New Greek gov’t takes over, former banker at helm

AP – By Elena Becatoros

ATHENS, Greece — Greece’s new technocrat Prime Minister Lucas Papademos assumed power Friday at the helm of an interim coalition government that will seek to push through tough economic reforms and ensure the country avoids a catastrophic default. Papademos, a former European Central Bank vice president, leads a government including ministers from three parties. Although the vast majority of posts are retained by members of outgoing Prime Minister George Papandreou’s Socialists, the bitter rivalry between that party and the conservatives of Antonis Samaras is being at least temporarily set aside as Greece’s politicians struggle to put the country back on track financially and ensure it can retain its cherished position in the eurozone. “The new cooperation government will do the best it can to address the country’s problems, and I believe that with the cooperation of all — and the new government stresses this — and the unity of all, we will achieve that,” Papademos told Papandreou. Finance Minister Evangelos Venizelos retained his post, the conservatives got the key positions of foreign affairs and defense, and ministerial positions also went to members of a small right-wing party with nationalist leanings. “We can all together, under conditions of national unity and social cohesion, overcome the crisis, implement a tough program that requires sacrifices, but that at the end opens up prospects, hope, for the rebuilding of the country and the economy,” Venizelos said. Papademos — who was appointed Thursday after two weeks of political turmoil that infuriated European leaders, horrified Greeks and led to mayhem on international markets — must now ensure his government passes Greece’s latest debt deal: a (euro) 130 billion ($177 billion) agreement reached by the European Union on Oct. 27. It includes provisions for private bondholders to forgive 50 percent, or some (euro) 100 billion, of their Greek debt holdings, details of which the new government will have to negotiate. He also must secure the next (euro) 8 billion installment of the country’s initial (euro) 110 billion eurozone and International Monetary Fund bailout, without which Greece will default in a matter of weeks.

Speaking during the new government’s first cabinet meeting, Venizelos stressed the country must carry out its pledges quickly so the eurozone’s finance ministers can unblock the next installment of cash on Nov. 17.

Greece’s new interim government was welcomed by the leaders of Germany and France, Europe’s two largest economies — as well as the head of the eurozone and the European Commission president, who all stressed the new government must now quickly implement its pledges.

Papademos, who also served a stint as Greece’s central bank governor and oversaw the country’s entry into the euro in 2001-2, must guide the country at a time of deep recession, with unemployment reaching a record 18.4 percent in August and Greeks furious at having to endure repeated rounds of tax hikes and salary and pension cuts. Among the tasks that await him are the suspension of 30,000 civil servants on partial pay and a series of privatizations. His term is expected to last only a few months until early elections, tentatively scheduled for February. Greece has had technocrats — experts in fields such as economics or management as opposed to elected officials — lead short-lived governments in the past, most recently in 1989-1990 when Xenofon Zolotas, an economist and central bank governor, led a coalition government for about four months.