Chaotic start for Greek government after shock resignation

(ATHENS) - Greece's newly-elected government has got off to a chaotic start overshadowed by health troubles, as money to pay salaries and pensions runs down and just days to go before a key European Union summit.

Prime Minister Antonis Samaras, who narrowly won a June 17 general election with a promise to keep Greece in the euro, is recovering at home until next week following an eye operation and will not be able to attend the summit.

His original nominee for finance minister, bank chief Vassilis Rapanos, added to uncertainty by turning down the post on Monday due to poor health and amid what Greek newspapers said were signs of infighting over cabinet appointments.

The new nominee is Yannis Stournaras, a 55-year-old economics professor who has proposed using state property as collateral for new bonds to raise more than 100 billion euros ($125 billion) and is known for his candour.

Government spokesman Simos Kedikoglou told Ant1 television that Greece would offer "an initial outline of its positions" on revising the hugely unpopular austerity conditions of an EU-IMF bailout deal that is critical for the economy.

The spokesman said Samaras would lead meaningful negotiations on the bailout during a tour of European capitals after he makes a full recovery, with analysts expecting a showdown with European leaders reluctant to make concessions.

"We hope it will be a positive summit, not only for Greece but also for the rest of the European south and the entire world," President Carolos Papoulias, who is taking Samaras's place at the EU meeting, said on Tuesday.

A visit by EU and International Monetary Fund auditors that could unlock some of the desperately-needed international loan money and serve as a basis for renegotiation of the bailout has meanwhile been delayed indefinitely.

Greek officials have warned that under current conditions there are only enough reserves to pay public sector salaries and pensions until late July.

The government -- an unlikely coalition led by Samaras's conservative New Democracy party with socialists and moderate leftists as junior partners -- has not even been officially confirmed with a vote of confidence in parliament.

The vote is now expected to be held on Monday next week at the earliest.

"People are waiting for Samaras to move quickly and seriously, hopefully next week. We have a very short period to prove ourselves. Two weeks, no more," said Kostas Panagopoulos, chief executive of the Alco polling agency in Athens.

Manolis Alexakis, an assistant professor in political sociology at the University of Crete, said he was pessimistic about the new government's chances because of rivalries within the coalition.

"They haven't really started yet," said Alexakis, adding: "This kind of government cannot be successful because of its ingredients. The other coalition partners will try to capitalise on any losses or failures by the government."

The Pasok and Democratic Left parties have offered to support the coalition in parliament but have not included any of their lawmakers in the line-up.

The liberal Kathimerini daily also highlighted the inherent weakness of the new coalition in an editorial saying the government was already "in danger".

"These are historic times and mistakes and improvisation are unacceptable," it said, adding that the bailout revision plan was "unrealistic".

In its first policy announcement, the government on Saturday said it wanted a two-year extension of a deficit deadline to 2016 instead of 2014 -- a move that could require up to 20 billion euros ($25 billion) more in bailout money.

It also wants to freeze public sector layoffs and review minimum wage cuts.

Political analyst George Sefertzis said the announcement was "a risky tactic for negotiations" but a necessary one to placate public anger against austerity.

The coalition's fragility "raises questions about its capacity to face the situation and resist a failure in the bailout deal renegotiation," he said.

European leaders including paymaster Germany have urged the new government to respect Greece's commitment but say a limited time extension could be possible.

Some analysts have warned that Greece may eventually be forced to leave the eurozone because of the financial pressures, even under a Samaras government.

And failure to ease unpopular austerity could trigger a new wave of protests.