ATHENS (Reuters) ? Prime Minister George Papandreou will meet the Greek president on Wednesday, raising hopes that party leaders may finally have come to terms on a national unity government as the nation hurtles toward an economic and political precipice.
Greeks and the nation's international lenders have watched in growing horror for three days as party leaders feuded over a shrinking list of credible candidates to lead a coalition after Papandreou said he would step down.
Papandreou will meet President Karolos Papoulias at 1500 GMT, the president's office said, and state television reported negotiations had been completed on the formation of a "100 day" coalition to govern until early elections in February.
However, earlier optimistic reports have proved premature as the socialist and conservative parties bickered over who should take the poisoned chalice and lead a government that will impose yet more crippling austerity on an angry electorate.
With Greeks and the European Union clamoring for an end to the game of political cat and mouse, the central bank governor made a rare intervention to say a new coalition was imperative for securing a 130 billion euro bailout.
"Political uncertainty has added to the stress facing the economy and the banking system," Bank of Greece Governor George Provopoulos said in a statement. "Any delay in forming a new government threatens to damage further the country's credibility."
Three days after agreeing in principle on the unity coalition, the major parties had yet to name a new prime minister, despite repeated promises of an imminent deal.
The country will run out of money next month unless party leaders can form a government which will come to terms with the EU and IMF, Greece's last remaining lenders.
"This is a disgrace to our political system," said Dora Bakoyanni, who leads the small centrist Democratic Alliance. "The two major parties are leading the country toward disaster... We won't be able to look our children in the eye."
PUTTING FAITH IN PAPADEMOS
Greeks and the country's international lenders had put their faith in a plan for Lucas Papademos, a former vice-president of the European Central Bank, to head the new government as a technocrat and give it credibility politicians lost long ago.
But that idea stalled in the small hours, apparently over politicians' refusal to let Papademos pick his own team for tackling Greece's overwhelming debt and budget problems.
"The Papademos candidacy has hit problems that have to do with both parties," one party source told Reuters on condition of anonymity.
With the clock ticking, the stakes could not be higher.
Greece must have a new coalition to secure the bailout, negotiate the release of emergency funds from the EU and IMF to avoid bankruptcy when big debt repayments come due in December and safeguard its place in the euro zone.
For its part, the European Union needs to put out the fire in Greece to prove to international financial markets that it can tackle another blaze in Italy, a far bigger economy also in economic and political crisis.
In the latest sign of concern among EU leaders, Papandreou briefed French President Nicolas Sarkozy by phone on the negotiations for a new government, Papandreou's office said.
A FROSTY RECEPTION
Sarkozy gave Papandreou a frosty reception at a summit in Cannes last week, and has openly said it is up to Greece to show it deserves to stay in the common currency bloc.
Papandreou appears to have been working through a list of Greeks who occupy, or used to occupy, international posts in the search for a technocrat to lead the "100 day coalition" which will govern until early elections in February.
European Ombudsman Nikiforos Diamandouros, who handles complaints against EU institutions in Strasbourg, confirmed on Monday he had been sounded out, but declined to say who had made the approach or what his conditions would be for accepting it.
Greek media also suggested the country's representative at the IMF, Panagiotis Roumeliotis, before moving on to Vassilios Skouris, the president of the European Court of Justice.
With a technocrat so hard to find, the political class also looked to its own ranks. Greek media mentioned parliamentary speaker Filippos Petsalnikos as a possible candidate.
Veteran socialist lawmaker Apostolos Kaklamanis, 74, said he had discussed taking the job with the leaders but said no deal had been done.
In the early hours of Wednesday, a government official confidently announced the coalition government would be announced later in the day and that Papandreou would meet the president by 1000 GMT. That time came and went without any meeting although the meeting is now due later in the day.
Party sources said Papandreou's PASOK had been hunting for a technocrat, while the conservative New Democracy kept proposing socialists -- wanting them to impose the unpopular austerity policies ordered by the EU and IMF to ensure that they carry blame when Greeks vote in February.
"The political leaders are orbiting in the astrological sign of paranoia ... I feel sorry for Greece," George Karatzaferis, who leads the far-right LAOS party leader, told reporters.
FIND A SOLUTION!
The pro-government daily Ethnos summed up the exasperation felt by Greeks with a banner headline: "Find a solution!"
Adding to the confusion, conservative leader Antonis Samaras became embroiled in a dispute within his New Democracy party and a related row with the European Union.
Party political sources said some New Democracy lawmakers were accusing Samaras of giving away too much, especially when he agreed to accept austerity measures in the bailout package.
Samaras had long argued that the spending cuts, tax rises and job losses imposed by the outgoing socialist government had deepened Greece's crippling recession, now in its fourth year.
A New Democracy party source said there were internal divisions since Samaras staged a U-turn on the package last week, opening the way for Sunday's agreement in principle to back a new government that would carry out the reforms.
"Parts of New Democracy are causing trouble. Many party officials around Samaras don't like the way things are going," the source said on condition of anonymity.
Under pressure from party dissidents, Samaras attacked the EU for demanding written undertakings from Greece that it would stand by its promises to implement the bailout package that euro zone leaders agreed last month.
(Additional reporting by Daphne Papadopoulou; Writing by David Stamp)
Source: http://us.rd.yahoo.com/dailynews/rss/world/*http%3A//news.yahoo.com/s/nm/20111109/wl_nm/us_greece
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