I’m staying, Greek PM vows as crisis mounts

Greek prime minister George Papandreou has vowed to stay on and fight to pull his country out of a crippling debt crisis, facing down a revolt from within his governing Socialists over new austerity measures.

Greece has been gripped by a major political crisis over a new five-year package of austerity measures demanded by creditors.

The political turmoil reached such a level yesterday that it spooked markets and forced a top European Union official to say Athens would receive enough rescue loans to avoid a summer default.

Talks to form a Greek coalition government with rival Conservatives collapsed on Wednesday, and the country’s political crisis deepened yesterday as Mr Papandreou saw two of his Socialist lawmakers resign.

“We will prevail and we will hold on. We have as a country in the past successfully faced major crises. As hard at this struggle is, we cannot run away from our fight,” Mr Papandreou told party lawmakers in an emergency meeting in parliament.

“We will fight and we will win, for Greece, its people and the future of the new generations.”

The prime minister said he would keep seeking a consensus with the opposition over the financial reforms that creditors have demanded as part of an international bailout.

“I will serve and continue to serve the effort for broader consensus and we hope that this effort ultimately is successful,” he said. “But I have learned to battle on my own.”

He also admitted his government had displayed “mistakes and weaknesses,” but promised a new, stronger Cabinet in a reshuffle expected to be announced later.

Mr Papandreou also repeated criticism of how the Greek debt crisis has been handled within Europe.

“There is a cacophony in the European Union, an unease, difficulties and mistakes – yes, mistakes – in the EU in the way this crisis was handled,” he said.

The Greek prime minister spoke by phone earlier in the day with German Chancellor Angela Merkel to discuss negotiations over the second bail-out for Greece.