Incoming Papademos government gears up for Greece challenge

AFP , Friday 11 Nov 2011

New Greek unity government to be sworn in on Friday, putting ex-deputy chief of the European Central Bank, Lucas Papademos, responsible for the main task of ratifying the EU bailout deal

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Incoming Prime Minister Lucas Papademos (Photo: Reuters)

A new Greek unity government headed by the European Central Bank's ex-deputy chief Lucas Papademos will be sworn in Friday after a historic power-sharing deal between the country's main rival parties.

The ceremony at 1200 GMT at the presidential mansion is to be officiated by Archbishop Ieronymos, head of the Church of Greece.

Papademos, 64, was brought in to pull Greece back from the brink and convince its increasingly impatient European and IMF creditors that tough reforms will be completed as promised by the previous short-lived socialist administration.

"The Greek economy is facing huge problems despite the enormous efforts made ... Greece is at a crucial crossroads," the incoming prime minister said in his maiden speech after his appointment, adding: "The course will not be easy."

Papademos will head a transition government whose main task will be to ratify an EU bailout deal crucial to the country's economic survival.

His first job is to persuade the European Union and International Monetary Fund to disburse an eight-billion-euro ($11-billion) slice of aid from a 2010 bailout deal that is needed by December 15 before state coffers run dry.

Then he must force through painful austerity measures exacted as the price for a second EU bailout package which gives Athens 100 billion euros in loans, the same amount in debt reduction and a further 30 billion in guarantees.

His appointment took four days of torturous talks between the top two parties, the outgoing ruling socialists and the main opposition conservatives, after Prime Minister George Papandreou on Sunday pledged to step down.

Former head of state Costis Stefanopoulos described the process to appoint Papademos as "ridiculous" and leading newspapers said Greece had been "humiliated" in the eyes of fellow Europeans, particularly as Papademos had been a front-running candidate since Monday.

"This is something unprecedented in our country, so it had to be done in a solid procedure," outgoing deputy government spokesman Angelos Tolkas told state television channel NET.

Papandreou's position as prime minister had become untenable after he shocked his European partners with a call for a referendum on the bailout deal on October 31. He was admonished by fellow EU leaders at the G20 summit and returned home to a party revolt.

There was also simmering anger towards two years of austerity policies—which Papandreou's successor is bound to continue—with protesters even disrupting nationwide parades last month in honour of Greece's wartime resistance to the Axis powers.

The new government, which is also slated to hold early elections as soon as the EU deal is ratified by parliament, was set up with support from the socialist PASOK party, the New Democracy conservatives and the smaller nationalist LAOS party, who together account for 254 deputies in the 300-seat parliament.

The KKE Communists and the leftist Syriza party have washed their hands of the whole process; with Syriza leader Alexis Tsipras pointing out that a non-elected government carries no real power over the Greek people.

"This is a raw subversion of the people's sovereign rule," Tsipras said. 

"The new government is called to apply policies without democratic legality," he added.

The last unity government in Greece in 1989 was also headed by an eminent economy expert, former bank of Greece governor Xenophon Zolotas, and only lasted three months.

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