Greek PM Papandreou to Resign After Coalition Government Formed

George Papandreou, the prime minister of financially crippled and politically roiled Greece, announced today that he will resign after the makeup of the nation's new coalition government is decided.

The country’s Cabinet meeting today will be the last with Papandreou as prime minister, and the resignation could come as early as tonight. The meeting is expected to focus on issues related to Monday's Euro group meeting, at which Finance Minister Evangelos Venizelos will represent Greece, a government statement said.

The prime minister, who survived a confidence vote early Saturday, will resign after the government is announced, a spokesman for Papandreou's Socialist PASOK party said.

Papandreou won the critical parliamentary confidence motion 153-145 after a week of drama in Athens that horrified Greece's European partners, spooked global markets and overshadowed the Group of 20 summit in the French resort of Cannes.

The threat of a Greek default or exit from the common euro currency has worsened the continent's debt crisis, which is already struggling under bailouts for Greece, Ireland and Portugal.

The main goal, duration, and leader of a new coalition government must be agreed before Papandreou resigns, PASOK party lawmaker Telemachos Hitiris told Greek state television today.

"We only have to wait for the prime minister's announcements in the Cabinet," he said. "Everything must be done within the day. Otherwise, tomorrow it will be hell."

Papandreou has come under fire at home and abroad for his shortlived plan for a referendum on a euro zone bailout deal. He survived a confidence vote in parliament on Saturday, but lawmakers from his party have called on him to quit.

Hitiris said elections should take place after Greece meets its obligations to euro zone partners, pinning the timing to around January or February.

Venizelos is likely to remain in his post as finance minister in a new government, sources told Greek television, according to a CNN report. Candidates for the prime minister's job include Petros Moliviatis and Loukas Papaimos, according to Greek television.

The new government will have a life of four months, according to Greek television, citing sources, and elections are to take place in early spring.

The coalition government faces the task of saving the nation from bankruptcy.

A Greek default could drag down larger European economies, analysts warn.