Greek Unity Falls Apart, No PM to Replace Papandreou

A deal to create a Greek unity government collapsed on Wednesday just hours after outgoing Prime Minister George Papandreou officially stepped down, wishing his successor well as he handed over the reins to a coalition that does not exist.

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While party sources said earlier today said that House Speaker Filippos Petsalnikos would head Greece’s new coalition government, barring any last-minute changes, it took only hours for it to emerge that there was no successor due to feuding between the two main political parties.

Large factions of Papandreou’s socialist PASOK party and the conservative New Democracy party have refused to back Petsalnikos as head of the interim government, which will lead the coalition until early elections in February.

Unless the new government can push through austerity measures to secure emergency funding from the European Union and International Monetary Fund, Greece will run out of money next month and default on its sovereign debt.

With Petsalnikos out of the running and the clock ticking, some lawmakers are revisiting an earlier plan to recruit Lucas Papademos, a former vice-president of the European Central Bank, to head the new government. Papademos’ financial expertise gives him the credibility to see Greece through budget cuts.

“The only solution is Papademos. If he accepts by tomorrow morning we will be able to form a strong government that will pull the country out of the crisis,” said Socialist lawmaker Spyros Vougias.

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A meeting of party leaders will be held at 8:00 a.m. GMT on Thursday to discuss plans for the new coalition.