[MGSA-L] Ex-central banker front-runner to become Greek PM

June Samaras june.samaras at gmail.com
Mon Nov 7 12:23:49 PST 2011


Ex-central banker frontrunner to become Greek PM

Mon Nov 7, 2011 1:08pm EST

* New PM's identity not yet agreed but Papademos tipped

* Venizelos should stay finance minister - opposition source

* New premier must control hardened party chiefs

By Dina Kyriakidou and Lefteris Papadimas

ATHENS, Nov 7 (Reuters) - A former deputy head of the European Central
Bank emerged on Monday as frontrunner to become Greek prime minister,
as party leaders bargained over who will lead a "100 day coalition" to
push through a bailout before the nation runs out of money.

Under EU pressure, an unaccustomed spirit of compromise seeped into
Greek politics as the top parties haggled over the jobs in a
government which will run Greece only until early elections in

A source at the opposition conservatives said nothing had been agreed
yet with the ruling socialists on who should lead the government of
national unity, and refused to comment on speculation that former ECB
vice president Lucas Papademos would get the job.

However, the opposition source told Reuters that his New Democracy
party accepted that socialist Finance Minister Evangelos Venizelos
could stay in his job at a time of national crisis.

"The economic ministries, including finance minister Venizelos and his
team, should stay for the sake of continuity," said the source, giving
the first indication of who will occupy any of the cabinet posts.

New Democracy would also vote for the 2012 budget and back a bond swap
plan contained in the bailout package, under which the value of banks'
holdings of Greek government debt will be halved.


Whoever leads the transitional government of national unity will have
a monumental task in restoring order to a country whose chaotic
economy and politics are shaking international faith in the entire
euro project.

European Union leaders want Greece to form the coalition quickly and
push the 130 billion euro bailout through parliament, for the sake of
a nearly bankrupt nation and to shore up confidence in euro zone.

Despite the sealed lips on both sides, Papademos remained a possible
frontrunner for premier. An aide said the Greek economist, who left
the ECB last year, had arrived in Athens on Monday from the United
States where he is a Harvard academic.

Outgoing Prime Minister George Papandreou has been in touch with
Papademos, a senior government official told reporters. "The prime
minister had several telephone contacts with Mr Papademos in the last
days," the official said.

Papademos oversaw the nation's adoption of the euro in 2002 as Bank of
Greece governor before moving to the ECB, and is a well-known figure
in European capitals.

Papandreou sealed a deal on Sunday with New Democracy on the crisis
coalition to approve the international financial aid package. On
Monday he informed European leaders, including German Chancellor
Angela Merkel and European Commission President Jose Manuel Barroso,
by phone about efforts to form the coalition, his office said.

The Greek leaders' immediate job is to agree the new prime minister,
who must exert authority over hardened party chiefs and made decisions
which will affect Greeks for a decade.

Papandreou also spoke to conservative New Democracy party leader
Antonis Samaras on the coalition, and his office said more talks would
follow later in the day.

In an early sign that a broad compromise will be hard to achieve,
President Karolos Papoulias's plan to summon the heads of all leading
parties for more negotiations on Monday was dropped after two leftist
parties refused to attend.


Greeks worry that any new premier will have hands full merely getting
Papandreou's socialist PASOK party and New Democracy to work together,
whether or not the leaders join the cabinet.

"I'm afraid the new government will very soon turn out to be
problematic," conservative former finance minister Stefanos Manos told

"The new prime minister will ... not give the impression that he is in
charge. Everyone will be looking to the two party leaders who will be
running things behind the scenes," he said, adding: "The civil service
won't implement any decision and everyone will be waiting for the

At least the two parties agreed on the likely lifespan of the
coalition, deciding in the early hours of Monday morning that Feb. 19
would be the preferred date for an election. Venizelos went later on
Monday to explain Greece's plans to his fellow euro zone fiance
ministers at a meeting in Brussels.

Brussels has piled pressure on Athens to approve the bailout, a last
financial lifeline for Greece which faces big debt repayments in
December. The EU fears that the Greek crisis will spill into much
bigger euro zone economies such as Italy and Spain -- which would be
far harder to rescue.

Papandreou, who sealed his fate last week with an attempt to call a
referendum on the bailout which backfired, will stand down when the
new government takes over.


Greeks have suffered immensely in the two years that Papandreou has
run the country. International lenders have demanded wave after wave
of pay and pension cuts, plus tax increases and job losses in return
for emergency aid. This has helped to keep Greece in four successive
years of recession.

The Communist PAME labour group will hold a rally in Athens on Nov. 10
to oppose a new government which it said "has the task to save the
monopolies and crush the popular movement".

"They want to vote through the new bailout... which will leave Greek
people with their hands tied for many years."

The ESEE retail federation expressed qualified relief that politicians
were coming to terms, calling for "consensus and cooperation so as to
save what can be saved in the short time left," it said in a

Greek bank shares , the country's best benchmark of market sentiment
with the government shut out of bond markets, rose 3 percent on the
coalition deal.

A new coalition would be sworn in and hold a confidence vote within a
week if all goes to plan, the government says.

Many Greeks remained sceptical about a coalition tasked with imposing
more austerity to tackle a huge budget deficit.

"Hurrah, we are saved!" said plumber George Vihos sarcastically. "Why
should we celebrate now that they will make sure we bear the pain?"

On Sunday European Economic and Monetary Affairs Commissioner Olli
Rehn told Reuters that euro zone finance ministers would insist on
hearing a plan for a unity government from Venizelos at Monday's
Eurogroup meeting.

Papandreou had sought the referendum to show that harsh cuts demanded
in the bailout had public support, but the risk that a "no" vote could
bring about a sudden bankruptcy caused mayhem in markets, anger in
Europe and rebellion in the ruling party.

He soon ditched the idea and won a confidence vote in parliament, but
only after promising to make way for the national unity coalition.
June Samaras
2020 Old Station Rd
Canada L5M 2V1
Tel : 905-542-1877
E-mail : june.samaras at gmail.com

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