Greece's prime minister to quit in deal to salvage bailout package

Prime Minister George Papandreou began steps to form a coalition government after narrowly winniing a vote of  confidence.

Story highlights

  • Eurozone financial leaders will meet Monday in Brussels
  • Papandreou won't be head of the new government, a statement says
  • He and opposition leader Samaras will talk Monday to plot details
  • The deal hinges on Greece approving a 130 billion euro bailout deal

Greek Prime Minister George Papandreou will meet Monday with the leader of the country's main opposition party to discuss who will become the nation's next prime minister -- a day after an announcement that Papandreou he will step down amid the country's financial crisis.

Papandreou's planned resignation -- announced by President Karolos Papoulias -- is contingent on the approval of the controversial 130 billion euro bailout deal.

On Sunday, Papandreou met with Antonis Samaras -- the leader of the New Democracy party, Greece's leading opposition party -- and agreed to form a new government.

During Monday's meeting, the two will discuss who will serve in the new government as well as who will be the next prime minister, according to a statement from the president.

New national elections will be held sometime after the bailout is implemented, but no more details nor a timeline of future events were disclosed.

Earlier Sunday, Samaras told reporters that once Papandreou resigns, everything will "take its course" and "everything else is negotiable."

The move appears to close one chapter in Greece's tumultuous political and economic saga, as Papandreou had become a lightning rod for critics for his leadership of the south European nation as it tackles a prolonged financial plight.

It also paves the way for passage of an agreement that Papandreou negotiated October 26 with European leaders. The deal would wipe out 100 billion euros in Greek debt, half of what it owes to private creditors, and includes a promise of 30 billion euros to help the public sector pare its debts -- making the whole package worth a total of 130 billion euros ($178 billion).

But Greece's turmoil is far from over. The bailout -- the second it has received from the European Union and International Monetary Fund -- would be accompanied by additional austerity measures such as slashing government jobs, privatizing some businesses and reducing pensions. It also comes at a time when Greece's economy -- and to some extent the global economy -- is still staggering.

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Though Greece ranks 32nd in terms of gross domestic product, experts say it wields a disproportionate influence internationally. Economists worry that a Greek default on its debt could pull down larger European economies -- particularly those of Italy and Spain, as well as struggling Portugal and Ireland.

Eurozone finance ministers are scheduled to meet Monday in Brussels, Belgium.

Within Greece, the bailout's passage would be a significant victory for Papandreou. He has insisted repeatedly in recent weeks that it needs to be approved -- signaling that he'd be willing to resign as prime minister, a job he has held since 2009, as long as that happens.

Earlier Sunday, Greece's president met ahead of a Cabinet meeting with all party leaders -- including Papandreou, who heads the socialist PASOK party, and Samaras.

Finance Minister Evangelos Venizelos is likely to remain in his post as finance minister in a new government, sources told Greek television.

Candidates for the prime minister's job include Petros Moliviatis and Loukas Papaimos, according to Greek television.

The new government will have a life of four months, according to Greek television, citing sources, and elections will take place in early spring.

On Monday -- in addition to a meeting between Papandreou and Samaras -- the Greek president will hold another meeting open to heads of all Greece's political parties.