Greek government talks to go to fourth day

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Media caption,

Prime Minister George Papandreou: "Our country will be stronger and more secure"

Talks on forming a new Greek government appear to be deadlocked after the smallest party in the coalition talks walked out on the third day.

The office of the Greek president now says the talks will resume on Thursday.

Earlier, outgoing Prime Minister George Papandreou made what was expected to be his farewell address to the nation, pledging that the new government would respect the terms of an EU bailout.

Without the bailout, Greece risks bankruptcy and an exit from the euro.

Under the terms of the deal, Greece must enact further austerity measures in return for a bailout of 130bn euros (£111bn; $178bn) and a write-off of half the Greek debt held by private lenders.

'Strategy games'

On Wednesday afternoon, Mr Papandreou made a televised speech in which he said he wished the new prime minister every success. However, he did not disclose his successor's name.

He then left to meet the president, who was brokering talks between three parties expected to join a new government of national unity - his own centre-left Pasok, New Democracy on the centre-right, and the nationalist Laos party.

But the talks then broke down when Laos walked out.

As he left the presidential palace, Laos leader Giorgios Karantzaferis told reporters it was sad to see that even at this critical moment, there were strategy games taking place between Mr Papandreou and New Democracy head Antonis Samaras.

When asked if there was a deal on a new government, Mr Karantzaferis did not reply.

The BBC's Mark Lowen in Athens says there is now a perilous power vacuum in Greece, which is running out of time to resolve its problems.

Former European Central Bank vice-president Lucas Papademos has set new terms to join the new government, the Reuters news agency reports.

Mr Papademos was an early front-runner to be the next prime minister. However, later reports suggested his candidacy had run into trouble.

Government sources told Reuters he wanted a greater role for New Democracy in the new government, and the possibility that the coalition could go on beyond the provisional date set for early elections, 19 February.

Many contenders

In his address, Mr Papandreou said: "In the next few months, we will do whatever is required, not only to remain in the euro but to take advantage of the benefits of the agreement of 26-27 October [the EU bailout deal]."

He also said the new government would tackle tax evasion and bring greater transparency to the public finances.

A number of other names have been mentioned to succeed Mr Papandreou as prime minister. They include:

  • Parliamentary speaker Philippos Petsalnikos, who is also a former justice minister
  • Vassileios Skouris, president of the European Court of Justice
  • Law professor Ioannis Koukiadis, a former Socialist labour minister, was named by the newspaper Athens News as a possible contender
  • EU ombudsman Nikiforos Diamandouros
  • Panagiotis Roumeliotis, Greece's representative to the International Monetary Fund (IMF)

EU economic affairs commissioner Olli Rehn said he wanted the heads of Greece's two main parties to commit in writing to the terms of the bailouts before Athens could receive the next instalment.

But Mr Samaras balked at the idea, saying he regarded the rescue deal as "inevitable" but saw no need for a written pledge.

Greece needs the next tranche from the first bailout - worth 8bn euros (£6.8bn; $11bn) - to avoid running out of money within weeks.