(Reuters) – A deal on forming a Greek national unity government collapsed as the country headed towards an economic abyss and revived early today the chances of former European Central Bank vice president Lucas Papademos heading the coalition.
Prime Minister George Papandreou said he was handing over to a coalition that does not exist and then failed to install an old-style politician and personal ally as premier.
On a day that was bizarre and chaotic even by Greek political standards, Papandreou wished his successor well and headed off to meet the president — only for it to emerge that there was no successor due to feuding in the political parties.
Papademos, whose candidacy had seemed doomed, insisted that both the socialist and conservative parties sign written undertakings to support Greece’s 130 billion euro bailout, as demanded by the European Union, a government source said.
The outgoing prime minister had agreed to the terms laid down by Papademos, who as Bank of Greece governor oversaw the country’s adoption of the euro in 2002, the source added.
Papademos made his demands for both major parties to back the bailout package, which includes austerity measures that are likely to prove highly unpopular, amid warnings that Europe is running out of patience with Greece and may cut a financial lifeline that the party leaders seem to take for granted.
Stefanos Manos, a former finance minister, said the behaviour of Papandreou and conservative leader Antonis Samaras was undermining Greece’s future in the euro and risking a possible return to the national currency.
“The Europeans are sick of us. Papandreou and Samaras don’t realise they will stop giving us money and we will return to the drachma,” said Manos. “They are going to destroy us. These problems demand decision-making. They can’t decide on anything and they are fighting like cat and dog.”
Greeks and the nation’s international lenders have watched in growing horror for three days as party leaders feuded over a shrinking list of credible candidates to lead the national unity coalition after Papandreou’s government imploded.
Greece will run out of money next month unless the new government agrees emergency funding with the European Union and International Monetary Fund, Greece’s last remaining lenders.
LAST MINUTE SNAGS
Earlier, party sources said senior members of the socialist and conservative camps had settled on the speaker of parliament, veteran socialist Filippos Petsalnikos, as the new prime minister — barring last-minute snags.
Papandreou then gave an emotional television address, supposed to be his last to the nation as premier, saying this deal had saved country’s membership of the euro zone.
“I am proud that, despite the difficulties, we avoided bankruptcy and ensured the country stayed on its feet,” he said. “I want to wish the new prime minister success, I will support the new effort with all my strength.
“Today, despite our differences — political and social differences do exist — we have put aside our fruitless conflict and disagreement,” Papandreou said.
Papandreou and Samaras then began talks with President Karolos Papoulias on the new coalition. However, before leaders of smaller parties could join them to seal the coalition, the meeting was abruptly halted.
But snags had indeed emerged, with large sections of Papandreou’s PASOK party and the conservative New Democracy refusing to back Petsalnikos.
Party sources said some lawmakers saw him as a pawn of Papandreou. “We wanted a strong a man who could handle all the economic issues,” a socialist lawmaker said. “This candidacy is so close to Papandreou’s policies, it does not signal the change the Greek people wanted.”
