Greece political leaders sealed a pact to form a national unity government on Sunday night after the prime minister George Papandreou announced his imminent resignation under pressure from a European ultimatum.
Papandreou, who sealed his fate last week with a disastrous attempt to call a referendum on the bailout, will stand down when the new government takes over, the office of the Greek president said.
An agreement in principle was reached between Mr Papandreou and Antonis Samaras, the conservative opposition, leader after an hour and a half meeting with the president on Sunday night.
The two men will meet on Monday to decide on the composition of the new government, which will take office after Mr Papandreou formally tenders his resignation. A presidency statement said they will discuss who would head the coalition government, but that Papandreou would not lead the new administration.
With Greece due to run out of money in a few weeks, the European Union told its bickering parties to explain by Monday evening how they would form a unity government to enact the 130 billion euro ($179 billion) emergency funding package.
“Tomorrow there will be new communication between the prime minister and the opposition leader on who will be the leader of the new government,” the statement said.
Papandreou’s socialist PASOK party and the New Democracy party of Samaras agreed early on Monday that the most suitable date for the elections would be February 19 next year.
The interim government is expected to be in place for about three to four months in order to ensure a new European debt deal and secure a vital installment of bailout loans that Greece needs to avoid default.
In reaching the agreement, Mr. Papandreou agreed to meet Mr. Samaras’s demand that he step down as prime minister, while Mr. Samaras agreed to back the debt deal and a seven-point plan of priorities proposed by Mr. Papandreou that would essentially commit the new government to the terms of the debt deal.
Earlier, European Economic and Monetary Affairs Commissioner Olli Rehn told Reuters that finance ministers from countries that use the single currency would insist on hearing a plan for a unity government from their Greek colleague Evangelos Venizelos at Monday’s Eurogroup meeting.
“We have called for a national unity government and remain persuaded that it is the convincing way of restoring confidence and meeting the commitments,” he told Reuters. “We need a convincing report on this by Finance Minister Venizelos tomorrow in the Eurogroup.”
“The decision is very positive, because it will appease the markets and because it shows that Greek authorities are doing what foreign leaders want them to do — to get on with implementing the conditions for the E.U. debt deal,” said Athanassios Papandropoulos, an economist and commentator for the conservative Greek newspaper Estia.
Papandreou and Samaras – who were once U.S. college room mates – had to bury their deep differences and personal animosity, as Greece is deep in economic, political and social crisis, its future in the euro zone is in question, and their reputations among ordinary Greeks are at rock bottom.
“The two leaders had no other choice. If elections were held now, nobody would turn out to vote for them,” said Elias Nikolakopoulos, political science professor at Athens University.
The initial agreement came after a week of intense political drama sparked by Mr Papandreou’s announcement he was taking the debt deal to a referendum.