The Associated Press
ATHENS, Greece — Greece's president is hosting critical power-sharing talks between the prime minister and the head of the main opposition party as leaders seek common ground on forming an interim government.
The political crisis in Athens has threatened the country's ability to avoid a catastrophic bankruptcy and retain its cherished eurozone membership.
Prime Minister George Papandreou has said he will step aside once an agreement is reached on an interim government whose main task will be to pass a new European debt deal and ensure Greece receives the next vital installment of bailout loans. Opposition leader Antonis Samaras had insisted Papandreou resign before negotiations began.
The meeting between Papandreou and Samaras is taking place Sunday.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.
ATHENS, Greece (AP) — Greece's political leaders struggled Sunday to find common ground on forming an interim government amid a political crisis that threatened the country's ability to avoid a catastrophic bankruptcy and to retain its cherished eurozone membership.
The country's president, Karolos Papoulias, was to convene a meeting between Prime Minister George Papandreou and the head of the main opposition conservatives, Antonis Samaras, Sunday night to try to hammer out a solution.
Faced with mounting pressure from both the opposition and his Papandreou, who survived a confidence vote in his government Saturday, has said he will step aside if agreement can be reached on the formation of an interim government that will secure a new European debt deal for Greece and the disbursement of a vital bailout loan installment without which the country will default within weeks.
"I've said many times, and I insist on this for the umpteenth time, that I am not interested in staying on in this new government as prime minister," Papandreou told his ministers during an emergency Cabinet meeting Sunday. "I couldn't have been clearer. I don't play games and neither do I gamble the country's fortunes."
Samaras, who has been pressing for snap elections, has set Papandreou's resignation as a condition for participating in any talks, saying earlier Sunday he considered the prime minister to be "dangerous" for the country.
The crisis was sparked after Papandreou's shock announcement Monday night that he wanted to put a new European debt deal aimed at rescuing his country's economy to a referendum. That plan caused an uproar in Europe, with the leaders of France and Germany saying any popular vote in Greece would decide whether the country would remain in the euro. European officials also said the country would not receive the vital euro8 billion euro installment of its existing euro110 billion bailout until the uncertainty in Athens was over.
Papandreou's announcement also spooked international markets, leading stock markets to tumble and led to calls in Greece for Papandreou's resignation — even from among his own Socialist lawmakers and ministers — with many saying he had endangered Greece's bailout.
The prime minister withdrew the referendum plan on Thursday, after Samaras indicated his party would back the new debt deal, which was agreed upon after marathon negotiations in Europe on Oct. 27.
Greek officials were hoping to have a deal on a new interim government by Monday, when the country has to attend a meeting of eurozone finance ministers in Brussels.
"Forming a new government is not just to a question of having someone representing the country. There are very specific things to be done and we must show responsibility and send a strong message to our partners abroad that we, as a country, are ready not only to vote the agreement, but also to implement it," Papandreou said during the Cabinet meeting, according to a transcript of his statements released by his office.
Greece has been surviving since May 2010 on its initial 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 euro130 billion ($179 billion) in rescue loans and bank support. It would also see banks write off 50 percent of Greek debt, worth some euro100 billion ($138 billion). The goal is to reduce Greece's debts to the point where the country is able to handle its finances without relying on constant bailouts.
Greece's lawmakers must now approve the new rescue deal, putting intense pressure on the country's leaders to swiftly end the political crisis so parliament can convene and put the debt agreement to a vote.
"We know that there can be no elections now," Papandreou said during the Cabinet meeting, noting that snap polls would delay the approval of the new debt deal. "This cooperation, however, is necessary and will be beneficial for the climate in our country and internationally."
He said the new government would focus on passing the new debt deal and ensuring the disbursement of the bailout tranche.
"In these critical moments, the two (main) parties are merely wasting time," said lawmaker Giorgos Kontoyannis, a former New Democracy legislator 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 Papandreou's popularity plummeting and his majority in parliament whittled down from a comfortable 10 seats to just three.
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November 06, 2011 01:46 PM EST
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