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Samaras Names Yiannis Stournaras as New Finance Minister

ATHENS – Moving fast to avoid a further crisis of confidence in his already shaky tri-partite coalition government, Greece’s new Prime Minister Antonis Samaras has named economist Yiannis Stournaras as his Finance Minister to replace Bank of Greece President Vassilis Rapanos, who resigned, citing ill health after being hospitalized only days after being tabbed for the top financial job, although he was said to be unhappy that Stournaras – his choice to be one of his deputies – and other technocrats had been left out of the Cabinet.
Samaras packed his Administration with mainly politicians from his New Democracy party, which barely won the critical June 17 elections, including holdovers from the failed government of former New Democracy head and then Prime Minister Costas Karamanlis, who ruled from 2004-09 before being soundly defeated by then PASOK Socialist leader George Papandreou. He was driven out of office in 2011 after two yearas of protests, strikes and riots against austerity measures he imposed on the orders of international lenders putting up $325 billion in two bailouts to prop up the country’s essentially-dead economy. The crisis was caused in large part by Karamanlis’ administration lying about the country’s economic state, although both New Democracy and PASOK had packed public payrolls with hundreds of thousands of needless workers for generations in return for votes, creating a $460 billion deficit.
Stournaras, is founder and General Director of the Foundation for Economic and Industrial Research (IOBE) and had served as Development Minister during a six-week caretaker government that was in place following a stalemated May 6 elections, which led to the second round of balloting. Because New Democracy did not have enough votes to create a government, Samaras had to ask PASOK leader Evangelos Venizelos – a former Finance Minister in a shaky hybrid government his party shared with New Democracy – and Democratic Left leader Fotis Kouvelis to give their support. They consented, but would not allow any of their party members to serve in the Cabinet, setting off speculation that they were distancing themselves in case the government falls.
Stournaras will have the toughest job in the government, being the visible public face of Greece’s negotiations with the Troika of the European Union-International Monetary Fund-European Central Bank (EU-IMF-ECB) to try to change the conditions of a second bailout deal, this one for $173 billion, that Samaras and Venizelos signed. That required more of the pay cuts, tax hikes and slashed pensions they had agreed to, but which they tried to dissociate themselves from during the campaign.Greece is surviving on a first package of rescue loans of $152 billion
The Troika said any attempt to tinker with reforms could lead to the money pipeline being shut off and also want another $15 billion in cuts. It will be Stournaras’ job to change their mind, and the change-of-heart by Samaras was said by Rapanos to be one of the reasons he stepped down as he felt Greece’s conditions would undermine his ability to bargain with the Troika.
Greece is stuck in a worsening recession of 22.6 percent unemployment, an economy shrinking at a rate of 6.5 percent and with 1,000 businesses a week shuttering because the austerity measures have led to falling corporate tax revenues – despite big tax increases. With Samaras recovering from eye surgery for a detached retina, and Stournaras not yet sworn in, Greece will be represented at a critical June 28-29 meeting of EU leaders in Brussels by President Karolos Papoulias, who has only a symbolic role, and other deputy ministers. The event was where Samaras had hoped he and his Finance Minister could start making their case to give Greece more time to implement reforms and delay the firing of 150,000 state workers.
Stournaras, 55, is a professor of economics at the University of Athens and also holds a masters’ degree in economic theory and policy from Oxford University. He has worked as special adviser to the Finance Ministry from 1986-1989 and from 1994-2000, as well as to the Bank of Greece from 1989-1994. He participated in the design of macroeconomic and structural policy in the run up to Greece’s accession to the European Monetary Union, representing the Ministry of Economy and Finance at the Monetary Committee of the European Union.

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