Greeks locked in search for coalition leader

Public anger and lack of leadership has created a gridlock between the main parties

Greece is waiting for news on its new leaders and EU bailout (Reuters)

Greece was in political deadlock last night as its leaders struggled to persuade anyone to become prime minister of a "100 day" emergency coalition government, which the EU has demanded before it will release loans the country needs to stave off a disastrous default.

Only Nikiforos Diamandouros, the European ombudsman, publicly confirmed he had agreed to meet party leaders last night as a desperate scramble to get someone from outside partisan politics to take on the top job in Athens continued late into the night.

The early favourite, Lucas Papademos, from the Harvard school of government, was reportedly demanding more time and more control than feuding politicians were willing to give him and had effectively ruled himself out.

The former vice-president of the European Central Bank flew into Athens yesterday for talks with the leaders of the two main parties a day after they agreed to form a unity government aimed at securing an international bailout and clearing the way for elections on 19 February next year. A retired socialist finance minister Panagiotis Roumeliotis was also reported to be under consideration but government officials refused to confirm details.

Prospective candidates have been concerned over how much authority they would have over leaders of the two main parties who in return are seeking to avoid political responsibility for unpopular decisions that lie ahead.

Greece's outgoing Prime Minister, George Papandreou, began yesterday with a series of calls to his EU counterparts to explain his impending resignation and attempt to repair some of the damage done during a tumultuous week in Athens.

Rising public anger at the failed austerity measures demanded by Brussels and the absence of leadership from Greece's own politicians have combined to create gridlock between the country's two main parties despite general consensus that the return of the drachma must be avoided at all costs. Greek political commentator Antonis Karakoussis summed up many people's sentiments when he said the country's politicians "were looking foolishly toward a future that does not exist for any of them".

The governing socialists are desperate to avoid elections "like Turkeys who won't vote for Christmas," said one MP. And the opposition conservatives, who have infuriated European allies by opposing EU-IMF measures, want to distance themselves from painful cuts demanded in return for another bailout.

The terms for the rescue package agreed in late October at a marathon EU summit amount to new cheap loans of €130bn as well as debt relief of €100bn in a voluntary scheme with private banks, known as a "haircut". The details of what's demanded in return include further cuts to salaries and pensions, an ambitious privatisation scheme and far greater accountability to other eurozone countries.

Observers believe that Greece's squabbling politicians, who were struggling yesterday to agree on a line up for the coalition would have even greater difficulty marshalling support for an unpopular austerity package that must – the rest of the EU insists – be swallowed whole.

"I'm afraid the new government will very soon turn out to be problematic," said Stefanos Manos, a respected former conservative former finance minister. "The new Prime Minister will... not give the impression that he is in charge. Everyone will be looking to the two party leaders who will be running things behind the scenes."

Greece's current Finance Minister Evangelos Venizelos, who met his eurozone counterparts yesterday, was expected to keep his job.

"The economic ministries, including Finance Minister Venizelos and his team, should stay for the sake of continuity," a senior source told Reuters last night.