HomeWorld BusinessGreece seals sketchy coalition deal

Greece seals sketchy coalition deal


ATHENS — Greek Prime Minister George Papandreou sealed a deal with the opposition on a crisis coalition to approve an international bailout, but details remain thin despite an European Union (EU) ultimatum for Athens to get serious about tackling its huge problems.

With Greece due to run out of money in a few weeks, the EU told its bickering parties to explain by yesterday evening how they would form a unity government to enact the ₣130 billion ($179 billion) emergency funding package.

Papandreou, who sealed his fate last week with a disastrous attempt to call a referendum on the bailout, will stand down when the new government takes over, the office of the Greek president said.

But otherwise he and conservative leader Antonis Samaras came up with the bare minimum to satisfy Brussels, and they still had to agree on who becomes the next Prime Minister to lead a nation which is destabilising the entire eurozone.
Papandreou’s party trumpeted the agreement, reached late on Sunday at talks led by President Karolos Papoulias.

“Today was a historic day for Greece,” government spokesman Ilias Mossialos said, adding the new coalition would be sworn in and hold a confidence vote within a week, if all went to plan.

Others were less charitable. “I’m afraid the new government will very soon turn out to be problematic,” said Stefanos Manos, a former conservative Finance minister.

The new coalition has to win parliamentary approval for the bailout before calling early elections.

Papandreou’s socialist Pasok party and the New Democracy party of Samaras agreed early yesterday that the most suitable date for the elections would be February 19 next year.

Brussels has piled pressure on Athens to approve the bailout, a last financial lifeline for Greece, fearing that its crisis will spill into much bigger eurozone economies such as Italy and Spain — which would be far harder to rescue.

Papandreou and Samaras had been scrambling to reach a deal before finance ministers of euro countries met in Brussels yesterday evening, to show that Greece was serious about taking steps needed to stave off bankruptcy.

Earlier, European Economic and Monetary Affairs commissioner Olli Rehn said that finance ministers from countries that use the single currency would insist on hearing a plan for a unity government from their Greek colleague Evangelos Venizelos at yesterday’s Eurogroup meeting.

“We have called for a national unity government and remain persuaded that it is the convincing way of restoring confidence and meeting the commitments,” he said.

“We need a convincing report on this by Finance minister Venizelos tomorrow in the Eurogroup.”
Papandreou had sought the referendum to show that harsh cuts demanded in the bailout had public support, but the risk that a “no” vote could bring about a sudden bankruptcy caused mayhem in markets and unrest in the ruling party.

He soon ditched the idea and won a confidence vote in parliament, but only after promising to make way for the national unity coalition.
The coalition deal is unlikely to calm Greek politics.

Recent Posts

Stories you will enjoy

Recommended reading