Greek leaders fail to reach deal on new government

ATHENS?? Greek political leaders have failed to reach a deal to form a new coalition government, according to a senior member of the current ruling party.

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Apostolos Kaklamanis, 74, said he has talked with political leaders about heading the country's new coalition government but that there had been no deal.

Greek Prime Minister George Papandreou will meet the country's president at 4 p.m. local time (10 a.m. ET) on Wednesday, the president's office said.

It had been hoped critical power-sharing talks would result in a deal on Wednesday, allowing the Greek parliament to approve a ?130 billion ($179 billion) European rescue package through Parliament.

Approval of the deal will allow the release of a ?8 billion ($11 billion) loan installment, without which Greece will go bankrupt before Christmas.

The political crisis is threatening to cut Greece's loan lifeline and could even force it out of the euro ? in an ignominious first for the 17-member currency union.

"They didn't set any conditions, whether I would change any ministers, who I would appoint or who I would remove," Kaklamanis told reporters.

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Papandreou has agreed to step aside once a power-sharing deal is reached. His surprise announcement last week that he would put the new debt deal to a referendum sparked the latest political crisis, leading to an angry backlash from European leaders who had hammered out the agreement barely a week before, and a revolt from Papandreou's own Socialist lawmakers. He withdrew the plan after Samaras indicated he would back the debt deal.

Greece has survived since May 2010 on a ?110 billion ($150 billion) bailout package from its eurozone partners and the International Monetary Fund. A second rescue package has been created that involves private bondholders voluntarily agreeing to cancel 50 percent of their Greek debt.

In return for the rescue funds, Greece has endured 20 months of punishing austerity measures. The efforts by Papandreou's government to keep the country solvent have prompted violent protests, crippling strikes and a sharp decline in living standards for most Greeks.

Reuters and The Associated Press contributed to this report.

Source: http://www.msnbc.msn.com/id/45220891/ns/world_news-europe/

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