Papademos in lead to be next Greek prime minister

City A.M. Reporter
A former deputy head of the European Central Bank has emerged as frontrunner to become Greek prime minister, as party leaders bargained over who will lead a "100 day coalition" to push through a bailout before the nation runs out of money.

Under EU pressure, an unaccustomed spirit of compromise seeped into Greek politics as the top parties haggled over the jobs in a government which will run Greece only until early elections in February.

A source at the opposition conservatives said nothing had been agreed yet with the ruling socialists on who should lead the government of national unity, and refused to comment on speculation that former ECB vice president Lucas Papademos would get the job.

However, the opposition source told Reuters that his New Democracy party accepted that socialist Finance Minister Evangelos Venizelos could stay in his job at a time of national crisis.

"The economic ministries, including finance minister Venizelos and his team, should stay for the sake of continuity," said the source, giving the first indication of who will occupy any of the cabinet posts.

New Democracy would also vote for the 2012 budget and back a bond swap plan contained in the bailout package, under which the value of banks' holdings of Greek government debt will be halved.

Whoever leads the transitional government of national unity will have a monumental task in restoring order to a country whose chaotic economy and politics are shaking international faith in the entire euro project.

European Union leaders want Greece to form the coalition quickly and push the €130bn bailout through parliament, for the sake of a nearly bankrupt nation and to shore up confidence in the Eurozone.

Despite the sealed lips on both sides, Papademos remained a possible frontrunner for premier. An aide said the Greek economist, who left the ECB last year, had arrived in Athens from the US where he is a Harvard academic.