'Progress' in Greek government talks as EU heat mounts

Greece's two main political parties have made progress on naming a new premier and crisis government, an official spokesman said Monday, as international pressure rose for a deal to avert bankruptcy. "Today's communication between Prime Minister George Papandreou and the head of the opposition Antonis Samaras were carried out and there was positive convergence on the new premier," government spokesman Elias Mossialos said in a statement. State TV Net had earlier reported that a deal had been made. Greek media said the man slated to be offered the helm in a transition government, former European Central Bank vice-president Lucas Papademos, 64, had set a number of conditions before he would agree to the challenge. State TV NET said the Harvard economics professor was seeking to extend the new government's term to beyond February 19, a date tentatively set for early elections after a first round of crunch political talks on Sunday between the ruling socialist party and the main opposition conservatives. "From what I can tell, the two main parties are trying to form a government where they can dictate things to the prime minister," former conservative finance minister Stefanos Manos told the channel. "In my opinion this is a recipe for failure," Manos said. Papademos, who flew back to Greece from the United States earlie in the day, is also reportedly asking for members of the conservative New Democracy party to join the new cabinet, a prospect so far dismissed by its leader Samaras, whose party leads the polls and wants to avoid damage ahead of elections. There was speculation on two fall-back candidates: 69-year-old European ombudsman Nikiforos Diamantouros and Greece's IMF delegate Panagiotis Roumeliotis, a 64-year-old former finance minister. Diamantouros told Kathimerini daily he had not been made an offer. An agreement "will take time, it's not easy," deputy government spokesman Angelos Tolkas told AFP, adding that the talks "will continue until tomorrow if necessary. Greece has little time left to activate an EU bailout deal agreed in Brussels last month by outgoing Prime Minister Papandreou that most Greeks see as a mixed blessing. Adding to the urgency, the United States said Monday it welcomed consensus in Greece but said the next government in Athens should swiftly act on fulfilling conditions of the EU bailout. "We welcome the consensus that has been reached in Greece," said White House spokesman Jay Carney, saying the incoming government should take steps to live up to commitments on the rescue plan "as quickly as possible." A spokesman for Economic and Monetary Affairs Commissioner Olli Rehn had also demanded earlier that Athens sort out its domestic chaos before it can expect any more European cash. "First we need clarity about political and economic developments in Athens, then we will proceed with this discussion today," Amadeu Altafaj told a news conference. And German Finance Minister Wolfgang Schaeuble insisted Monday that Greece needed to stick to its bailout plan obligations regardless of its domestic turmoil. "Whatever will happen, Greece has to stick to what has been agreed. With a new government, with an old government, with new elections or a referendum or not," Schaeuble told a seminar in Finland. The drama in Athens played out as eurozone finance ministers met in Brussels to discuss the disbursement of an eight-billion-euro slice of aid from an earlier bailout package in 2010 that Athens needs by December 15 to pay the bills. As a result of the meeting, the eurozone has asked Greece's coalition partners to co-sign commitments in exchange for international rescue funding. "We asked the new Greek authorities to send a letter, co-signed by the two parties of the incoming government" to reaffirm Greece's commitment to demands for financial reform under the terms of an EU-IMF rescue, Luxembourg premier Jean-Claude Juncker said. The EU baiout deal hammered out late last month would give Greece 100 billion euros in eurozone loans, a further 100 billion in debt reduction, with banks accepting losses on their Greek bond holdings, and 30 billion in government guarantees. The bailout is designed to lighten the country's crushing debt load by nearly a third but is also understood to entail continued cutbacks after two years of painful austerity sacrifices. The incoming team would also face pressing deadlines and only has enough money to last through to mid-December. According to the finance ministry, it must draft a 2012 budget in two weeks and push it through parliament by the end of December. Athens also needs to negotiate with its European peers on unlocking 30 billion euros ($41 billion) by early January to recapitalise Greek banks, and secure a 20 billion euro loan tranche before the end of February. The debt-wracked country is under intense international pressure as it teeters on the brink of bankruptcy. Leaders of the world's top 20 economic powers Friday pushed Europe into acting to stop Italy following Greece into a debt crisis, but the G20 summit failed to come up with new funds to boost the IMF war chest. Sunday's drama capped a frantic week that began with Papandreou's shock announcement that Greece would hold a referendum on the EU deal which aims to slash the country's debt by almost a third. The move stunned fellow European leaders, sent global markets into a tailspin and earned the socialist premier a humiliating dressing-down ahead of the G20 summit