–Finance Minister Papaconstantinou Seen Likely To Be Ousted

ATHENS (MNI) – Greece’s Prime Minister George Papandreou announced
moments ago that he will form a new government on Thursday and will not
resign his office as had been widely anticipated earlier Wednesday.

Papandreou said he will seek the Parliament’s approval for the new
government and vowed, “I will continue to do my duty.”

Earlier in the day, there had been talk of a coalition government
with Antonis Samaras, the leader of Greece’s top opposition party, who
has made clear his party will steadfastly oppose the government’s new
E28 billion package of austerity measures. Passage of the measures is
considered a pre-requisite for a new Greek bailout package from Greece’s
European Union partners and the International Monetary Fund.

Papandreou’s Socialist party has a razor thin majority of 4 seats
in Parliament after one of his MPs resigned on Tuesday. According to
Greek press reports, up to 10 more Socialist MPs are prepared to resign
or change their party status to independent in protest against the new
measures, which also include a E50 billion privatization plan.

Papandreou’s announcement this evening capped a crazy day in which
Greece seemed to be spiraling toward chaos, as tens of thousands of
protesters surrounded the Parliament and the Finance Ministry to protest
the new austerity package, which includes salary and pension cuts as
well has tax hikes across all income brackets.

The demonstration turned violent, as angry protesters pelted
members of Parliament with eggs and bricks and police reported injuries.

Papandreou held an emergency meeting with the president of the
Republic Karolos Papoulias, and a government spokesman later said that
the prime minister was considering stepping down in the name of national
unity. He was expected to announce his resignation this evening.

But instead, he vowed to stay on, blaming the opposition for the
breakdown of the talks and the failure to reach a consensus. He said he
had sought a consensus “but got rejected.”

If Papandreou does indeed name a new government Thursday, it is
widely expected that Finance Minister George Papaconstantinou will lose
his job. Little else is known about the composition of a new government,
but Lucas Papademos, the former European Central Bank vice president and
ex-governor of the Bank of Greece, has been frequently mentioned as
somebody who could be tapped for a senior role.

The apparent meltdown in Greece is occurring as Eurozone finance
ministers continue to be unable to reach an agreement on how to ensure
that private creditors contribute to a new Greece bailout package,
estimated in the vicinity of E85 to E90 billion. Germany is pushing for
a 7-year extension on maturities of outstanding Greek debt, but the ECB
has forcefully rejected that proposal, warning that any solution that
could be considered a default or partial default would have “very
dangerous” consequences.

Samaras, the opposition leader is expected to make a statement
later this evening.

–Angelika Papamiltiadou, a_papamiltiadou@hotmail.com

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