Greek politicians form government

City A.M. Reporter
Greek politicians today agreed a coalition government intent on renegotiating the terms of an international bailout that is staving off bankruptcy but fuelling social tensions.

The government brings together the conservative New Democracy party and Socialist PASOK in an uneasy alliance of rivals facing an emboldened opposition determined to fight against austerity.

Party leaders said a team would be formed to renegotiate the terms of the €130bn (£104bn) bailout, setting up a showdown with Greece's European partners who say they will adjust but not re-write the document.

"Our efforts have yielded a parliamentary majority to form a durable government which will bring hope and stability," New Democracy leader Antonis Samaras told President Karolos Papoulias, three days after he narrowly won a Sunday election.

PASOK leader Evangelos Venizelos warned of a "big battle" in Brussels to craft a new deal that would promote growth and contain unemployment.

"The most critical issue is the formation of the national negotiation team and ensuring that it is successful," he told reporters.

PASOK will back the government in parliament but there was no word on who would serve in the new cabinet. Venizelos said the make-up of the government remained to be fixed and would be discussed tonight.