Greece update: Papandreou asks cabinet to resign
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Athens appears to be making tentative progress in forming its new unity government, according to reports.
George Papandreou
Outgoing prime minister George Papandreou and conservative opposition leader Antonis Samaras are in their second day of negotiations as they attempt to work out a power-sharing agreement to create an interim government.
Papandreou has asked his cabinet to resign to make the process easier, the Financial Times report.
Officials from Papandreou’s Pasok socialist party also told reporters that an agreement on the unity government is likely to be announced later today. One told Reuters: “The deal has not been concluded yet but the prime minister seemed convinced that it would happen soon.”
It has also been reported that senior officials from Pasok and the conservative New Democracy party have been asked to sign a letter to European Commission and International Monetary Fund pledging their commitment to the new Greek bailout programme.
This letter would allow the country to access the next €8 billion tranche of bailout funding. This was recently suspended when Papandreou threw the new deal into doubt by proposing, then withdrawing, a referendum for the package.
Lucas Papademos, a former governor of the Bank of Greece and ex-vice president of the European Central Bank, is widely tipped to become the country’s caretaker prime minister.
Reports of the potential resignation of the Greek cabinet was announced as the outlook for Silvio Berlusconi’s political future looked increasingly bleak.
Berlusconi faces a crucial budget vote in the Italian parliament, amid calls for him to resign. The Italian leader has been deserted by coalition ally Umberto Bossi, leader of fringe right-wing part Lega Nord.
Uncertainty over the future of the government has helped push up Italian government bond yields.
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