Consultations for new Greek coalition government to begin Monday

Consultations for a new Greek coalition government are expected to begin on Monday, following an agreement reached by Prime Minister George Papandreou and main opposition leader Antonis Samaras earlier on Sunday, as Greece faces increasing agony to escape a possible default that threatens to destabilize the world economy. According to an official statement by the Office of the President of the Greek Republic Karolos Papoulias, who hosted the meeting between the two leaders, Papandreou will leave his post and a new Prime Minister will be named on Monday. Papandreou and Samaras are expected to meet again on Monday to discuss further details on the new government, which will lead Greece to national elections after the implementation of an October 26 EU plan to rescue Greece. It is still unclear whether the new coalition government will be made up of technocrats, as demanded by New Democracy party leader Samaras, or political figures. The Communist Party of Greece and the Coalition of the Radical Left (SYRIZA) announced that they will not participate in the new coalition government, nor in the relevant consultations. Other parties represented in the Greek parliament have welcomed the agreement, but have not clarified if they would join the new government. The agreement between Papandreou and Samaras came after a two-days long political crisis and continuous speculation on Papandreou' s real intentions following a confidence vote he won by 153/145 votes on Friday. The crisis broke out as a result of European Union leaders' rejection of Papandreou' s plan to hold a referendum on the EU rescue plan. The plan imposes tough austerity measures on the Greek government and runs into strong opposition from the Greek public. European leaders feared the plan could be rejected by the Greek voters in a referendum and threatened to kick Greece out of the Eurozone if Papandreou didn't back off. The referendum was cancelled on Thursday following angry reactions of Greece' s European partners. Since May 2010 Greece relies heavily on an EU/International Monetary Fund aid package worth billions of euros to overcome the severe debt crisis. Under the fresh EU plan, Greece will receive additional aid combined with a 50 percent "haircut" of the Greek debt with the voluntary participation of private holders of Greek bonds to make the burden on the country sustainable. The agreement must be ratified by the Greek parliament in the coming weeks, along with the 2012 budget, before Greece will receive any more aid from international creditors.