Leaders in Greece Agree to Form a New Government

Athens – After crisis talks on Sunday night, Prime Minister George Papandreou and his main rival agreed to create a new unity government in Greece that will not be led by Mr. Papandreou, according to a statement released Sunday night by the Greek president, who mediated the talks.

Mr. Papandreou and the opposition leader Antonis Samaras agreed to meet again on Monday to hammer out the details. The name of the new prime minister is not expected until then.

The new government is intended to govern for several months to put in place a debt agreement with the European Union, a step European leaders consider crucial to shoring up the euro. Then it is to hold a general election and dissolve.

Mr. Papandreou has faced mounting pressure to resign, including from within his own party, the Socialists.

Before the meeting with the president, Mr. Samaras said he would enter talks on a unity government only if Mr. Papandreou resigned. Mr. Papandreou himself had repeatedly said that he would be willing to step aside for the deal to go through.

But after meeting with his cabinet in the afternoon, Mr. Papandreou said Mr. Samaras would first have to agree to a seven-point plan of priorities that would essentially commit the new government to the terms of the debt deal. The priorities include securing the release of European rescue funds, meeting fiscal targets imposed by foreign creditors, and passing the 2012 budget by the end of the year.

Mr. Samaras’s conservative New Democracy party has in the past voted against many of the unpopular austerity measures Europe has demanded in exchange for its help, leaving the Socialist government to shoulder the political burden alone.

Mr. Papandreou also insisted that the two sides agree on the composition of a unity government before he steps down.

“It’s clear this government is prepared to hand over the baton, but it can’t hand it over into a vacuum,” he said, according to a transcript of the cabinet meeting that was released to the news media. “It will hand over to the next government, if we agree and decide on it.”

It was not clear on Sunday night whether the opposition had agreed to the sevenpoints during the meeting with President Karolos Papoulias; nor was it clear when Mr. Papandreou would step down. Discussion of the composition of the unity government was left for Monday.

In one scenario discussed in the Greek media on Sunday, Mr. Papandreou might cede power to a unity govermnet including politicians from the Socialist and New Democracy parties but led by a nonpolitical figure. One name being mentioned as a possible leader for such a government is Lukas Papademos, a former vice president of the European Central Bank.

That scenario could set the stage for a power battle between Mr. Papademos and the current finance minister, Evangelos Venizelos, who has reportedly been trying to rally support for a government that he could lead.

Mr. Papandreou survived a crucial confidence vote in Parliament in the early hours of Saturday, a vote seen as an endorsement for the debt agreement with the European Union, but which was predicated on the expectation that he would immediately resign.

His failure to do so appeared to leave Greek politically deadlocked, with the opposition calling for early elections and the government insisting that holding elections now would be too destabilizing.

European leaders want the Greek Parliament to pass the new debt deal worked out in Brussels on Oct. 26. They have urged Greek leaders to forge a broader consensus, since the governing Socialist party did not seem to be able to unify and pass the law on its own.

The deal calls for banks that hold some Greek debt to write down 50 percent of its face value, to help reduce the country’s public indebtedness to 120 percent of its gross domestic product by 2020. But the deal also requires the Greek government to adopt a series of deeply unpopular austerity measures, and it imposes a permanent foreign monitoring presence, a development that many Greeks see as a loss of sovereignty.

In an effort to allow Greeks to have their say, and to strongarm Mr. Samaras into backing the debt deal, Mr. Papandreou proposed a popular referendum on the agreement last week. After the referendum idea drew the ire of European leaders and threw international markets into turmoil, Mr. Papandreou withdrew it.

Though the about-face may have appeared to be a defeat for Mr. Papandreou, he won support for the debt deal from the opposition.

Opinion polls published in Greek newspapers on Sunday drew different conclusions about whether Greeks preferred a national unity government or immediate elections.

A poll for the centrist weekly Proto Thema found that 52 percent of Greeks favored a unity government that would rule for several months and be chosen by Mr. Papandreou, while 36 percent preferred immediate elections to choose a new government, as proposed by the New Democracy party.

Another poll, for the center-left Ethnos newspaper, found less difference in support for the two scenarios, with 45 percent supporting a unity government and 42 percent backing snap elections.

A third survey, for the center-right Kathimerini, found that 66 percent of Greeks supported early elections, but in that poll the alternative choice offered was not a unity government, it was a referendum, which only 14 percent of respondents supported.