Greece: New PM Later Today
Business + Economy

Greece: New PM Later Today

Greece will get a new prime minister later Tuesday, senior government officials promised, as European nations ratcheted up the pressure for a swift resolution to the political crisis in Athens.

Talks between Prime Minister George Papandreou and opposition leader Antonis Samaras over a power-sharing deal dragged into a second day. The two agreed over the weekend to forge an interim government that will shepherd the country's new euro130 billion ($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.

By Tuesday afternoon there were still no precise details of when the new interim prime minister would be announced. There was mounting speculation that a former deputy at the European Central Bank, Lucas Papademos, could replace Papandreou.

None of the people being considered for the interim government have been announced publicly.

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 euro8 billion ($11 billion) loan installment later this month, a senior official said. He said those officials included 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 with the eurozone demand.

"There is national dignity," he said. "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, ruling 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 election 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 bailout deal. They then reached a landmark agreement Sunday for Papandreou to step down and the temporary government to be formed.

But patience was wearing thin even among Greek politicians themselves.

"The country cannot take these petty political games any longer," said Dora Bakoyannis, a former foreign minister who was expelled from Samaras' opposition conservatives for breaking ranks and voting in favor of a 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 euro110 billion ($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, including tax hikes, job cuts, pension cuts and income cuts. 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 euro1.3 billion ($1.8 billion) in 26-week treasury bill auction Tuesday.

Associated Press writers Elena Becatoros and Nicholas Paphitis in Athens and Costas Kantouris in Thessaloniki contributed.

Copyright 2011 The Associated Press.