But negotiations were proceeding slowly, and a statement released by the government cast doubt on whether the parties would be able to agree on a new leader before Tuesday.
The statement, in its entirety, read: “There was a positive approach in talks between Prime Minister George Papandreou and the leader of the main opposition, Antonis Samaras, regarding who should be the new prime minister.”
Mr. Papandreou’s office said that a cabinet meeting was scheduled for noon Tuesday. It remained unclear when a new prime minister and government would be announced.
The wrangling has fueled fresh fears about Greece’s acceptance of a debt-relief deal struck on Oct. 26 that is seen as crucial to containing the crisis and insulating Italy, a much larger economy whose political leaders have also struggled to cut budgets and deal with heavy debt.
Deepening doubts on that score, finance ministers from the euro zone on Monday demanded a letter from the two leading Greek political parties confirming their commitment to the loan deal before releasing the $11 billion Athens says it needs to avert default on its debts next month.
Reflecting the confusion in Rome and Athens, yields on Italian bonds — the price Italy must pay to borrow money on international markets — rose on Monday to more than 6.6 percent, the highest since the introduction of the euro more than a decade ago, news reports said.
The debt deal requires that the Greek Parliament pass a new round of austerity measures, including layoffs of government workers, in a climate of growing social unrest. It also calls for permanent foreign monitoring to ensure that Greece keeps its pledges of structural changes to its economy, a requirement that many Greeks see as an affront to national sovereignty.
The new unity government, in which the major Greek parties would share power, is widely expected to be led by a nonpolitician and to govern for several months, long enough to implement the debt deal and pass a budget for 2012.
In a statement early Monday, the Greek Finance Ministry said that delegations from Mr. Papandreou’s Socialist Party and Mr. Samaras’s New Democracy Party regarded Feb. 19 as “the most appropriate date for elections.”
Mr. Samaras is not expected to play a role in the unity government, but would be a candidate for prime minister in the general election.
In many ways, a new interim government buys time for European leaders to put together a stronger bailout mechanism that would protect larger economies from the risk of default, chief among them Italy.
“The decision is very positive, because it will appease the markets and because it shows that Greek authorities are doing what foreign leaders want them to do — to get on with implementing the conditions for the E.U. debt deal,” said Athanassios Papandropoulos, an economist and a commentator for the conservative Greek newspaper Estia.
Still, Mr. Papandropoulos said he saw little chance that a unity government could get Greece on the road to recovery. “It will last three months,” he said. “then we’ll have elections, and then we’ll have the same problems all over again.”
One person being mentioned as a possible leader of the new unity government is Lucas Papademos, a former governor of the Bank of Greece. Mr. Papademos is a former vice president of the European Central Bank and has been teaching at Harvard since his retirement in 2010.
The Greek debt crisis flared during Mr. Papademos’s last year at the European Central Bank, and he became known for supporting a hard-line policy that Greece should never default.
Now, if he were to head the new government, Mr. Papademos would have to support the 50 percent debt reduction proposal that is the heart of the deal.
Landon Thomas Jr. contributed reporting.
Article source: http://www.nytimes.com/2011/11/08/world/europe/greek-leaders-reach-deal-to-form-a-new-government.html?partner=rss&emc=rss
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