Greece‘s embattled prime minister George Papandreou has agreed to step aside to make way for a government “of broad acceptance” that will be led by his long-time political foe, finance minister Evangelos Venizelos.
Ahead of winning a crucial vote of confidence in parliament by 153-145, Papandreou, who has steered the country through its worst crisis in recent history said he would visit the Greek president, Karolos Papoulias, who is head of state, to ask him to form a coalition government.
“It’s a done deal,” a well-placed source told the Guardian. “Papandreou will propose that Venizelos becomes prime minister and he will go home.”
With Greece at the centre of Europe‘s debt drama, the government of national unity, expected to be formed in the coming days, would give Athens the breathing space to approve a vital aid package crafted by the EU and IMF last week.
“It will be a four-month government,” said Venizelos. “In February new elections will be held.”
The recession-hit country, which has been rocked by almost daily strikes, protests and cross-party warfare, is staring at the prospect of going bust in weeks if it fails to ratify the €130bn (£112bn) EU-IMF sponsored debt deal – a step that would have dire consequences for the rest of the eurozone and the global economy.
The German chancellor, Angela Merkel, had warned that without strong parliamentary approval of the rescue loans, and the deeply unpopular cost-cutting measures they entail, Athens would not receive a critical €8bn cash injection needed to cover hospital and school payments and public sector wages and pensions.
Under pressure from his own MPS to resign at the end of a week that began with his shock decision to hold a referendum over the aid package, Papandreou chose the honourable way out by electing to cut the deal with Venizelos. The alternative, snap elections, would have been “a catastrophe” for a country on the edge of political and economic collapse, he said.
“I don’t care about my post. I don’t care even if I am not re-elected. The time has come to make a new effort … I never thought of politics as a profession,” he told the chamber in an impassioned 45-minute speech before the ballot.
The ruling socialists will join forces with smaller parties in the 300-seat parliament to form the government. “In unofficial talks they have agreed to do this and the new government will have a majority of 180 seats,” the source said. “The conservative New Democracy party has made clear they don’t want to collaborate so we will do it this way.”
The energy minister, Giorgos Papaconstantinou, described the new administration as the beginning of a new chapter in Greece, where the failure to forge political consensus has been blamed for the near-bankrupt nation’s inability to implement long overdue reforms. A coalition government is widely seen as the only way to bring Greece back from the brink as it struggles to contain the fallout from Papandreou’s decision to call a referendum.
The move, an extraordinary high-stakes gamble by a prime minister determined to achieve “greater consensus” for the severe austerity measures demanded in return for aid, backfired dramatically, with EU leaders wondering whether Greece wanted to stay in the eurozone and global markets gyrating wildly on fears of the instability a no vote would bring.
But the fiasco has also focused minds. The threat of bankruptcy – and sudden talk of Greece’s exit from the eurozone – prompted the conservative main opposition party to row back on its previous rejection of the bailout deal which will also see 50% of Greece’s colossal €360bn debt also being written off. The about-turn was also welcomed by Paris and Berlin.
Papandreou has brushed off the move as a successful form of brinkmanship, saying that ultimately with New Democracy’s endorsement of the measures it had proved to be a “positive shock”.
But in the maelstrom of the past few days he also recognised that he would have to sacrifice himself for Greece to move on.
“The issue is how to keep the country going and then evolve the current government into a broader government that takes on board other political forces,” said Papaconstantinou, one of Papandreou’s closest confidents. “We need broader support and approval for the kind of measures that were taken.”
