Greece will form new coalition to stay in euro

view gallery VIEW GALLERY

PM Papandreou will step down today and new leader must secure an EU bailout package

Athens

Under huge pressure from the European Union, Greece last night agreed a new government of national unity to prevent the country from crashing out of the single currency. Greek Prime Minister George Papandreou will step down today when the line up for the new government will be announced.

Greece's EU partners had demanded an end to the political stalemate in Athens in time for today's meeting of European finance ministers in Brussels.

The former vice-president of the European Central Bank, Lucas Papademos, was expected to lead the interim coalition, whose main job will be to secure a proposed EU bailout and ensure Greece's future in the eurozone. As a respected economist, Mr Papademos would restore some of the credibility lost during a chaotic week of political turmoil. However, his role as an adviser to the departing Mr Papandreou could still complicate efforts to have him appointed as interim Prime Minister.

The coalition will include Greece's two main parties and remain in office until the reforms demanded as part of the international rescue package have been fully implemented. The bitter political feuding in Athens, which has deepened the euro crisis, ended late last night as Mr Papandreou met with opposition leader Antonis Samaras in the presence of Greek president Karolos Papoulias.

"It has been decided to assemble a new government with the objective of guiding the country towards elections after the implementation of the October [EU bailout] decisions," read a statement from the president's office.

Those elections are likely to take place in the new year, giving the new government time to pass a complex package of austerity measures in return for €130bn in loans and €100bn of debt relief.

World leaders and international financial markets have watched almost helplessly for the last week as bickering Greek politicians refused to make peace and form a new government. Mr Papandreou, whose disastrous gamble on a euro referendum one week ago sent shockwaves through world markets – clung to power despite losing credibility with EU leaders, as well as public and party support.

Mr Samaras said he would support the EU bailout deal but refused to join a transitional government until Mr Papandreou, whom he has accused of being "dangerous" and a "liar", resigned.

The premier, whose father and grandfather were prime ministers before him, won a narrow vote of confidence on Friday and said he would resign, but squabbling between the two main parties over the timing of elections and his departure created a damaging stalemate. The ruling party, Pasok, wanted to avoid the ballot box for as long as possible as opinion polls suggest they would suffer an historic rout. Conversely, the opposition conservatives are keen for polls to go ahead before they can be tainted by being part of an administration that would have to implement painful and unpopular cuts.

Anger in Greece at the machinations of its political elite has reached fever pitch over the weekend. The conservative daily Ekathimerini headlined yesterday with "Haggling on the deck of the Titanic" while left-leaning To Vima led with "Power Games: Between the Euro and the Drachma".

The vast majority of Greeks want to retain the euro despite two years of failed austerity measures which have not alleviated Greece's debt burden and sunk the country into a deep recession. The bewilderment of the rest of the EU at the stalemate in Athens was summed up by Austria's finance minister Maria Fechter who said Greece's "strange" dynastic politics were to blame for the situation.

"For many years you had two families governing: Karamanlis, Papandreou, Karamanlis, Papandreou," she said. "I wouldn't want to say who is more responsible for the making of this catastrophe."

Gameplan what now?

* European Union finance ministers meet in Brussels today and Greece's representative will have some tough questions to answer. A new government must be appointed for this to take place. Now an emergency coalition has been agreed in Athens, a new cabinet will be announced.

 

* The final terms of the bailout agreed on 26 October need to be settled so that the package can be put before the Greek parliament. EU leaders have made it clear that the measures will need to be supported by at least 180 of Greece's 300 MPs to signal a broad consensus.

 

* A date must be set for fresh elections with Greece's two main parties between them languishing at around 50 per cent in opinion polls. Support is growing for smaller parties, including nearly 14 per cent in recent surveys for the communist party.

 

* By mid-November the next €8bn tranche of EU bailout money will be needed by Athens to pay its bills. If Greece has not satisfied the EU, International Monetary Fund and the European Central bank then the loans will be blocked and the country declared bankrupt.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Sport
England's women celebrate after their 3rd place play-off win against Germany
Women's World CupFara Williams converts penalty to secure victory and bronze medals
Arts and Entertainment
Ricardo by Edward Sutcliffe, 2014
artPortraits of LA cricketers from notorious suburb go on display
News
newsHillary Clinton comments on viral Humans of New York photo of gay teenager
Arts and Entertainment
The gang rape scene in the Royal Opera’s production of Gioachino Rossini’s Guillaume Tell has caused huge controversy
music
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Administrator - Spanish Speaking

£17000 - £21000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Sales Administrator - German Speaking

£17000 - £23000 per annum: Recruitment Genius: This is a fantastic opportunity...

Recruitment Genius: Sales Administrator - Japanese Speaking

£17000 - £23000 per annum: Recruitment Genius: If you are fluent in Japanese a...

Recruitment Genius: Graphic Designer - Immediate Start

£16000 - £25000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test