Greek Prime Minister George Papandreou announced Sunday evening that he would step down halfway through his four-year term if the 130 million euro bailout plan is passed. Papandreou came to the decision after an evening meeting with Antonis Samaras, who leads the opposing New Democracy party to Papandreou’s PASOK party.
The proposed euro bailout deal would consist of rescue loans and support for banks, with the goal of allowing Greece to decrease its debts so it can independently manage its financial situation without the helping hand of further bailouts. The bailout also grants banks and private investors the ability to write off half of their Greek debt holdings.
In addition, Greece’s political parties came to an agreement that they would form a new national unity government. According to MarketWatch, Papandreou reportedly said, “I will do whatever I can to help form a coalition government. The Oct. 26 decisions and obligations stemming from this are a condition for the country remaining in the euro.”
In one of his most controversial decisions that sent repercussions throughout the European economy, Papandreou denied a previous call for a referendum on Greece’s most recent bailout package. In response, European leaders had to halt the release of aid that had been previously approved, raising investor fears in an already turbulent European market.
Papandreou’s announcement will put immense pressure on political leaders to come to a decision on the bailout. If political turmoil persists and prevents the EU and IMF from granting loans, Greece could potentially default on its 360 billion euro ($465 billion) debt.
Papandreou and Samaras will meet again on Monday to decide who will succeed Papandreou and who will make up the new Cabinet.