Greek President Karolos Papoulias called a meeting with political party leaders for today, after squabbling over the next premier pushed unity government aims into disarray and undermined the bid to secure bailout funds needed to prevent a financial collapse.
Prime Minister George Papandreou met with Papoulias in Athens yesterday to resign as criticism grew over delays in naming a new prime minister. Papandreou attended the meeting with Antonis Samaras, leader of the opposition New Democracy party, and opposition LAOS party leader George Karatzaferis, who then abandoned the talks.
“Despite our differences we leave clashes and sterile opposition to one side,” Papandreou said in an address to the nation televised live on state-run NET TV.
Papandreou didn’t name a new prime minister in his speech. Greece’s two biggest political parties agreed to name parliament speaker Filippos Petsalnikos to head the government rather than former European Central Bank Vice President Lucas Papademos, To Vima newspaper reported, without saying how it got the information.
Papoulias called the meeting for 10 a.m. local time today with political party leaders. No official announcement was made on who will staff the new government, and Papandreou has not formally resigned.
The euro slid the most in more than a year versus the dollar yesterday. The shared currency slumped 2.1 percent to $1.3542 at 5 p.m. New York time, its biggest drop on a closing basis since August 2010. The Standard & Poor’s 500 Index closed down 3.7 percent at 1,229.10.
European stocks fell with the benchmark Stoxx Europe 600 Index dropping 1.7 percent. Greece’s benchmark general index fell 1.6 percent to 767.11 at the 5:20 p.m. close in Athens, after two days of advances.
The yield on the 10-year Greek bond dropped 13 basis points to 27.63 percent, after seven straight days of increases.
Karatzaferis, the head of the fourth-biggest party in parliament, said he was “very sad” that “tactical games” were being played by the two main parties at such a critical time.
“I said from the start I didn’t want Petsalnikos,” Karatzaferis told reporters outside the presidential palace. “I had supported Papademos. They will do great harm to the country if they don’t choose Papademos.”
Calls to Papademos’s mobile phone weren’t answered and there was no immediate reply to requests sent by Bloomberg News for an interview with Papademos to his office at the central bank in Greece.
Talks Drag On
Negotiations on a government between Papandreou and Samaras dragged on for a third day yesterday as the two sides disagreed on a prime minister and the opposition balked at European Union demands for written commitments to secure a bailout package.
The new government must implement budget measures and decisions related to an Oct. 26 European bailout package that’s worth 130 billion euros ($177 billion), including a debt swap, before holding elections.
Immediately at stake is the fate of an 8 billion-euro loan installment under an earlier aid package, a 110 billion-euro EU- led bailout agreed in May 2010. The tranche must be paid before the middle of December to prevent a collapse of the country’s financial system.
‘Worse Than Belgium’
“It’s worse than Belgium: There’s the Greek premier who has made a resignation speech but hasn’t resigned; there’s no designated successor prime minister; and main parties are accusing each other of being to blame,” Spyros Economides, senior lecturer at the London School of Economics, said in a telephone interview. “It’s a situation of chaos and denial.”
Papandreou promised his party he would step down on Nov. 4 and put together a new government to bridge differences with EU leaders and officials after his proposal for a referendum on the second Greek financing package roiled markets and Greece.
The political bickering over the past three days came in for criticism yesterday from the country’s central bank chief, George Provopoulos, and opposition lawmakers, as well as key members of Papandreou’s Pasok socialist party.
“Political uncertainty has added to the stress facing the economy and the banking system,” Provopoulos said. Education Minister Anna Diamantopoulou said a new premier must be a person of stature in Greece and abroad and with knowledge of the task the government will be charged to carry out.