Thursday, 10 November 2011

New Greek PM vows to stick with euro

Economist Lucas Papademos will be Greece's next prime minister.
The Washington Post
BERLIN — Economist Lucas Papademos will be Greece's next prime minister, the Greek president's office said Thursday, giving a nonpolitician the job of passing an unpopular bailout plan before elections are held next year.

The selection ended four days of squabbling among the country's bitterly divided political parties over how to structure a unity government. Papademos, 64, and the rest of the government were to be installed Friday. The former vice president of the European Central Bank, an early favorite for the premiership, is widely seen as an able, if uncharismatic, bridge between Greece and its creditors.

The gridlock over naming a successor to Prime Minister George Papandreou shattered any remaining sense that Greece's political parties had united in the interest of helping the country through its economic crisis. It also demonstrated that electoral advantage, along with the costs of embracing the bailout too closely, remains very much on the minds of Greece's politicians, analysts said.

But Papademos assured Greeks and Europeans that he would push through the austerity measures that are a condition of the $177 billion bailout plan announced at the end of October. The country is weeks away from running out of money, officials have said.

Greece's "problems will be solved with unity, understanding and prudence," Papademos said after his selection was announced. He called Greece's membership in the eurozone "a guarantee for monetary stability."

As governor of the Bank of Greece from 1992 until 2002, Papademos helped usher Greece into Europe's common currency in the first place, an achievement that the country's financial crisis has threatened. He earned his bachelor's, master's and doctoral degrees at the Massachusetts Institute of Technology and taught at Columbia University for almost a decade, starting in the mid-1970s.

More recently, he served as an economic adviser to Papandreou and a visiting professor at Harvard's Kennedy School of Government. He had been scheduled to teach a class during the spring semester there called "The Global Financial Crisis: Policy Responses and Challenges."

Papademos "is not the kind of extrovert figure that we've been used to having in Greece," said George Pagoulatos, a professor of politics and economics at the Athens University of Economics and Business.
Pagoulatos said Papademos's aversion to deal-making could be a good thing amid the highly charged process of making painful cuts, although some Greek commentators noted Thursday that the new prime minister's cautious nature would not necessarily inspire the country in a time of crisis.

The most immediate issue facing Greece is securing an $11 billion installment of its original May 2010 bailout package. Finance Minister Evangelos Venizelos said last week that without it, the country's coffers would be empty by Dec. 15.

When Papandreou said last week that he would hold a popular referendum on the bailout plan, shocking Europe and many of his allies, the leaders of Germany and France warned him a "no" vote would spell the end of Greece's membership in the eurozone.

The referendum call cost Papandreou his support. He survived a confidence vote last week, but only after he had pledged to step down upon the formation of a unity government. He was expected to formally bring his two-year premiership to a close on Friday, ending his stint in the post that his father and grandfather also held.

In a nationally televised address late Wednesday, Papandreou said farewell to the Greek people.

"Today, despite our political and social differences, we are setting aside sterile conflicts," Papandreou said. 

"We will take the necessary steps together, with national unity."

The composition of the new Cabinet was not immediately clear, but Greek news reports suggested Venizelos would remain finance minister and the government would include members of the Socialists, the opposition New Democracy party and the far-right Popular Orthodox Rally, known in Greece as the Laos party.