Under-fire Greece inches to deal on new crisis leader

Agence France-Presse

Posted at Nov 08 2011 06:08 PM | Updated as of Nov 09 2011 02:08 AM

ATHENS - Greece inched agonizingly to a deal on naming a new leader and crisis team Tuesday to haul the debt-wracked country back from the brink of bankruptcy, under mounting pressure from Brussels and Washington.

As talks dragged on into a second day, outgoing socialist Prime Minister George Papandreou was to hold an emergency cabinet meeting at 12 pm (1000 GMT).

Former European Central Bank vice-president Lucas Papademos still appeared favourite to accept the poisoned chalice, although a series of demands he made to take the job apparently prevented him from being named on Monday.

State television channel NET said Papademos wanted to extend the new government's term to beyond February 19, a date tentatively set for a fresh round of elections, and appoint opposition conservatives to the new cabinet.

The names of two fall-back candidates were also circulating: 69-year-old European ombudsman Nikiforos Diamantouros and Greece's man at the IMF, 64-year-old former finance minister Panagiotis Roumeliotis.

But Papademos, a technocrat who has won international respect for his financial expertise as the right-hand man of former ECB chief Jean-Claude Trichet, was still front-runner, according to the Kathimerini daily.

"Papademos is still very much in the game," it said.

The political turmoil in Greece has threatened to derail a massive EU bailout hammered out last month.

In another day of high drama in Athens, NET said late Monday that a deal had been clinched but a government spokesman later poured cold water on the euphoria, saying only that the two main parties had found common ground.

"There was positive convergence on the new premier," Elias Mossialos said in a terse statement.

The pressure from Brussels for Greece to get its act together mounted at a meeting of eurozone finance ministers, whose chairman Jean-Claude Juncker said both main parties must put in writing their commitment to Europe.

"We asked the new Greek authorities to send a letter, co-signed by the two parties of the incoming government" to reaffirm Greece's commitment to demands for financial reform under the terms of an EU-IMF rescue, Juncker said.

Even Washington piled on the pressure, with President Barack Obama's spokesman Jay Carney saying: "We urge the government to move as quickly as possible to fulfill the commitments required under its new rescue programme."

The EU rescue deal agreed after torturous negotiations between governments and banks would give Greece 100 billion euros in eurozone loans, 100 billion in debt reduction and 30 billion in government guarantees.

But it also comes with strings attached. Debt-mired Greece must further tighten its belt, after two years of painful austerity measures that have sparked riots on the streets and eventually brought down the government.

Whoever decides to take on the unenviable job of Greek leader must push through the terms of this deal, persuade the rest of Europe that Greece is stable enough to remain in the euro and lay the ground for February elections.

He must also battle to forge consensus between the ruling socialists and the opposition conservatives in a country used to fiercely combative politics as Greece teeters dangerously close to bankruptcy.

The first task will be to persuade the EU and International Monetary Fund to unlock an eight-billion-euro ($11-billion) slice of aid the finance minister says the country needs by December 15 to pay the bills.

The drama comes after a historic week for Greek politics that saw Papandreou send markets into tailspin with a plan to hold a referendum on the EU plan, then a cliffhanger of a confidence vote and finally, a deal on a unity government.

But some media expressed disappointment that progress was so slow on forming the new team at such a time of crisis.

"Crawling along while Europe is applying the pressure," said Kathimerini.

"Difficult delivery for the test-tube government baby," sneered the Eleftherotypia.