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Greece parties look to seal coalition Greece parties look to seal coalition
(about 4 hours later)
Talks on the formation of a government in Greece are entering a second day, amid intense pressure from world powers and financial markets. Talks on the formation of a coalition government in Greece have gone into a second day, amid intense pressure from world powers and financial markets.
New Democracy, the largest party after Sunday's election, says it has a deal with third-placed Pasok. New Democracy, the centre-right party which won Sunday's election, is seeking an alliance with the socialist Pasok party and the smaller Democratic Left.
However both would prefer more partners to create a stronger government. All three parties have said the new government should take office quickly.
Its first priority would be the bailout agreement reached with the EU and IMF, which all Greek political parties want to be renegotiated in some form. They also favour keeping Greece in the euro, but want to renegotiate the terms of its bailouts by the EU and IMF.
The New Democracy conservatives said on Monday they had an initial deal with the socialists Pasok, after New Democracy's leader Antonis Samaras held a day of meetings and called for a government of "national consensus". However, European leaders have indicated that there is limited room for manoeuvre and are expecting details on how the new government intends to make another 11.7bn euros (£9.4bn; $14.7bn) of cuts by 2014.
One senior New Democracy official told Reuters news agency an announcement was expected soon, involving Pasok and possibly another, smaller leftist party. 'Optimistic'
"We are going to clinch a deal tomorrow [Tuesday], we will form a government," the official said. "Pasok will participate more than symbolically... They will participate actively." New Democracy won 129 seats in Greece's 300-seat parliament on Sunday, followed by the radical anti-bailout party, Syriza, with 71, Pasok with 33 and the Democratic Left with 17.
'Torturous reality' On Tuesday, Pasok leader Evangelos Venizelos held talks on joining a coalition government with his Democratic Left counterpart, Fotis Kouvelis.
The BBC's Chris Morris in Athens says the parties involved say they want a government as quickly as possible but they are haggling and want to get the conditions right. Afterwards, Mr Venizelos told reporters he was "optimistic".
He says they want as many parties in as possible, but with more parties come more conditions. "Greece must and will have a government as soon as possible," he said. "I am confident after my meeting with Mr Kouvelis that our views are very close."
Then the question will come, our correspondent says, of just how strong the coalition will be, as there will be a lot of pressure on it from both inside and outside parliament. But Mr Kouvelis was more cautious, saying the three parties would first have to agree on the coalition's policies and the division of cabinet posts.
Pasok has maintained it wants the party that finished second in the election, the anti-austerity Syriza, to be part of the government, but Syriza leader Alexis Tsipras has ruled this out. "There will be a government, but I don't know if it will be formed by tonight. I believe we will have reached an agreement by the end of the week.
The moderate Democratic Left party has indicated it may give conditional support to a Samaras-led government. "There are still some outstanding issues regarding the programme of the government and the terms [of the bailout] from which Greece must disengage," Mr Kouvelis added.
The election saw New Democracy take 129 seats in the 300-seat assembly, with Syriza on 71, Pasok on 33 and the Democratic Left on 17. New Democracy leader Antonis Samaras's three-day mandate to form a government from President Karolos Papoulias expires on Wednesday. If it fails, Syriza would be given a chance, followed by Pasok.
But the leader of Syriza, Alexis Tsipras, has said he will not even attempt to do so. He has also refused to join a government led by New Democracy.
'Huge hardships'
World powers have urged Greece to move swiftly to form a government.World powers have urged Greece to move swiftly to form a government.
On Monday, markets initially reacted positively to the election result but that quickly waned. On Monday, markets initially reacted positively to the election result, but that quickly waned.
All the parties in the election wanted a renegotiation of the bailout terms, but differed on the extent.All the parties in the election wanted a renegotiation of the bailout terms, but differed on the extent.
Mr Samaras says he will honour the agreements Greece made earlier, but wants an easing of the terms of the bailout, "so the Greek people can escape from today's torturous reality". Mr Samaras said late on Monday: "We will simultaneously have to make some necessary amendments to the bailout agreement, in order to relieve the people of crippling unemployment and huge hardships."
The senior New Democracy official told Reuters there would be a quickening of a privatisation programme but that it would prefer a scheduled 11.7bn euros ($14.7bn) of austerity cuts to be spread over four years, not two. A senior New Democracy official told Reuters news agency it would support a quickening of the government's privatisation programme, but that it would prefer the scheduled 11.7bn euros of austerity cuts to be spread over four years, not two.
Germany has indicated there will be few concessions on the terms.Germany has indicated there will be few concessions on the terms.
German Chancellor Angela Merkel warned: "Elections cannot call into question the commitments Greece made. We cannot compromise on the reform steps we agreed."German Chancellor Angela Merkel warned: "Elections cannot call into question the commitments Greece made. We cannot compromise on the reform steps we agreed."
However, the US said it might support a review of the terms.However, the US said it might support a review of the terms.
US Treasury Under Secretary for International Affairs Lael Brainard said: "We can expect to see on the part of the European partners and the IMF recognition that Greece's programme has gone off track for some period of time, in part because they had a protracted political process and have not had a government." US Treasury Under-secretary for International Affairs Lael Brainard said: "We can expect to see on the part of the European partners and the IMF recognition that Greece's programme has gone off track for some period of time, in part because they had a protracted political process and have not had a government."
Two international bailouts have been awarded to Greece, an initial package worth 110bn euros (£89bn; $138bn) in 2010, then a follow-up last year worth 130bn euros, but they come with tough austerity measures attached. Two international bailouts have been awarded to Greece, an initial package worth 110bn euros (£89bn; $138bn) in 2010, then a follow-up last year worth 130bn (£105bn; $164bn) euros, but they come with tough austerity measures attached.
Greece has also had 107bn euros (£86bn; $135bn) of debt, held by private investors, written off.