ATHENS – With the political infighting over, Greece’s interim Prime Minister to head a coalition government to enable the country to keep getting critical international loans seems likely to be former European Central Bank (ECB) Vice-President Lucas Papademos. The newspaper To Vima, without citing sources, said Papademos, 65, a widely respected figure in Greece, with a strong background in both academics and finance was the compromise choice after bickering between Socialist Prime Minister George Papandreou, who will step down, and Conservative New Democracy party leader Antonis Samaras. Wrangling between them threatened to derail chances for a unity government necessary before the Troika of the European Union-International Monetary Fund-ECB would release the next installment of $11 billion in an ongoing series of emergency rescue loans in a first bailout of $157 billion begun last year. A second bailout of $180 billion, also in in the works, could have been cancelled as well if Greece did not have a government in place by Nov. 7.
That’s when Finance Minister Evangelos Venizelos, who at one point seemed to have a chance to take the helm although he is highly unpopular after imposing a raft of new tax hikes on workers and the poor, and slashing pensions while letting tax evaders go nearly unpunished, is scheduled to be in Brussels to meet leaders of the Eurozone , the 17 countries using the euro as a currency. EU leaders said if Greece did not form a unity government to accept terms of the bailout, including new austerity measures that have led to protests, riots and strikes, then the country could be forced out of the Eurozone – perhaps even the EU – and the money tap would be shut off, leaving workers and pensioners without pay or benefits.
Papoulias canceled a meeting with all the Parliament’s party leaders after the Communists and Leftist group SYRIZA refused to attend, saying the new government was not legitimate because it would not come from elections, which the Prime Minister’s office said would be held after lawmakers agree to implement the bailout. The biggest stumbling block was removed when Samaras withdrew his long-held objections the plan and said his party would approve it although he said he remains opposed to the austerity measures.
Papandreou set in motion a series of Machiavellian-like machinations on Nov. 4 when he sought, and got, a vote of confidence from the Parliament his PASOK party controls, but only after he was forced to cancel a referendum on the second bailout. That came after bitter denunciations from EU leaders who said if the question was defeated then that also could have led to Greece leaving the Eurozone and being on its own and forced into bankruptcy. The country is buried under $460 billion in debt caused by generations of the rival PASOK and New Democracy parties packing payrolls with political hires in return for votes, a lack of foreign investment and an uncompetitive economy with a more than 10 percent deficit.
An opinion poll conducted by Public Issue for Sunday’s Kathimerini indicated that despite the current problems, the majority of Greeks want to remain in the Eurozone. The survey indicated that if Papandreou were to have forged ahead with plans to hold a referendum on whether Greece should stay or leave the euro, most Greeks would have voted for remaining in the eurozone. According to the poll, 68 percent of the 603 people questioned said they would have voted to keep the euro, giving Papandreou the support he would have needed to stay in power.
With Greeks weary of internecine political battles, Papademos seemed a soothing choice to rattle nerves and market jitters as the country’s economic woes threatened to topple the Eurozone and have made international stock exchanges flutter. He is a well-known academic with practical experience and said to have a level head, unlike Greece’s volatile political figures. He helped oversee Greece’s transition away from the drachma to the euro 10 years ago, although that transition has since been discredited by EU leaders who said Greece fudged its figures to get in and kept lying about them after that, long after Papademos was no longer involved. He was graduated from the Massachusetts Institute of Technology, holds a degree in physics, a Masters in electrical engineering and a doctorate in economics. He is a distinguished scholar who has published papers on macroeconomic theory and policy, held academic positions at Columbia University, Harvard University and the University of Athens and worked at the Federal Reserve Bank in Boston, was the Bank of Greece’s Chief Economist in 1985 and its governor in 1994.
In a speech made at the Euro Information Conference in 2001, he praised the euro for shielding small economies from the “exogenous shocks” that emanated from the September 11 terrorist attacks in America. Papademos argued the euro ensured price transparency and increased competition, concluding: “The macroeconomic and microeconomic benefits for Europe and Greece from the introduction of the euro are numerous.” After leaving the Bank of Greece in 2002, Papademos became the Vice President to Jean-Claude Trichet at the European Central Bank, before leaving the position in 2010 to serve as an advisor to Papandreou. He has emphasized the responsibility of governments to take control of their own debts, saying: “The ECB’s interventions in sovereign bond markets should not be perceived or interpreted as a ‘freebie’ for governments. They are temporary. Governments cannot assume or expect that the ECB will always facilitate their funding independently of the achievement of their fiscal and other policy objectives.”
(Sources: The Telegraph, Wall Street Journal, To Vima, Bloomberg, Kathimerini)