Thu, Jun 21, 2012 - Page 1 News List

Greece clinches pro-bailout coalition


Greek pro-euro parties yesterday agreed a coalition that will try to revise an unpopular EU-IMF bailout deal and pull the country out of a harrowing recession that has doomed its recovery efforts.

“Greece has a government,” Evangelos Venizelos, leader of the socialist PASOK party, told reporters after three days of talks with Antonis Samaras, head of the conservative New Democracy party and the likely new prime minister.

Referring to a summit of EU leaders next week, he said: “Those two days in Brussels, we will carry out a major battle for revision of the loan, and negotiate a framework that will boost the recovery and the fight against unemployment.”

Venizelos said the precise makeup of the government would be unveiled later yesterday and that New Democracy, PASOK and the small Democratic Left party were “taking on the weight of collective responsibility.”

National Bank of Greece chairman Vassilis Rapanos, a former professor of economics who served in the government when Greece joined the euro in 2001, is tipped to be the new finance minister, state television reported.

After two months of political deadlock, the struggling eurozone member is under intense pressure to get back on track with reforms promised for a bailout that has kept the economy on life support for the past two years.

The IMF is already pressing to send a team of experts to Greece as soon as the government is announced after New Democracy narrowly won Sunday’s elections against the leftist anti-austerity SYRIZA party.

Democratic Left leader Fotis Kouvelis said he expected an agreement on the political platform of the new government by the end of yesterday, adding that it would “release the country from the painful terms” of the multibillion bailout.

New Democracy took 129 of the 300 parliamentary seats, including an extra 50 seats given to the winner, while SYRIZA took 71 seats after garnering more than a quarter of the vote in a country struggling with its fifth year of recession.

PASOK took 33 seats and Democratic Left won 17 seats, which would give the expected new government a majority of 29 seats to pass controversial reforms.

The government’s first priority will be to restore contact with international auditors and resume the flow of loans that was suspended ahead of the election.

Foreign creditors such as Germany have stressed that they are only willing to give Greece more time to meet a deficit reduction target currently set at 2014, but that they would not change the actual substance of the bailout deal agreed in February.

However, 61-year-old Samaras, a US-educated former foreign minister, is under pressure to go further having promised in his campaign that he would cut property and sales taxes, and freeze reductions in public salaries and pensions.

“There can be no discussions about changing the substance of the agreements, but as I indicated three or four weeks ago, we can by all means talk about extensions,” Eurogroup chief Jean-Claude Juncker told Austrian radio on Tuesday.

Ahead of talks between eurozone finance ministers today, a senior EU official appeared more open to possible concessions, saying it would be “delusional” and “stupid” to keep the loan agreement intact.

“We would be signing off on an illusion,” the source said.

This “will not be done in two weeks’ time,” the official said, but likely “in the course of the summer.”

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