ATHENS ? Greece inched closer on Wednesday to forming a coalition aimed at securing crucial funding for the debt-wracked country and revising an onerous bailout deal, with the leader of the conservative party New Democracy expected to announce a new government with the Socialists and a small leftist party later in the day.
New Democracy?s leader, Antonis Samaras, was to meet at noon local time with the Socialist Pasok chief, Evangelos Venizelos, and at 1 p.m. with the leader of the moderate Democratic Left, Fotis Kouvelis. Also at 1 p.m., senior officials of the three parties were to resume talks that began on Tuesday to reach a common policy program for the coalition.
Debate in the local media focused Wednesday on who would join a new cabinet, which is almost certain to be led by Mr. Samaras as prime minister. The likeliest candidate for the daunting portfolio of finance minister was believed to be Vassilis Rapanos, president of National Bank, the country?s biggest lender.
Earlier in the day, Mr. Venizelos met with his party?s legislators to discuss his proposals for the form that the Socialists? participation in a coalition should take. On Tuesday, he had objected to former top-ranking ministers and current legislators joining the cabinet, in an attempt to avoid their association with the additional austerity measures, drawing criticism from some party officials.
In a televised statement on Tuesday, Mr. Venizelos said it was urgent to complete the coalition negotiations quickly.
But even before the government could be formed, Greek political leaders were contending with its main structural flaw: that they must disown the very agreement that Europe had championed them for upholding.
Mr. Venizelos noted that many of the tough terms of the bailout that he helped work out while serving as finance minister had been ?imposed? on Greece during the first phase of the negotiations, when the critical goal was to seal a deal quickly to ensure that Athens did not run out of money to pay its bills. He said that the agreement was always seen as open to revision.
At the same time, Mr. Venizelos and other officials of his party, as well as the top ranks of the third would-be coalition member, the Democratic Left, were hinting that they might seek to avoid responsibility for decisions of the new government by limiting their participation in the cabinet that would be formed under Mr. Samaras. They were also seeking to block any participation in the government by ministers who served under the governments that negotiated the original bailout agreements.
The new government will face a daunting double mandate to both enforce Greece?s loan agreement with its foreign creditors ? the European Central Bank, the International Monetary Fund and the nations of the European Union ? while renegotiating enough of the bailout terms to keep the government in power in the face of growing social unrest among the rapidly unraveling middle class. It must also reassure investors enough to slow the flight of deposits from Greek banks.
?Greek banks may be small,? said Carl Weinberg, the chief economist at High Frequency Economics, a consulting firm in Valhalla, N.Y., ?but if the public doesn?t see that government authorities can ensure that the banks are safe at all times, then the banking system won?t be stable.?
Greece?s official creditors made no secret that they wanted Mr. Samaras to prevail over the leftist Syriza party, which placed a close second in the elections with its calls to tear up the loan agreement. The creditors have indicated that they are willing to talk about changes to the agreement, but it is unclear how far Europe?s leaders, particularly Chancellor Angela Merkel of Germany, are prepared to go in making concessions.
If the government is to survive long enough to carry out its obligations under the bailout agreement, analysts here said, it will need to extract significant changes from Greece?s lenders. While New Democracy and Pasok have enough members, barely, to form a majority in Parliament, that coalition is not likely to last long without other support, particularly from the Democratic Left party.
Mr. Kouvelis, the Democratic Left?s leader, said on Tuesday that his party would join the coalition if agreement could be reached on a platform to extend the timetable for Greece to meet its budget deficit targets and to revoke the harshest austerity measures, like the demand to cut the minimum wage.
Mr. Kouvelis said the most onerous terms of the bailout agreement had ?decimated society.?
Source: http://feeds.nytimes.com/click.phdo?i=86a11fef34ed4f5c7c00fc989df47521
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