Greek Prime Minister George Papandreou said Saturday he will do what it takes to form a coalition government and push through a controversial international bailout package.

He met the country’s president Saturday to ask permission to form a coalition, hours after winning a vote of confidence by a narrow margin.

The vote gives his country’s stricken economy some breathing room — and may reassure international markets sent into a tailspin by this week’s political turmoil in Greece — but many questions remain unanswered.

The 153-145 confidence vote victory came minutes after Papandreou announced that he would seek a coalition government, but it was not immediately clear who would lead it.

Reports have named current Finance Minister Evangelos Venizelos as a possible successor as caretaker prime minister.

Venizelos said Friday night he wanted to see a temporary three-month government that would push through all the necessary legislation through February. Elections would be likely to follow.

Speaking briefly after his meeting with President Karolos Papoulias, Papandreou said he would take the necessary actions to form a wider cooperation government.

He said implementing a controversial bailout package agreed October 26 was a priority, to ensure Greece stayed in the euro, the single currency used by the 17 nations in the euro zone.

European leaders warned this week that although they wanted Greece to stay in the euro, they considered saving the currency more important, amid fears that the Greek crisis could spread to other European countries and beyond.

In forming Greece’s new government, Papandreou’s Socialist PASOK party is likely to seek the support of a number of smaller parties, on either the left or the right, after the main opposition leader Antonis Samaras made it clear he did not want to be part of a coalition.

Samaras has called for a transitional government for six weeks, followed by elections.

Papandreou argued it would be disastrous if elections were to be held immediately, because that would leave the latest bailout deal “up in the air.”

The deal would wipe out 100 billion euros in Greek debt, half of what it owes. It comes with a promise of 30 billion euros from the public sector to help pay off some of the remaining debts, making the whole deal worth 130 billion euros (U.S. $178 billion).

But the package comes with strings that would require Greece to slash government jobs, privatize some businesses and reduce pensions.

Saturday’s narrow victory is expected to mean that Greece will get its next tranche of money from a separate international agreement brokered in May 2010, allowing it to pay its bills next month and avoid immediate default.

That $8 billion euro payment had been threatened when Papandreou announced earlier this week that he would take the bailout package to the Greek people through a national referendum, a move he retracted Thursday.

He came under enormous pressure from international leaders, many of whom were meeting for the G-20 summit in Cannes, France, to act to restore stability in Greece.

Though Greece ranks 32nd in terms of gross domestic product, experts say it wields a disproportionate influence on world markets; economists fret that a Greek default could drag down larger European economies, in particular those of Italy and Spain, as well as struggling Portugal and Ireland.

As many as 100,000 demonstrators are expected to turn out in Rome later to voice their opposition to the government of Italian Prime Minister Silvio Berlusconi.

Berlusconi said Friday that Italy had agreed to let the International Monetary Fund “certify” its reform program, a step designed to boost investor confidence.

But he faces a vote of confidence perhaps as soon as next week, amid criticism of his handling of Italy’s economy — and analysts say he may no longer have the support of a majority in parliament.

Italy’s President Giorgio Napolitano has warned of a “grave crisis of credibility” in the international community regarding Italy’s commitment to reform and said proposals agreed to in Brussels last month must be implemented.

A crucial vote on budget reform measures is expected in Rome Tuesday.

Although Italy’s finances are in much better shape than those of Greece, it has a huge pile of debt and borrowing costs for the Italian government rose to a euro-area high of 6.43% Friday.

During the hours of debate ahead of the confidence vote in Athens, Papandreou reiterated an appeal for approval of the international bailout package that the country has been offered, calling it “a huge chance, and perhaps the last one, to rebuild a country with new and strong foundations.”

Papandreou insisted that he has no great desire to maintain his grip on power.

“The last thing I care for is the chair,” he said. “I don’t care if I never get elected again.”

He defended his leadership, accusing previous governments of miring the Greek economy in debt. “Those days, you could borrow money easily, and now that’s why the Greek people have to pay back for it,” he said.

Papandreou said he now wanted “to turn the page over and move forward.”

Under a motion of confidence, lawmakers signal to the head of state whether the government has the support of parliament. A loss typically results in the government’s dissolution and the holding of a general election unless the head of state asks someone with more support to form a government.

“It’s not over,” said Heather Conley, director of the Center for Strategic International Studies’ Europe Program, about the Greek crisis. “We’re buying time in nearly daily increments. It doesn’t change the fact that this is a fourth year of a Greek recession, and they have missed nearly all their austerity targets.”

The real solution would be to redefine the euro zone and the European Union, creating a transfer of wealth from north to south, she said, adding “That’s not going to happen.”

Meanwhile, the country is pursuing two strategies — trying to buy time to fix its economy and trying to prevent contagion.

U.S. President Barack Obama told the G-20 summit Friday he was confident that Europe could meet the challenge presented by the troubled global economy.

“Make no mistake, there is more hard work ahead and more difficult changes to make but our European partners have laid a foundation on which to build,” Obama said.

read more articles