Greek prime minister set to form new government

Greek PM survives confidence vote

    Just Watched

    Greek PM survives confidence vote

Greek PM survives confidence vote 04:04

Story highlights

  • The clock is ticking for Greece to sort itself out, a Greek economic expert says
  • Prime Minister George Papandreou says he will act to form a coalition government
  • It is not yet known who will lead the new government
  • Markets have been jittery amid fears Greece might default on its huge debts

Embattled Greek Prime Minister George Papandreou plans to meet with the main opposition leader Sunday as he tries to form a coalition government aimed at securing a controversial international bailout package.

Papandreou has started talks with smaller parties, and met with President Karolos Papoulias on Saturday to seek permission to form a coalition, hours after winning a vote of confidence by a narrow margin.

The president summoned party members ahead of a Cabinet meeting set for Sunday.

The vote of confidence gives Greece's stricken economy some breathing room -- and may reassure international markets sent into a tailspin by political turmoil in the nation -- but many questions remain unanswered.

The 153-145 confidence vote victory came minutes after Papandreou announced that he would seek a coalition government, but it was not immediately clear who would lead it.

Reports have named current Finance Minister Evangelos Venizelos as a possible successor as caretaker prime minister.

Venizelos said Friday night he wanted to see a temporary three-month government that would push through all the necessary legislation through February. Elections would be likely to follow.

Speaking briefly after his meeting with Papoulias, Papandreou said he would take the necessary actions to form a wider cooperation government.

He said implementing a controversial bailout package reached October 26 was a priority, to ensure Greece stayed in the euro, the single currency used by the 17 nations in the euro zone.

European leaders warned this week that although they wanted Greece to stay in the euro, they considered saving the currency more important, amid fears that the Greek crisis could spread to other European countries and beyond.

In forming Greece's new government, Papandreou's Socialist PASOK party is likely to seek the support of a number of smaller parties, on either the left or the right, after the main opposition leader Antonis Samaras made it clear he did not want to be part of a coalition. Samaras will meet Sunday with Papoulias.

Samaras has called for a transitional government for six weeks, followed by elections.

Papandreou argued it would be disastrous if elections were to be held immediately, because that would leave the latest bailout deal "up in the air."

The deal would wipe out 100 billion euros in Greek debt, half of what it owes to private creditors. It comes with a promise of 30 billion euros from the public sector to help pay off some of the remaining debts, making the whole deal worth 130 billion euros (U.S. $178 billion).

But the package comes with strings that would require Greece to slash government jobs, privatize some businesses and reduce pensions.

Antonis Papagiannidis, editor of Greece's Economic Review, told CNN such austerity measures ran the risk of deepening Greece's recession.

Meanwhile, Greece's fierce party politics mean it is difficult to know what will come next following the confidence vote, he said.

"Everybody is a little confused, while at the same time the clock of the markets is ticking, tick tock," he said. "Some sort of all-out disaster is still looming right round the corner."

Papandreou's narrow victory Saturday is expected to mean that Greece will get its next tranche of money from a separate international agreement brokered in May 2010, allowing it to pay its bills next month and avoid immediate default.

That $8 billion euro payment had been threatened when Papandreou announced earlier this week that he would take the bailout package to the Greek people through a national referendum, a move he retracted Thursday.

He came under enormous pressure from international leaders, many of whom were meeting for the G-20 summit in Cannes, France, to act to restore stability in Greece.

Though Greece ranks 32nd in terms of gross domestic product, experts say it wields a disproportionate influence on world markets; economists fret that a Greek default could drag down larger European economies, in particular those of Italy and Spain, as well as struggling Portugal and Ireland.

Although Italy's finances are in much better shape than those of Greece, it has a huge pile of debt and borrowing costs for the Italian government rose to a euro-area high of 6.43% Friday.

Tens of thousands of opposition party demonstrators turned out in central Rome Saturday to voice their opposition to the government of Italian Prime Minister Silvio Berlusconi, after he said Italy had agreed to let the International Monetary Fund "certify" its reform program, a step designed to boost investor confidence.

