Greece’s new premier takes power with plea for co-operation and unity

GREECE’S new technocrat prime minister Lucas Papademos assumed power yesterday 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.

Mr Papademos, a former European Central Bank vice-president, leads a government including ministers from three parties.

The bitter rivalry of outgoing prime minister George Papandreou’s Socialists and the conservatives of Antonis Samaras is being set aside as politicians struggle to put the country back on track financially and ensure it can retain its position in the eurozone.

“The new co-operation government will do the best it can to address the country’s problems, and I believe that with the co-operation of all – and the new government stresses this – and the unity of all, we will achieve that,” Mr Papademos told Mr Papandreou during the handover.

Finance minister Evangelos Venizelos retained his post, the conservatives got the key positions of foreign affairs and defence, while ministerial positions also went to members of a small right-wing party with nationalist leanings.

Mr Papademos – who was appointed on 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 €130 billion (£111.3bn) agreement reached by the European Union on 27 October.

It includes provisions for private bondholders to forgive 50 per cent, or some €100bn, of their Greek debt holdings, details of which the new government will have to negotiate.

Greece’s new interim government was welcomed by the leaders of Germany and France and the head of the eurozone.

Mr Papademos, who also served as Greece’s central bank governor and oversaw the country’s entry into the euro in 2001-2002, must guide the country at a time of deep recession, with unemployment reaching a record 18.4 per cent in August and repeated rounds of domestic tax hikes and salary and pension cuts.

He also must secure the next €8bn instalment of the country’s initial €110bn eurozone and International Monetary Fund bailout, without which Greece will default in a matter of weeks.

Once that is done and the country has implemented the new debt agreement, Mr Papademos will have to lead the country to 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.

German chancellor Angela Merkel – whose country is the single largest contributor to Greece’s initial bailout – congratulated Mr Papademos, and underlined her expectation that his government will move swiftly to push through reforms.

“You are taking office at a difficult time for your country, but also for the eurozone as a whole, in which great hopes and expectations are directed at you,” she wrote in a message to Mr Papademos, released by her office. “It is up to you and your government to approve and implement quickly the critical and necessary reform measures to lead Greece out of the current crisis.”