George Papandreou Resignation: Greek PM To Step Down To Make Way For Coalition Government
ATHENS, Greece — Greece's laborious power-sharing talks disintegrated into chaos Wednesday, with political leaders failing to name a new prime minister who will take over from George Papandreou and head an interim government, despite three days of negotiations.
The latest setback in more than a week of political turmoil came less than an hour after Papandreou made a televised address to the nation saying Greece's political parties were joining together to save the debt-ridden country from rapidly approaching bankruptcy.
The crisis erupted last week, when Papandreou said he would put a hard-fought euro130 billion European debt deal to a referendum – horrifying European leaders, battering international markets and sparking a rebellion within his own party, with lawmakers accusing him of endangering Greece's bailout.
Greece has survived since May 2010 on a euro110 billion ($150 billion) rescue loan package from its eurozone partners and the International Monetary Fund. European leaders agreed on a second rescue package on Oct. 27 after marathon negotiations, which involves private bondholders who have agreed to cancel 50 percent of the Greek debt they hold as bonds – although details are still to be worked out.
It was this deal that Papandreou wanted to put to a popular vote. But after the vicious reaction his plan was met with – and an opposition party pledge to support the deal – he withdrew the referendum plan and agreed to stand aside, half way through his four-year term. He is to hand over to an interim government whose main aim will be to secure the next vital euro8 billion installment of Greece's current bailout and approve the debt agreement before February elections.
However, after a historic deal with conservative opposition leader Antonis Samaras Sunday night to form the transition government, negotiations dragged on, missing self-imposed deadline after deadline. Repeated pledges to announce a new prime minister came to nothing despite intense European pressure to quickly resolve the crisis.
A final decision had been all but certain Wednesday night, with Papandreou delivering a farewell televised speech to the nation in which he wished his successor well – although he did not name him.
"Today the main political forces are joining together, to guarantee to Greece's citizens that in the following months we will do whatever is necessary not only to secure the country's position in the euro and implement the (debt deal) decisions ... but also to make use of its great benefits," he said.
"I want to wish every success to the new prime minister and the new government. I will stand at their side and will back this national effort to the utmost of my ability."
But less than an hour later, Giorgos Karatzaferis, the head of a small right-wing party, stormed out of political leader talks being chaired by the country's president, Karolos Papoulias. The president's office scheduled another meeting for Thursday morning – and a deal seemed as far away as ever.
Karatzaferis told journalists outside the presidential mansion that the other two political leaders had used "trickery" – but he provided no details.
Samaras, who heads the conservative New Democracy party, angrily laid the blame for the delay with Papandreou's Socialists, implying they had failed to make any concrete proposals for a new prime minister.
"New Democracy will not become a part of the problem. We are deeply dedicated to the country's constitution. The initiative for proposing a new prime minister lies with the governing majority," he said.
Despite numerous names being leaked to the press over the past three days of talks as prospective candidates, none had been announced officially.
"My problem lies not with individuals, my problem is to finally unblock the ... installment and the loan agreement, for the country to get a government – particularly at this crucial international point when markets are going through turbulence," Samaras said.
Over the past couple of days, international attention has focused more on Rome than on Athens amid concerns that Italy's economy was heading the same way as Greece's. The fear that Italy is running out of time to get a handle on its debts hit markets in Europe hard on Wednesday even though Premier Silvio Berlusconi pledged to stand down.
But the latest hitch in Athens is certain to raise concern in Europe, where the Greek turmoil has threatened to spread the debt crisis to other nations and has raised serious questions about the country's membership of the euro.
Former European Central Bank vice president Lucas Papademos had been widely tipped as the strongest candidate for interim prime minister for the past two days. But two officials from the main parties said that by Wednesday afternoon another strong candidate had emerged – current Parliament speaker and former justice and public order minister, Philippos Petsalnikos.
"This is a total shambles," said Panagiotis Lafazanis, deputy of a small left-wing party that refused to join in the cross-party talks. "One party leader is in a room and doesn't know where the other two are," he said of the Wednesday night talks at the presidential palace. "Then names fly around that are leaked to the point where they are almost officially announced. That doesn't work, so everyone leaves. It's a shambles."
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Associated Press writer Derek Gatopoulos in Athens contributed to this report.
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ELENA BECATOROS and NICHOLAS PAPHITIS 11/ 9/11 03:12 PM ET Associated Press