Video: Political infighting delaying Greek bailout

  1. Transcript of: Political infighting delaying Greek bailout

    LESTER HOLT, anchor: in turmoil. Tonight, the fragile Greek government is at a stalemate and the debt crisis and economic chaos could have a dangerous ripple effect around the world. NBC 's Michelle Kosinski is in Athens for us tonight and she has the latest.

    MICHELLE KOSINSKI reporting: It is a Greek drama the whole world has been watching. The dubious protagonist, Prime Minister George Papandreou , barely won a confidence vote after proposing a coalition government that might mean the end of his job. But the opposition is calling instead for elections, which could delay Greece 's desperately needed multibillion-dollar bailout by Europe.

    Mr. JUSTIN URQUHART STEWART (Financial Analyst): You couldn't really make it up if you put it in a novel. No one would believe it. And that will reflect on markets and that will reflect on trading and nervousness, particularly within the banking system. And that's the really dangerous bit.

    KOSINSKI: The specter of Greece defaulting, leaving the eurozone has rattled world markets. Some even see it as potentially precipitating a second global recession.

    Unidentified Man: If they don't do something fast, all hell will break loose, probably.

    KOSINSKI: And if you think the US isn't affected, on the day Papandreou considered putting the bailout issue to a risky public vote, US stocks slumped. When he changed his mind, they bounced back. As of now, he remains in power with the hope Greece 's Parliament will approve the bailout. Another looming question is will Greece be able to continue to enact the necessary austerity measures like raising taxes, slashing salaries that so many here feel are grossly unfair. Thirty-three -year-old civil engineer Marcos Ballas has a good job, but hasn't been paid in three months, surviving by living with his parents.

    Mr. MARCOS BALLAS: It's like a cow. You take milk, how much milk you can take? The cow will stop. You have to feed the cow in order to have milk.

    KOSINSKI: Coming days will be critical in bringing Greece and world confidence in the eurozone back from the brink. Michelle Kosinski , NBC News, Athens.

    HOLT: For more on what's happening in Greece and the ripple

Kostas Tsironis  /  AP
Greece's Prime Minister George Papandreou after meeting with Greek President Karolos Papoulias, in Athens on Saturday. Embattled Papandreou launched efforts to form a four-month coalition government, arguing the move is vital to demonstrating Greece's commitment to remaining in the eurozone. news services
updated 11/5/2011 5:51:50 PM ET 2011-11-05T21:51:50

Greece's prime minister struggled Saturday to form a temporary coalition government in the near-bankrupt country, extending a political deadlock threatening billions in international rescue funds.

In an impassioned plea to parliament late Friday, George Papandreou agreed to step aside as premier if necessary to help hammer out a coalition, offering to include the conservative opposition party — a possibility swiftly rejected by its leader.

"The last thing I care about is my post. I don't care even if I am not re-elected. The time has come to make a new effort ... I never thought of politics as a profession," he told parliament before the vote in the early hours of Saturday.

Papandreou said a new coalition government would need four months to secure the new €130 billion ($179 billion) rescue agreement and demonstrate the country's commitment to remaining in the eurozone.

Story: Greece prime minister survives confidence vote, may step aside

"Cooperation is necessary to guarantee — for Greece and for our partners — that we can honor our commitments," Papandreou said at a meeting Saturday with President Karolos Papoulias, hours after his Socialist government narrowly survived a confidence vote.

"I am concerned that a lack of cooperation could trouble how our partners see our will and desire to remain in the central core of the European Union and the euro."

But Papandreou's plea was snubbed by conservative opposition leader Antonis Samaras.

"We have not asked for any place in his government. All we want is for Mr. Papandreou to resign, because he has become dangerous for the country," Samaras said in a televised address. "We insist on immediate elections."

Samaras was due to meet the president at 1:00 p.m. (1100GMT) Sunday.

Frustrated with Greece's protracted political disagreements, the country's creditors have threatened to withhold the next critical €8 billion ($11 billion) loan installment until the new debt deal is formally approved in Greece.

Greece is surviving on a €110 billion ($150 billion) rescue-loan program from eurozone partners and the International Monetary Fund. It is currently finalizing a second major deal: to receive an additional €130 billion ($179 billion) in rescue loans and bank support, with banks agreeing to cancel 50 percent of their Greek debt.

Midway through his four-year term, Papandreou was forced by his austerity-weary Socialist party into seeking cross-party support after he abandoned a disastrous proposal to hold a referendum on a new European debt deal — which prompted havoc on world markets and anger from creditors.

Papandreou's popularity has been battered by two years of punishing austerity, causing crippling strikes, violent protests and sharp drop in living standards for ordinary Greeks who face repeated rounds of tax hikes and cuts in pension and salaries.

Late Friday, Papandreou won a confidence vote in the Socialist-led parliament on a pledge that he was willing to quit and form a caretaker coalition.

But he insisted an immediate election would paralyze government and endanger the new rescue deal.

The conservative snub left Papandreou with limited options: negotiating with conservative splinter groups and independents to attract consensus, and possibly invite respected non-politicians to join the effort.

"(Papandreou) will not resign immediately and he cannot resign before there is a new government. What remains to be seen is how flexible he will be in seeking a different governmental makeup," Ilias Nicolacopoulos, a prominent political analyst told AP television.

"There will be a tough game of poker."

The Associated Press and Reuters contributed to this report.


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