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Outlines of new Greek government take shape

By the CNN Wire Staff
June 20, 2012 -- Updated 0036 GMT (0836 HKT)
New Democracy leader Antonis Samaras is sworn in as Greece's new prime minister during a ceremony at the presidental palace in Athens on June 20, 2012. New Democracy leader Antonis Samaras is sworn in as Greece's new prime minister during a ceremony at the presidental palace in Athens on June 20, 2012.
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STORY HIGHLIGHTS
  • NEW: Three of the four largest parties will hold more talks Wednesday
  • Pasok's leader says he thinks a government can be formed by the end of the day
  • The Greek political and economic crisis threatens to drag down the euro
  • The anti-austerity Syriza party came second in elections and will go into opposition

Whether you live in Greece or abroad, tell us how the debt crisis is affecting your life.

Athens, Greece (CNN) -- Greece appeared Tuesday to be heading toward having its first elected government in 222 days as the leaders of three political parties signaled that talks among them were going well.

Representatives of the three parties, New Democracy, Pasok and the Democratic Party of the Left, held talks at Parliament in Athens Tuesday evening, state broadcaster ERT reported.

They will meet again Wednesday afternoon, it said.

Evangelos Venizelos, head of Pasok, which placed third in Sunday's election, said he believes a government could be formed by Wednesday afternoon, based on the current situation.

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In a televised address, he said he had proposed the formation of a national task force to renegotiate the terms of Greece's unpopular international bailout.

Greeks went to the polls Sunday as the country struggles to get out of the political and financial mire that threatens to drag down Europe's common currency and spark a new global financial crisis.

The center-right New Democracy party, which broadly favors Greece meeting international debt obligations, narrowly came in first place and has been holding talks on forming a coalition. It has three days from when the results were announced, on Monday afternoon, in which to form a government.

The head of New Democracy said Monday he wants a wide coalition.

"There should be government of national salvation with as many parties as possible," Antonis Samaras told reporters.

The leader of the Democratic Party of the Left, Fotis Kouvelis, held talks Tuesday with Venizelos and Monday with Samaras.

Samaras called the discussions with the fourth-place party "constructive." The leftist party has supported bailouts from international lenders while seeking to renegotiate the terms.

With almost all ballots counted, New Democracy had won nearly 30% of the vote, the Interior Ministry said, giving the party 129 seats in the country's 300-seat Parliament.

Alexis Tsipras, the fiery leader of the leftist Syriza party, which came in second, met with Samaras but said Monday he would not back a coalition.

"History and the people will judge them by their results," Tsipras said of the parties backing the existing bailout deal with the creditors who are keeping Greece afloat. "Shortly we will be vindicated."

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He said his party's nearly 27% showing had forced Greek leaders to realize the bailout is "nonviable," and said Syriza would press as a member of the opposition for the bailouts to be scrapped.

Syriza, which campaigned against the terms of the bailout, got 71 seats.

Pasok, which long dominated Greek politics, won 33. Four smaller parties took fewer than two dozen seats each.

The vote was widely seen as a referendum on whether Greece should remain tied to the euro, the currency used by 325 million people across 17 countries in Europe. The possibility of a "no" vote roiled world markets, with some analysts warning that the collapse of the euro would cost $1 trillion.

Samaras said he would build a government of "parties that believe in the nation's European orientation, that believe in the euro."

But he acknowledged that government budget cuts forced on the country by international lenders have caused suffering among Greeks.

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The new government will have to make changes "in order for the Greek people to escape the torturous reality of unemployment and unbelievable difficulties that every Greek family faces today," Samaras said after meeting with the president.

International bailouts have kept Greece from defaulting in the face of an ongoing recession and low tax revenue, but lenders have demanded hugely unpopular government budget cuts in exchange.

Some observers had predicted that efforts to renegotiate the bailout could lead to a run on Greek banks and deeper misery.

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The country must identify additional budget cuts by the end of June to be considered compliant with the terms of its bailout.

German Chancellor Angela Merkel, Europe's powerful advocate for balancing budgets to build a strong basis for economic growth, had urged Greeks not to walk away from the international loan deals.

"We will stick to the agreements. That is the basis on which Europe will prosper," Merkel said Saturday.

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CNN's Penny Manis, Christine Theodorou, Lonzo Cook, Richard Quest, Matthew Chance, Irene Chapple, John Defterios and Diana Magnay contributed to this report, along with journalist Pavlos Xirogiannidis.

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