Europe

Greece debt crisis: Talks on unity government resume

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Media captionPrime Minister George Papandreou: "Our country will be stronger and more secure"

Greek politicians are holding a fourth day of talks to name a new prime minister, amid a debt crisis that could lead to the country leaving the euro.

After three days of wrangling on forming a government of national unity, a small party walked out on Wednesday.

But Greece's ANA news agency reports that the former European Central Bank vice-president Lucas Papademos will shortly be named as interim PM.

It is believed he won a demand to extend his potential period in office.

The leaders of the three main parties making up the government of national unity were meeting with the country's president to try to reach an agreement. Mr Papademos was seen entering the presidential palace later on Thursday morning.

Athens News Agency released a profile of Mr Papademos, calling him the "new prime minister-in-waiting" and an official announcement on the new government is imminent, Greek state TV reported.

A deal fell apart on Wednesday after the leader of the smaller party, Laos, disagreed with the choice of parliamentary speaker Filippos Petsalnikos to be the new PM.

He was reportedly seen as being too close to the outgoing PM, George Papandreou and not a candidate of high enough calibre.

'Power vacuum'

Earlier, Mr Papandreou confirmed his socialist party and conservatives would join the coalition - and said the new government would approve the terms of an EU bailout.

Without the bailout, Greece risks bankruptcy and an exit from the eurozone.

Under the terms of the deal, Greece must enact further austerity measures in return for a bailout of 130bn euros (£111bn; $178bn) and a write-off of half the Greek debt held by private lenders.

The BBC's Mark Lowen in Athens says that until the details of the new government are announced there remains a perilous power vacuum in Greece, which is running out of time to resolve its problems.

On Wednesday afternoon, in what was expected to be his farewell speech, Mr Papandreou said he wished the new prime minister every success.

He then left to meet President Carolos Papoulias, who has been brokering talks between three parties expected to join a new government of national unity - Mr Papandreou's Pasok, New Democracy on the centre-right, and the nationalist Laos party.

But the talks then broke down when Laos walked out.

As he left the presidential palace, Laos leader Giorgios Karantzaferis told reporters it was sad to see that even at this critical moment, there were strategy games taking place between Mr Papandreou and New Democracy head Antonis Samaras.

Former European Central Bank vice-president Lucas Papademos has set new terms to join the new government, Reuters news agency reported.

Government sources told Reuters he wanted a greater role for New Democracy in the new government, and the possibility that the coalition could go on beyond the provisional date set for early elections, 19 February. That now appears to have been accepted.

A number of other names have been mentioned to succeed Mr Papandreou as prime minister. They include:

  • Parliamentary speaker Philippos Petsalnikos, who is also a former justice minister
  • Vassileios Skouris, president of the European Court of Justice
  • Law professor Ioannis Koukiadis, a former Socialist labour minister, was named by the newspaper Athens News as a possible contender
  • EU ombudsman Nikiforos Diamandouros
  • Panagiotis Roumeliotis, Greece's representative to the International Monetary Fund (IMF)

EU economic affairs commissioner Olli Rehn said he wanted the heads of Greece's two main parties to commit in writing to the terms of the bailouts before Athens could receive the next instalment.

Earlier in the week Mr Samaras was said to have balked at the idea, saying he regarded the rescue deal as "inevitable" but saw no need for a written pledge.

Greece needs the next tranche from the first bailout, worth 8bn euros (£6.8bn; $11bn), to avoid running out of money within weeks.