Official: Greece's next prime minister to be announced Tuesday

Prime Minister George Papandreou began steps to form a coalition government after narrowly winniing a vote of  confidence.

Story highlights

  • George Papandreou's replacement is to be announced Tuesday
  • The announcement comes hours after Greece's finance minister cites "a new political situation"
  • "This is the proof of our commitment ... to implement the program," says finance minister

A new prime minister will be named Tuesday to replace George Papandreou, a Greek government spokesman said Monday.

Meanwhile, European finance ministers meeting in Brussels announced Monday that they have already requested assurances in writing that Greece's government-to-be would stick to austerity agreements already made by the outgoing government.

In Athens, government spokesman Ilias Mosialos' announcement that a new prime minister will be named came hours after Greek Finance Minister Evangelos Venizelos told reporters that the tense economic situation in Athens had changed dramatically over the weekend and that there was cause for optimism.

"After a difficult week we have now a new political situation, a new political frame in Greece," he said in Brussels, Belgium, where finance ministers to eurozone countries were meeting. "We have a new government of national unity and of national responsibility. This is the proof of our commitment and of our national capacity to implement the program and to reconstruct our country."

Eurozone finance ministers assembled in Brussels to discuss the Greek debt crisis and sweeping political shuffle, but their focus extended beyond Greece to include other, bigger ailing European Union economies and approaches to shoring up the EU bailout fund, which is slated to launch in coming months.

"We welcome the intention of Greece to form a national unity government," Euro Group President Jean-Claude Juncker told reporters after the EU finance ministers' meeting. But he reiterated EU expectations that all political parties in governing roles in Greece remain dedicated to adhering to austerity measures and keeping the common currency, the euro.

"We underlined the importance of sustained cross-party support for the program in Greece," said Juncker, who is also prime minister of Luxembourg, home to one of Europe's best-known banking centers.

"In this context we asked the new Greek authorities to send a letter, co-signed also by the leaders of the two main parties of the incoming coalition government, reaffirming their strong commitment," he said.

On Sunday, Greek President Karolos Papoulias announced that Papandreou would step down from his post as prime minister -- so long as a controversial 130 billion euro bailout deal cobbled together late last month is approved.

New elections will be held after the bailout is implemented, most likely on February 19, Venizelos said.

The formation of a new government could close one chapter in Greece's long-running, tumultuous political and economic saga, as Papandreou had become a lightning rod for critics of his leadership of the heavily indebted south European nation.

As political events were churning in Athens, eurozone finance ministers assembled Monday in Brussels, Belgium, where their focus extended beyond Greece to include other, bigger ailing economies.

Though Greece ranks 32nd in terms of gross domestic product, experts say it wields a disproportionate influence internationally. Economists worry that a Greek default on its debt could pull down larger European economies, particularly those of Italy and Spain, as well as struggling Portugal and Ireland.

But German Finance Minister Wolfgang Schaeuble told reporters in Brussels that Italy's woes do not warrant that level of concern over the Greek crisis. "Italy's actual numbers don't justify this nervousness in the markets," he said. "Italy definitively announced a plethora of measures at the meeting of the heads of state and government on the 27th of October that have the wherewithal to win back new trust for Italy in the markets, if they are implemented."

"It's essential now that Italy will stick to its fiscal targets, ensure their implementation and intensify the statutory reforms so it can boost growth and job creation," European Union Finance Minister Olli Rehn told reporters. "I have requested further information from the Italian government on the matters of fiscal consolidation and statutory reforms," he said, adding that commission staff had been dispatched to Rome.

Greece's turmoil is far from over. The bailout, the second it has received from the European Union and International Monetary Fund, comes with a hefty price tag - the imposition of additional austerity measures that include slashing government jobs, privatizing some businesses and reducing pensions. It comes at a time when Greece's economy -- and to some extent the global economy -- is staggering.