Greek PM steps down, paves way for new leader

ATHENS—Greek Prime Minister George Papandreou formally stepped down Wednesday as hopes rose for the formation of a new unity government amid mounting international pressure and fears of bankruptcy.

In a solemn televised address to the nation, the embattled Papandreou pledged support to his successor without unveiling a name, amid frenzied speculation in the media over who will attempt to lead the country out of its debt crisis.

“I want to wish every success to the new PM and the new government. I will support this effort with all my strength,” Papandreou said.

Minutes later, he visited the head of state, President Carolos Papoulias, where he was expected to hand in his mandate.

He has already asked his ministers to have their resignations ready.

“This is a historic day, the fact that several political powers are able to cooperate,” Papandreou told Papoulias in a televised exchange ahead of a meeting with other parties to finalise the new administration.

“It opens a new page in our country’s history,” added Papandreou as Greece’s two main political parties agreed to bury the hatchet for the national good as bankruptcy looms.

Meanwhile, local media were engaged in frantic speculation as to Papandreou’s successor, with the current leader of the parliament, Philippos Petsalnikos, apparently the new favorite.

The 60-year-old German-educated lawyer from northern Greece has served in many government posts over the last 30 years and is generally respected as an able politician who can keep a cool head under pressure.

Other names suggested included 63-year-old Vassileios Skouris, president of the European Court of Justice, European ombudsman Nikiforos Diamantouros, 69, and 64-year-old former finance minister Panagiotis Roumeliotis, who represents Greece at the IMF.

Whoever is picked faces a mountainous to-do list.

His first job is to persuade the EU and International Monetary Fund to disburse an eight-billion-euro ($11-billion) slice of aid from a 2010 bailout deal that is needed by December 15.

Then he must force through painful austerity measures exacted as the price for a second EU bailout package which gives Athens 100 billion euros in loans, the same amount in debt reduction and a further 30 billion in guarantees.

Drawing a firm line in the sand, crisis-weary France and Germany last week gave Athens a stark choice: pass these belt-tightening measures or leave the euro.

The new premier must also bring together Greece’s warring politicians for a unity administration in a country used to adversarial politics — combat rather than compromise.

During another day of rumour and counter-rumour, there were mounting calls for the two main parties, who are backing a power-sharing deal, to iron out their differences quickly.

The country’s central banker said it was a rapid deal was “imperative” to restore the country’s battered credibility.

“I consider it imperative that a new government is formed immediately … Any delay in forming a new government threatens to damage further the country’s credibility,” George Provopoulos said in comments to the Financial Times published by the bank.

The debt-laden country is under intense international pressure to move swiftly to implement an EU rescue deal that reduces its mountain of debt amid fears the crisis in Greece and now Italy could destabilise the entire eurozone.

And demonstrating the problems the new prime minister is likely to face, the opposition New Democracy party put an immediate spanner in the works by rejecting the EU’s insistence that a new government must agree in writing to the terms of the bailout deal.

“The fact that Europe has lost all faith in the (socialist) government’s credibility cannot (be used) to insult our national dignity,” New Democracy spokesman Yiannis Michelakis said in a statement.

Eurogroup head Jean-Claude Juncker demanded late Monday that the rival Greek parties agree in writing to the terms of the bailout sealed at an EU summit last month.

New Democracy head Antonis Samaras said Tuesday he backed the rescue deal as “inevitable” but saw no need for a written pledge.

EU economic affairs commissioner Olli Rehn has insisted a written pledge was vital to repair a “breach of confidence” by the outgoing Papandreou government after a short-lived call for a referendum on the bailout.

“It is indeed essential that the new government expresses its unequivocal commitment in writing regarding all decisions taken” at an EU summit in October that set up the lifeline for Greece, Rehn told reporters in Brussels.