Reuters
November 6, 2011
The European Union stepped in to force Greece's political parties into a coalition that will save the country from immediate default but the bickering that marked the negotiations bodes ill for Greece's place in the euro zone.
The deal on the new coalition, to be fleshed out on Monday, still lacks an agreed prime minister, a duration and a clear mandate but will allow Greece to collect an international loan installment it needs before it runs out of cash in December.
While some analysts breathed a sigh of relief, most doubted a coalition of factious parties would will be able to push through the deep reforms, unpopular salary cuts and tax measures Greece needs to stay on an EU/IMF lifeline for long.
"These are 'baby steps' that are good on the surface, but cannot lead to a solution that avoids a default," said Bob Andres, chief investment officer at Merion Wealth Partners LLC. "I don't think it will have a material impact on the final solution."
Greek Prime Minister George Papandreou will discuss on Monday with main conservative New Democracy opposition leader Antonis Samaras who they will appoint as premier, with non-political personalities, such as former European Central Bank vice-president Lucas Papademos as one of the potential candidates.
Their aides will hammer out how it will function before calling snap election. The two sided tentatively agreed to hold them on February 19.
"If all goes well, we will have a new government, with a vote of confidence, within the week," government spokesman Ilias Mossialos said.
Its immediate tasks would be to secure the next, 8 billion euro tranche within weeks, follow up on steps agreed with the IMF/EU/ECB "troika" in the second bailout plan, such as submit and approve the 2012 budget before the end of November.
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