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Eurogroup president Jean-Claude Juncker offers his arm to Greek Finance Minister Evangelos Venizelos at the EU headquarters in Brussels on Monday. (Georges Gobet/AFP/Getty Images)
Eurogroup president Jean-Claude Juncker offers his arm to Greek Finance Minister Evangelos Venizelos at the EU headquarters in Brussels on Monday. (Georges Gobet/AFP/Getty Images)

Greek leaders struggle to form new government Add to ...

The Greek financial tragedy descended into farce on Monday, as the country’s leaders made an unconvincing effort to show the world that they had set aside their squabbles and formed a new coalition government that will move ahead with bailout plans.

The country’s financial backers are withholding $11-billion in rescue funds, waiting to see whether new leadership emerges from the political chaos. Greece needs to get the money before the government runs short of cash on Dec. 15 and is working hard to give an impression of stability.

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Evangelos Venizelos, the Greek Minister of Finance, threw his arms around Eurogroup president Jean-Claude Juncker in a bear hug at a meeting of finance ministers in Brussels on Monday, and issued a bold statement saying that Greek political parties had united under a single banner.

“After a difficult week, we now have a new political situation, a new political frame in Greece,” Mr. Venizelos said. “We have a new government of national unity and national responsibility. This is the proof of our commitment and our national capacity to implement the program and reconstruct the country.”

The optimistic tone of his comments was later echoed by White House spokesman Jay Carney.

“We welcome the consensus that has been reached in Greece over the need to implement the country’s reforms,” Mr. Carney told reporters.

Those comments became the subject of widespread amusement in Athens, where nobody could see much evidence of consensus, or a new government.

Three days of intense talks have so far failed to name a new prime minister who would be acceptable to the governing party and the main opposition group.

Chatter among Greek journalists suggested that some candidates for the job were not thrilled at the prospect of taking responsibility for an interim government given the task of making deeply unpopular economic reforms. One leading contender, Lucas Papademos, former vice-president of the European Central Bank, reportedly flew into Athens to discuss his candidacy but could not reach agreement with party leaders about how many months the transitional administration would serve, and whether he would be allowed to name his own cabinet.

Bob Traa, senior representative for the International Monetary Fund in Athens, told The Globe and Mail that it’s too early to talk about releasing the $11-billion.

“Greece is still forming a new government, and Washington has not provided any further news on this,” Mr. Traa said. “Until such events happen, we are not in a position to comment.”

Some observers had hoped that a new government might be finalized on Friday, after several steps required by the Greek constitution, but that goal would have required agreement on a new prime minister on Monday.

As the clock ticked toward midnight, however, the parties appeared to be drifting further away from an agreement. After initially agreeing to join a coalition government that would implement the bailout reforms, the main opposition New Democracy party leader circulated a note among his parliamentarians that set out a strictly limited vision of the interim administration.

“We will not back any coalition government, we are backing transition,” the statement said. The New Democracy party also committed itself to a transition period of no more than 100 days, followed by elections that could “change everything.”

Perhaps concerned that “everything” may include commitments to reform, Mr. Juncker told reporters on Monday evening that he wants a co-signed letter from the two main political parties in Greece – socialist PASOK party and conservative New Democracy –affirming their intention to uphold their end of the bailout deal.

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