No end in sight to Greek woes

World

No end in sight to Greek woes

Close

PM Papandreou, mid-way into a four-year term, has promised early elections by March.

06 November,2011 05:50 pm

Greek leaders entered a second day of closed-door political talks Sunday and were under intense pressure to ensure the country doesnt go bankrupt in the next few weeks and that it remains in the eurozone.The Socialist government of Prime Minister George Papandreou, who narrowly survived a parliamentary confidence vote early Saturday, said it has started talks to form a temporary coalition to run the country for the next four months. The government will also hold a Cabinet meeting at 4 p.m. (1400 GMT; 9 a.m. EST).Papandreou, mid-way into a four-year term, has promised early elections by March and has said he would be prepared to step aside.But the conservative leader of the main opposition New Democracy party said Sunday no talks between the two parties were taking place and Antonis Samaras also reiterated his stance that Papandreou must resign before any coalition discussions can take place.Samaras made his latest comments after a brief meeting with President Karolos Papoulias, a mainly ceremonial figure who has called for collaboration between the two main parties.Greece has been surviving since May 2010 on a first €110 billion ($152 billion) bailout. But its financial crisis was so severe that a second rescue was needed as the country remained locked out of international bond markets by sky-high interest rates and facing an unsustainable national debt increase.The new European deal, agreed on by the 27-nation bloc on Oct. 27 after marathon negotiations, would give Greece an additional €130 billion ($179 billion) in rescue loans and bank support. It would also see banks write off 50 percent of Greek debt, worth some €100 billion ($138 billion). The goal is to reduce Greeces debts to the point where the country is able to handle its finances without relying on constant bailouts.Greeces lawmakers must now approve the new rescue deal, putting intense pressure on the countrys leaders to swiftly end the political crisis so parliament can convene and put the debt agreement to a vote.In these critical moments, the two (main) parties are merely wasting time, said lawmaker Giorgos Kontoyannis, a former New Democracy member of parliament who has joined splinter group Democratic Alliance. I want to say to my former New Democracy colleagues that our responsibility to our country is individual and not bound by party allegiance.In return for bailout money, Greece was forced to embark on a punishing program of tax hikes and cuts in pensions and salaries that sent Papandreous popularity plummeting and his majority in parliament whittled down from a comfortable 10 seats to just two.Papandreous government came under renewed threat after his disastrous bid this past week to hold a public referendum on the new €130 billion ($179 billion) deal. The idea was swiftly scrapped Thursday after an angry response from markets and European leaders who said any popular vote in Greece would determine whether the country would keep its cherished membership in the eurozone. They also vowed to withhold a critical €8 billion ($11 billion) installment of loans from an existing bailout deal that Greece needs urgently to stave off an imminent and catastrophic default.After the aborted referendum idea, Papandreous government survived a confidence vote. Now, EU partners and creditors are pressing Papandreou and other political leaders to form a coalition government as a condition to receive any further rescue funds.Government spokesman Elias Mossialos told state television Sunday that talks have begun and the name of the new prime minister should be known by Monday, in which case Papandreou would resign. Mossialos later told The Associated Press that his remarks regarding a new premier expressed a personal wish and are not an official announcement.Samaras party denied any talks were taking place either in the open or behind the scenes.The socialists and the main opposition New Democracy differ on the duration of such a caretaker government, with the opposition demanding elections within a few weeks and the government saying the coalition Cabinet should last through the end of February.