Greek PM sets election date
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Simitis says he will hand over power if his socialist party wins
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ATHENS, Greece (Reuters) -- Greek Prime Minister Costas Simitis has announced March 7 general elections and set the stage for Foreign Minister George Papandreou to immediately replace him if his socialists win the vote.
Simitis said while he would remain as prime minister until the elections -- five months before the Athens Olympic Games -- he was starting procedures to replace himself immediately as president of the ruling socialist PASOK party.
He would step down immediately as prime minister if PASOK won the election, which was due by May this year, in favor of the new party leader.
Papandreou, 51, who socialists regard as their key card in turning round opinion polls showing the opposition conservative New Democracy Party with a seven percent lead going into the election, is the hot favorite to take over leadership of PASOK.
"Elections will be held on Sunday, March 7," Simitis told a news conference.
"I will be prime minister until the day after elections. The new PASOK president will chair the new PASOK government (if it wins) immediately after the elections."
Both Simitis and New Democracy Party leader Costas Karamanlis have vowed the Olympic Games will not become an election issue and if the socialists lose power there would be no major changes to Athens' leadership of the Games.
Simitis, 67, has governed Greece since winning elections in 1996 and the party was reelected in 2000.
He has borne the brunt of voter discontent as many Greeks believe their standard of living has declined with unemployment at nine percent despite years of strong economic growth.
"This is a new era and the new era for the PASOK party demands a younger generation, that will take on the necessary responsibilities," Simitis said.
Papandreuu: Moderate, mild-mannered and diplomatic approach
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Apart from 1990 to 1993 when the conservatives were in power, PASOK has governed Greece since 1981.
"With his flight, (Simitis) is himself admitting the failure of the socialist party's policies," opposition Karamanlis told reporters after the prime minister's announcement.
The Greek stock market hit a 19-month high in mid-session, outperforming other European bourses as investors, weary of speculation about an election, welcomed the news of early polls.
Simitis' pledge to step down right after the elections also raised hopes that the vote would bring about a change in economic policies even if PASOK managed to stay in power.
"The fact that the pre-election period is minimized and the government can't proceed with pre-election handouts helps the mood," said Nikos Galousis, derivatives manager at Kappa Securities.
"Investors believe that whoever is elected, the political opposition or the PASOK party with a new leader, we will have different economic developments," he said.
Papandreou, oldest son of Andreas Papandreou, a fiery and flamboyant prime minister who governed for most of the 1980s, has quietly climbed up the party ranks in the past 23 years.
While his populist father pleased huge crowds with his maverick policies and oratory, George -- known in Greece as Yorgakis (Georgie) -- has made his mark with his moderate, mild-mannered and diplomatic ways.
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