eurozone bailout deal up for referendum - told cabinet members that he intended to resign once a coalition government was formed.

He also told his cabinet that elections should not be held before February or March, after a eurozone bailout is approved by parliament

'Bold compromise'

The new government will be tasked with implementing the terms of an October EU bailout deal that calls for further harsh austerity measures on Greece, already at breaking point due to a shrinking economy and rapidly rising unemployment.

Greek media earlier tipped Finance Minister Venizelos to take over from Papandreou as the talks got bogged down for almost two days in a dangerous game of brinkmanship, with Samaras insisting on immediate elections, which Papandreou resisted as too risky.

The damaging political stalemate threatened to see the country run out of cash within weeks after European leaders secured their hard-won overall eurozone debt crisis accord at a summit late last month.

Greek business and church leaders piled pressure on politicians to agree to a national unity government as quickly as possible, saying the country's future was at stake.

"The future of all of us for the next decade is being decided right now," the Greek federation of enterprises said in a statement on Sunday.

"The more the uncertainty lasts, the more the country is literally hanging by a thread," the group said, calling for a "bold compromise of political maturity and national responsibility."

Tumultuous week

Sunday capped a week that has been tumultuous even by the recent standards of Greece, which finds itself trapped in the eye of the eurozone debt storm.

Papandreou set the ball rolling on Monday with a shock announcement that Greece would hold a referendum on the terms of its October bailout deal which calls for further fierce austerity measures.

The move stunned fellow European leaders, sent global markets into a tailspin and earned the Greek prime minister a humiliating dressing-down by France and Germany on Wednesday ahead of a G20 meeting.

Hastily retracting the proposal, Papandreou then turned disaster into temporary victory by winning a nail-biting confidence vote early Saturday by offering to step down in favour of a unity government.