After days of uncertainty, Greece looks set to get a new unity government. The country's political parties have been negotiating since Monday over the makeup of the transitional coalition government and seem have found a breakthrough.

"We're done," President Karolos Papoulias told reporters gathered outside the presidential mansion.

Prime Minister George Papandreou is to meet with Papoulias at 5 p.m. local time. A government source told the news agency AFP he would then hand in his mandate.

The country, along with the rest of the world, has been on tenterhooks since it was announced on Sunday that Papandreou would step aside and allow the formation of a unity government to see the passage of a controversial European Union bailout deal through parliament.

The early favorite to replace Papandreou, former European Central Bank deputy head Lucas Papademos, is reportedly out of the running. A number of media reports suggested that his insistence on autonomy from the two large parties had disqualified him.

Names now being tossed around include Vassilos Skouris, the president of the Court of Justice of the European Union, and Filippos Petsalnikos, the parliament speaker.

EU wants action

Papandreou caused chaos last week by calling a referendum on the bailout, a vote which might have seen Greeks rejecting the package because of the austerity measures tied to it. Papandreou backed down, but was forced into agreeing to make way for the unity coalition.

After surviving a vote of confidence in parliament, Papandreou spent the weekend negotiating a plan to install a transition government. He and Antonis Samaras, the head of the opposition party New Democracy, sparred over whether snap elections should be held, with Papandreou refusing to step down until a unity government was in place.

Papandreou and Samaras ultimately agreed to form a 15-week interim government charged with implementing the 130-billion-euro ($179-billion) bailout package. Elections have now been set for February 19.

Bankruptcy looms for the debt-strapped nation if an 8-billion-euro loan installment is not released. Greece's European partners have said they won't hand over the money until it is clear that the country is sticking to the path of austerity that it has agreed to in exchange for the bailouts.

Author: Holly Fox (AP, dpa, Reuters)
Editor: Michael Lawton