Former Greek PM Papandreou sets up new party ahead of elections

ATHENS (REUTERS) - Former Greek Prime Minister George Papandreou announced the creation of a new political party on Friday, confirming a long-expected split from the centre-left Pasok and complicating the potential outcome of this month's general election.

Mr Papandreou, the son of one of Greece's most prominent political dynasties, led his country as the euro zone crisis broke before being ousted in 2011 over a botched effort to hold a national referendum on Greece's international bailout.

His new party, dubbed "Movement for Change", has yet to detail its policies but they are expected to be similar to those of Pasok, part of the ruling coalition led by Prime Minister Antonis Samaras' centre-right New Democracy party, which is trailing the anti-bailout Syriza party in polls ahead of the Jan 25 vote.

"It's time for the next big step of the progressive forces in the country," Mr Papandreou said in a post on his Facebook page.

"It's time to build, together, a new political home that will house our progressive values, the values that unite us," he said.

Mr Papandreou's break from Pasok had been expected for some time. Pasok is now a shrivelled remnant of the party which dominated Greek politics for 40 years and is polling at under 5 per cent in the latest surveys.

A split could take it below the 3 per cent threshold needed to enter parliament and there is no guarantee that Mr Papandreou's Movement for Change could get in either.

The leftwing Syriza party, which wants to renegotiate Greece's international bailout deal and write off a large part of its debt holds a narrow lead over New Democracy, polls show.

But neither party may win enough support to govern alone, putting the smaller parties in a key position to decide the next government.

The formal launch of the party will take place on Saturday, Mr Papandreou said.