Greek Prime Minister George Papandreou won a vote of confidence late Friday and said he would form a new coalition government that can sign off on a desperately-needed European bailout deal.
Presuming no more drama over the weekend, a tall order following the flurry of headlines late Friday, markets are likely to cheer the result; the Financial Select Sector SPDR (XLF) was up after hours. Papandreou said he would start negotiations Saturday to form “the widest coalition” and said before the vote that he is willing to resign.
Dow Jones is reporting that Papandreou is likely to propose Finance Minister Evangelos Venizelos as an interim prime minister in a coalition government. Former European Central Bank vice president Lucas Papademos may also be in the running.
Conservative opposition party members continued to call for Papandreou’s departure, and for elections.
The prime minister narrowly won the votes he needed to remain in power. His ruling Socialist party, Pasok, now holds a narrow 153-seat majority of 300 parliamentary seats.
One thing Papandreou didn’t want: to be forced out by a party founded by his father, who also was prime minister, as was his grandfather. One thing Greece doesn’t need: the delays an election would bring to tense bailout negotiations.
Having scrapped a citizen referendum on EU austerity measures Thursday, Papandreou’s stance this week, writes Eurasia Group Analyst Wolfango Piccoli, was
“a desperate and risky response to growing pressure by dissenters within his own Pasok to unveil ‘political initiatives’ to ease social and political tensions in the country.”
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