Talks on new Greek PM collapse

Athens, Greece:

Greece's laborious power-sharing talks disintegrated into chaos yesterday, with political leaders failing to name a new prime minister who will take over from George Papandreou and head an interim government, despite three days of negotiations.

The latest setback in more than a week of political turmoil came less than an hour after Papandreou made a televised address to the nation saying Greece's political parties were joining together to save the debt-ridden country from rapidly approaching bankruptcy.

The crisis erupted last week when Papandreou said he would put a hard-fought €130-billion European debt deal to a refer-endum, horrifying European leaders, battering international markets and sparking a rebellion within his own party, with lawmakers accusing him of endangering Greece's bailout.

Second rescue package

Greece has survived since May 2010 on a €110 billion (US$150 billion) rescue loan package from its Eurozone partners and the International Monetary Fund. European leaders agreed on a second rescue package on October 27 after marathon negotiations, which involve private bondholders who have agreed to cancel 50 per cent of the Greek debt they hold as bonds, although details are still to be worked out.

It was this deal that Papandreou wanted to put to a popular vote. But after the vicious reaction his plan was met with, and an opposition party pledge to support the deal, he withdrew the referendum plan and agreed to stand aside, halfway through his four-year term. He is to hand over to an interim government whose main aim will be to secure the next vital €8-billion instalment of Greece's current bailout and approve the debt agreement before February elections.