But he faces a vote of confidence as soon as next week amid criticism of his handling of Italy's economy -- and analysts say he may no longer have the support of a majority in parliament.

A crucial vote on budget reform measures is expected in Rome on Tuesday.

During the hours of debate ahead of the confidence vote in Athens, Papandreou reiterated an appeal for approval of the international bailout package that the country has been offered, calling it "a huge chance, and perhaps the last one, to rebuild a country with new and strong foundations."

Papandreou insisted that he has no great desire to maintain his grip on power.

"The last thing I care for is the chair," he said. "I don't care if I never get elected again."

He defended his leadership, accusing previous governments of miring the Greek economy in debt. "Those days, you could borrow money easily, and now that's why the Greek people have to pay back for it," he said.

Papandreou said he now wanted "to turn the page over and move forward."

      Markets in crisis

    • German Chancellor Angela Merkel talks with Finance Minister Wolfgang Schaeuble during a session at the Bundestag (lower house of parliament) on June 25, 2013 in Berlin.

      German Finance Minister Wolfgang Schaeuble says the eurozone's problems are not solved, but "we are in a much better shape than we used to be some years ago."
    • IBIZA, SPAIN - AUGUST 21:  A man dives into the sea in Cala Salada beach on August 21, 2013 in Ibiza, Spain. The small island of Ibiza lies within the Balearics islands, off the coast of Spain. For many years Ibiza has had a reputation as a party destination. Each year thousands of young people gather to enjoy not only the hot weather and the beaches but also the array of clubs with international DJ's playing to vast audiences. Ibiza has also gained a reputation for drugs and concerns are now growing that the taking and trafficking of drugs is spiralling out of control.  (Photo by David Ramos/Getty Images)

      Summer could not have come soon enough for Lloret de Mar, a tourist resort north of Barcelona. Despite the country's troubles, it's partying.
    • The Euro logo is seen in front of the European Central bank ECB prior to the press conference following the meeting of the Governing Council in Frankfurt/Main, Germany, on April 4, 2013.

      The global recovery has two speeds: That of the stimulus-fed U.S. and that of the austerity-starved eurozone, according to a new report.
    • The flags of the countries which make up the European Union, outside the European Parliament in Strasbourg, France.

      The "rich man's club" of Europe faces economic decay as it struggles to absorb Europe's "poor people", according to economic experts.
    • Packed beaches and Brit pubs? Not necessarily. Here's what drew travelers to one of Spain's most beautiful regions in the first place

      Spain's economic crisis is in its sixth straight year yet tourism, worth 11% of GDP, is holding its own, one of the few bright spots on a bleak horizon.
    • Photographer TTeixeira captured these images from a May Day protest in Porto, Portugal, Wednesday by demonstrators angered by economic austerity measures. "People protested with great order, but showed discontent against the government who they blame for this economic crisis," she said. "They want the government to resign and the Troika [European Commission, International Monetary Fund and European Central Bank] out of this country."

      As European financial markets close for the spring celebration of May Day, protesters across Europe and beyond have taken to the streets to demonstrate.
    • Croatian Prime Minister Zoran Milanovic delivers a speech in Mostar, on April 9, 2013. Prime Ministers from Bosnia's neighboring countries arrived in Bosnia with their delegations to attend the opening ceremony of "Mostar 2013 Trade Fair".

      As Croatia prepares to enter the 27-nation European Union, the country's Prime Minister says Italy must return to being the "powerhouse of Europe."
    • Anti-eviction activists and members of the Platform for Mortgage Victims (PAH) take part in a protest against the government's eviction laws in front of the Popular Party (PP) headquarters in Mallorca on April 23, 2013.

      Spain's unemployment rate rose to a record high of 27.2% in the first quarter of 2013, the Spanish National Institute of Statistics said Thursday.
    • People protest against the Spanish laws on house evictions outside the Spanish parliament on February 12, 2013 in Madrid, Spain.

      Spain has seen hundreds of protests since the "Indignados" movement erupted in 2011, marches and sit-ins are now common sights in the capital.