ATHENS – Moments after his Cabinet, stocked heavily with members from his own New Democracy party, was sworn in, Greece’s new Prime Minister Antonis Samaras put them to work on dealing with the country’s crushing economic crisis, in preparation for a visit from international lenders on June 25. After telling them their pay would be cut 30 percent, a gesture he said was critical because previous governments had cut workers’ pay, raised taxes and slashed pensions, Samaras added that he would hold the line on any more salary reductions for workers and reduce the tax increase on restaurants that was killing their businesses, a move designed to help them as tourism is slumping too.
Samaras said it was “a new day,” and cautioned his Ministers would have to limit their television appearances and scale back use of limousines. He added, “The country has a new government, but it’s also a different kind of government of a cross-party nature,” he said, describing it as a “government of responsibility.” With Greece trapped in a deep recession and struggling with 22.6 percent unemployment and facing more austerity measures, Samaras said, “This government has no grace period,” he added. “It must start producing results immediately. Make no mistake, our goal is to liberate Greeks from the crisis and ensure that their sacrifices have not been in vain.”
The coalition government has the support of the PASOK Socialists and the tiny Democratic Left to give Samaras 179 seats in the 300-member Parliament, but they have only 48 percent of the vote and face scrutiny from Greeks infuriated with the austerity measures that have been imposed as a condition of getting two bailouts totaling $325 billion from the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB.) Troika inspectors were set to come to Athens next week to review progress on stalled reforms and prepare an update on the next round of loan proceeds.
Neither PASOK nor the Democratic Left would allow any of its members to serve in the Cabinet, apparently wary what would happen if Samaras has to impose more austerity, conditions that have led Greeks to protest, strike and riot for two years. But the coalition partners hand-picked several members in a group that includes a mix of technocrats and politicians, including holdovers from the New Democracy Administration of former Prime Minister Costas Karamanlis from 2004-2009, whose government was accused of lying about the country’s economic condition, setting the crisis off. They include Dimitris Avramopoulos, Panos Panayiotopoulos, Costis Hatzidakis, Andreas Lykourentzos and Nikos Dendias.
Greece is surviving on a first bailout of $152 billion but a second for $173 billion had been held up until after the elections to see if anti-austerity parties, led by the Coalition of the Radical Left (SYRIZA), which vowed to re-do the deals or renege on them, would prevail. Samaras said that would have led to Greece being pushed out of the Eurozone of the 17 countries using the euro as a currency, back to the drachma, and to financial catastrophe, a charge that SYRIZA leader Alexis Tsipras dismissed as “scaremongering.”
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Eurozone head Jean-Claude Juncker said, “We expect the new government to invite the (EU/IMF) troika to Athens next Monday because we do think they are in an urgent situation and all the procedures need to be speeded up.” He added that the inspectors “will take stock of the situation. On the basis of the guidance we seek, a full Troika mission will go to Athens with a view to reaching an agreement on the condition that should be reflected in a revised memorandum of understanding,” he said.
He said, “This includes an agreement on the measures of prior actions to be implemented before the next disbursement can take place,” an ominous note that Samaras has to adhere to the reform deal he signed, although he said he wants to renegotiate some of the terms. The Troika also wants the new government to make another $15 billion in cuts and warned the money pipeline could be cut off if there are any attempts to tinker with reforms, including the mandated firing of 150,000 workers over three years, privatizing state interests, and ending the near-monopolies that many Greek professions enjoy, including architects, lawyers, engineers and pharmacists. Juncker added that the European Financial Stability Facility (EFSF), the Eurozone’s temporary bailout fund, would disburse to Greece by the end of June some 1 billion euros ($1.25 billion) from an installment agreed on by finance ministers in May.
The Cabinet consists of 39 ministers and deputy ministers, 10 fewer than under interim Premier Lucas Papademos, who oversaw a shaky coalition that began with three parties but ended with only New Democracy and PASOK, who both supported austerity. New Democracy members and figures hold 30 of the positions.
The most crucial post, that of Finance Minister, went to Bank of Greece President Vassilis Rapanos, 65, who spent four-and-a-half years in jail for fighting the military junta dictatorship that ruled from 1967-74. Rapanos will be the frequent public face of Greece during the crisis and negotiations with the international lenders. Rapanos, a professor at Athens University since the early 1990s, has a long history of working in the public sector, including as a board member at OTE telecom. He is considered to be a specialist in public finances. In its first official statement, the new coalition government declared that its aims were “to tackle the crisis, pave the way for growth and revise the terms of the loan deal without putting at risk the country’s European course and its position in the Eurozone.”