Published December 11, 2015
Power-sharing talks between Greece's prime minister and the opposition leader dragged on into Tuesday evening, with senior government officials saying a deal was close but European leaders ratcheting up the pressure for a resolution.
Talks between Prime Minister George Papandreou and opposition leader Antonis Samaras began Monday. The two agreed over the weekend to forge an interim government that will shepherd the country's new $179 billion European rescue package through Parliament.
Without the deal, which took Europe months to work out, Greece would go bankrupt, potentially wrecking Europe's banking system and sending the global economy back into recession.
"I believe that we are now close to an agreement with New Democracy," Papandreou said during a Cabinet meeting, referring to Samaras' conservative party.
"When one cooperates with another party, there are some red lines on either side which of course restrict things," he said in comments released by his office. "Therefore, while one could imagine ideal situations, in reality these do not exist, and one seeks simply to find the best possible solution."
Senior government officials promised a deal would come by the end of Tuesday.
There was mounting speculation that a former deputy at the European Central Bank, Lucas Papademos, could replace Papandreou.
Greece's eurozone partners were demanding that five top Greek officials co-sign a letter reaffirming their commitment to the country's bailout deals and economic reforms, in return for the release of a vital $11 billion loan installment later this month, a senior government official said in Athens. He said those officials were Papandreou and Samaras, the Bank of Greece governor, the new prime minister and the new finance minister. The official spoke on condition of anonymity to discuss sensitive details.
Samaras, however, issued a statement Tuesday that appeared to take offense.
"There is national dignity," he said in the statement. "I have long and repeatedly explained why, in order to protect the Greek economy and the euro, the implementation of the (new European debt deal) has become 'inevitable'. I do not allow anyone to cast doubt on these statements."
During an earlier Cabinet meeting, Socialist ministers offered their resignations to Papandreou to pave the way for the creation of the interim government, which is to last until an early elections expected Feb. 19.
"We have made our resignation available to the prime minister in order to help him with his actions," Tourism Minister George Nikitiadis said. "My feeling is that tonight we will have a name (of the new premier). It's going well."
The political crisis erupted last week, when Papandreou said he would put the new European rescue package to a referendum. Other eurozone nations were horrified by the delay, markets around the world tanked and Greece's international creditors froze the payment of the next bailout.
Papandreou withdrew the plan Thursday after Samaras indicated he would back the new deal. They then reached a landmark agreement Sunday for Papandreou to step down and the temporary government to be formed.
"The country cannot take these petty political games any longer," said Dora Bakoyannis, a former foreign minister who was expelled from the conservatives for voting in favor of an earlier government austerity plan. She has now formed her own party.
"The problem is not finding serious candidates, but whether those candidates will be allowed to do their job and not asked to be puppets," she added.
Greece has survived since May 2010 on a $150 billion rescue-loan program from its eurozone partners and the International Monetary Fund, but all agree it's not enough. A second rescue package has been created that involves private bondholders voluntarily agreeing to cancel 50 percent of their Greek debt.
In return for its bailout cash, Greece has endured 20 months of punishing austerity measures. The efforts by Papandreou's government to keep the country solvent have prompted violent protests, crippling strikes and a sharp decline in living standards for most Greeks.
Although Greece has been locked out of long-term bond markets because of high interest rates, it has maintained a limited presence in the market for short-term cash. It raised $1.8 billion in 26-week treasury bill auction Tuesday.