Political leaders in Greece clinched a historic deal to form a national unity government to haul the debt-wracked country, and the eurozone, back from the brink of disaster.

The Prime Minister, Mr George Papandreou, crucially agreed to step down yesterday, removing a key stumbling block which had held up an accord just hours before nervous financial markets reopen today with the euro in the line of fire.

“An agreement was reached to form a new government to immediately lead the country to elections after ratifying the decisions taken by the European Council,” the Greek president’s office said in a statement.

After a closed-doors meeting between Mr Papandreou, the opposition chief, Mr Antonis Samaras, and head of state, President Carolos Papoulias that lasted almost two hours, the statement was passed around to a waiting reporters from around the world, causing a near-stampede.

“The Prime Minister, Mr George Papandreou, has already stated that he will not lead the new government,” it added.

“Tomorrow there will be a new communication between the prime minister and the head of the opposition on the new prime minister and the new government.”

With patience in Europe and in Greece wearing thin, pressure had mounted throughout the day for an agreement that Mr Papandreou had said was needed to keep Greece in the eurozone.

European leaders had become increasingly frustrated at the political impasse in Athens at a time when they want to press ahead with hard-won agreements reached in late October on tackling the eurozone debt crisis.

Related Topics