Chaos as Greek unity government deal falls apart

A DEAL on forming a Greek national unity government collapsed last night as the country headed towards an economic abyss, hours after outgoing prime minister George Papandreou said he was handing over to a coalition that does not exist.

In a day that was bizarre and chaotic even by Greek political standards, Papandreou wished his successor well and headed off to meet the president — only for it to emerge that there was no successor due to feuding in the political parties.

Earlier, party sources said senior members of the socialist and conservative camps had settled on the speaker of parliament, veteran socialist Filippos Petsalnikos, barring last-minute snags.

But snags did indeed emerge, with large sections of Papandreou’s PASOK party and the conservative New Democracy refusing to back Petsalnikos after a three-day hunt for someone to lead the coalition until early elections in February.

One analyst said the Greek democracy was going through its worst moment since a military dictatorship was overthrown 37 years ago, and only now would serious negotiations begin.

“I believe the prime minister’s responsibility is huge, relations between the political parties and society are so tense that I believe elections and big political changes are inevitable,” said Costas Panagopoulos, head of pollsters Alco.

“I feel that the substantial discussion has just started and all these days we have been witnesses to a farcical comedy.”

Greeks and the nation’s international lenders have watched in growing horror for three days as party leaders feuded over a shrinking list of credible candidates to lead the national unity coalition after Papandreou’s government imploded.

Greece will run out of money next month unless the new government agrees emergency funding with the EU and IMF, Greece’s last remaining lenders, including a €130 billion bailout.

Some politicians said the parties would have to return to an earlier plan — apparently stalled — of recruiting Lucas Papademos, a former vice-president of the European Central Bank, to head the new government as a technocrat and give it the credibility that politicians lost long ago.

“The only solution is Papademos. If he accepts by tomorrow morning we will be able to form a strong government that will pull the country out of the crisis,” Socialist lawmaker Spyros Vougias told Reuters.

Papandreou and New Democracy leader Antonis Samaras began talks with president Karolos Papoulias on a new coalition to prevent bankruptcy. But party sources said some politicians saw Petsalnikos as a pawn of Papandreou, and attacked him for supporting the prime minister’s failed plan to call a referendum on the vital bailout.