Deputy PM airs idea of coalition

Ahead of a crucial few days for Greece, speculation about PASOK inviting New Democracy to join the government gathered pace on Friday just about as fast as rumors that the country is on the brink of default.

Deputy Prime Minister Theodoros Pangalos took a significant step in opening up the debate about whether PASOK should bring other parties into government to give the austerity program greater legitimacy.

Some Socialist MPs have suggested this week that their party should seek to form a coalition with New Democracy amid fears that PASOK will be irreparably damaged if it continues to carry sole responsibility for unpopular measures.

Pangalos ruled out the option of snap elections, which is another scenario that has been debated, but said that a coalition could provide the answer to Greece?s political and economic impasse.

?In conditions of crisis, I see a solution in the rallying together of more political forces around the achievement of a single aim,? he told Athina 984 radio. ?If this were possible with New Democracy, I would welcome it.?

Prime Minister George Papandreou ruled out working with the conservatives following a failed attempt in the summer to form a coalition government. Pangalos said that any new move to extend a hand to ND would have to have support within the party. ?I am not the party?s leader and the elected bodies must also have their say, as will those of New Democracy.?

The likelihood of the two parties working together seems slim. ND leader Antonis Samaras said Friday that if elected to power, he would scrap the government?s phasing out of some civil servants by placing them in a labor reserve. ?We will apply the policy that we have already announced. We will not consider them as having been fired,? he said.

Meanwhile, there was a fresh round of speculation Friday about a possible Greek default. European Central Bank governing council member Klaas Knot told a Dutch daily that the possibility could no longer be ruled out. He is the first ECB policymaker to speak openly of the prospect.

?It is one of the scenarios,? Dutch daily Het Financieele Dagblad quoted him as saying. ?All efforts are aimed at preventing this, but I am now less certain in excluding a bankruptcy than I was a few months ago.?

There was no official statement from Finance Minister Evangelos Venizelos, who flew to Washington to attend weekend meetings of the International Monetary Fund and the World Bank.

However, Papandreou?s office put out a brief statement after the premier met with PASOK MPs, which quoted him as rejecting the possibility of a default. ?Because many things are being said and written, concerning scenarios, I stress one more time that we have chosen to implement the July 21 deal [agreed with eurozone members],? he said.