Petros Giannakouris, Associated Press
ATHENS, Greece — Greece's prime minister is due to announce a broad cabinet reshuffle Thursday and seek a Parliamentary confidence vote in his new government as he struggles to push through an unpopular but critical new austerity package.
George Papandreou's reshuffle comes a day after talks with opposition parties over forming a coalition government collapsed and a major anti-austerity rally by tens of thousands in central Athens degenerated into riots.
A confidence vote is expected Sunday.
Papandreou has been struggling to contain an internal party revolt over the new five-year austerity package that is the main condition for continued funding from a €110 billion ($155 billion) international bailout. Without continued funding from the rescue loans, Greece will default on its massive debts, which would have widespread ramifications for the global economy as well as the eurozone.
Although Papandreou has not indicated publicly what his new government will look like, the reshuffle is expected to be sweeping. Key figures, including the finance minister, George Papaconstantinou, could be replaced.
Papaconstantinou has drawn the ire of many Greeks, including several governing Socialist party figures, for his handling of the crisis and the massively unpopular tax hikes and spending cuts demanded by the European Union and International Monetary Fund in return for the bailout loans.
EU officials have been pressing for cross-party unity on the new austerity package, which will impose more tax hikes and spending cuts, and runs two years beyond the current government's term to 2015. The bill must be passed in Parliament by the end of this month.
But conservative opposition leader Antonis Samaras has insisted the initial agreement for Greece's bailout must be renegotiated.
The ensuing turmoil in the markets has reflected waning confidence that Papandreou can get the new austerity bill through the 300-seat Parliament, where his majority was trimmed to five Tuesday after one of his deputies rebelled and declared himself an independent. Another deputy has said publicly he will not support the bill.
As clouds of tear gas wafted across central Athens and lawmakers had to be escorted by armed motorcycle guards past protesters into Parliament, Papandreou sought Wednesday to hammer out a deal over forming a coalition government with the opposition. He had been prepared to step down from his post as part of an agreement — and Samaras pressed for Papandreou's resignation. But the talks collapsed, and the prime minister announced he would reshuffle his cabinet instead.
Samaras blasted the prime minister for wasting a "historic opportunity" as opposition leaders across the board called for elections.
Wednesday's mayhem is likely to be viewed with concern in the other European countries that are bailing out Greece. European officials have been wrangling over how to plug a funding gap the country faces next year, and prevent a disastrous default.
Eurozone finance ministers and European leaders are to meet next week in Luxembourg and Brussels, with Greece expected to take up a large portion of the talks.
Wednesday's political maneuvering and violence on the streets of the Greek capital triggered a sell-off in global financial markets as investors worried that a default in Greece could hurt banks in other countries in a chain reaction experts predicted would be catastrophic. Yields on the country's 10-year bonds hit a new record high Wednesday of 18.4 percent.
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