Saturday

2nd Mar 2024

Greek elite cobble together fragile unity government

  • Whether Greek citizens will let the new government impose the cuts is an open question (Photo: EUobserver)

Greece’s two mainstream political parties have agreed on a narrow pact for a national unity government after intense pressure from the EU, which warned that the country would be left to go bankrupt, perhaps within days, if a cross-party consensus was not achieved.

The centre-left prime minister, George Papandreou, loathed by millions of his fellow citizens for the imposition of far-reaching spending cuts, is to step aside once the new administration is in place, although who is to replace him has yet to be decided.

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Papandreou is to meet with his conservative opposition counterpart later Monday to discuss options for a figure that both sides can agree on to lead the transitional government.

Lucas Papademos, Greece’s representative on the European Central Bank from 2002 until last year, is one prominent candidate, although Stavros Dimas, a former EU environment commissioner, has also been suggested as a compromise figure.

The coalition is tasked with approving a €130 billion EU-IMF bail-out deal, the second the country has been saddled with in the past two years, a package that will ensure that it is able to avoid bankruptcy and pay its largely central European creditors in return for years of austerity measures and international supervision of its finances.

The new administration will comprise the governing social democrats of Pasok and the right-wing New Democracy party. Papandreou had earlier approached Laos, a far-right religious party in the parliament and the Democratic Alliance, a small free-market liberal breakaway from the conservatives, to shore up his 152-seat majority in the 300-member house.

The opposition conservatives had wanted to head to elections immediately after the approval of the new bail-out deal in order to avoid being associated with the implementation of its spending cuts and structural adjustment.

Pasok for its part wanted the national unity government to continue to govern until the cuts had been pushed through.

In the end, little but the bare bones of a coalition agreement has been reached other than a likely date of 19 February next year for early elections.

On Sunday, EU economy chief Olli Rehn had made it clear that without a coalition government, Greece would be cast adrift. He gave the country’s political elite hours to come up with a deal, ahead of a meeting of EU finance ministers on Monday evening

"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 in an interview with Reuters.

"We need a convincing report on this by Finance Minister Venizelos tomorrow in the Eurogroup."

Whether the new government will be able to impose its spending cuts is another matter.

The existing administration has been blocked from pushing through many of its decisions by widespread strikes and even occupations of government ministries by ministry staff themselves.

The country is already bracing itself for a fresh outbreak of civil unrest on 17 November, the anniversary of the student uprising that ultimately led to the overthrow of the Western-backed military junta that ruled Greece from 1967 to 1974.

Greek PM to president: unity talks on the way

At a midday audience with Greek President Karolos Papoulias, Prime Minister George Papandreou said that moves toward cross-party consensus is necessary to put to rest EU fears that the passage of a €130 billion bail-out deal is at risk.

Greek PM survives confidence vote, looks to transitional government

Greek Prime Minister George Papandreou narrowly won a vote of confidence in the country’s parliament early Saturday morning. Paradoxically, the leader at the same time appears ready to step down and make way for a transitional, unity administration.

Ex-ECB man to be new Greek PM

Former vice-president of the European Central Bank, Lucas Papademos is set to be named the new, technocrat prime minister of Greece, a changeover demanded by the EU and IMF.

Future Greek governments must be bound to austerity strategy

The European Union has insisted that no matter what political flavour of government is elected in Greece well into the future, they must all be bound to the current austerity strategy imposed by the bloc and the International Monetary Fund.

ECB man to rule Greece for 15 weeks

Lucas Papademos, a former vice-president of the European Central Bank, is to be sworn in as prime minister of Greece for a 15-week period in which he will pass laws on an EU bail-out package.

Greek leaders return to talks as coalition deal founders

An agreement on a Greek national unity government to be headed by the parliament’s speaker fell apart apart at the eleventh hour, deepening the country’s political turmoil just weeks before the country is expected to run out of cash.

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