ATHENS – After three days of political feuding that angered Greeks worried whether it would jeopardize international rescue loans, a new coalition government was said to have been formed with Parliament Speaker Filippos Petsalnikos, a political unknown outside Greece, reportedly named the caretaker Prime Minister to deal with the problem of securing continuing aid and insuring the release of a delayed $11 billion installment, without which Greece will not have enough money to pay its workers and pensioners. Petsalnikos is a German-educated lawyer and said to be a long-time ally of former Prime Minister George Papandreou, who handed in his resignation on Nov. 9 and whose PASOK Socialist party still rules the country and Parliament. The choice led some Greek media to report that Petsalnikos was a “straw man” for Papandreou who would carry forth the same policies that led to dissolution of the government.
Shortly after Petsalnikos was said to be the choice, a source told The Greek Reporter that some PASOK Members of Parliament were rejecting the choice and their support is critical for any interim Greek leader to approve a second bailout from the Troika of the European Union-International Monetary Fund-European Central Bank of $157 billion, along with attached conditions of more pay cuts, tax hikes, slashed pensions and layoffs, the measures that finally led to Papandreou’s resignation after more than 18 months of bitter resistance on the part of Greeks.
The melodrama, which SKAI TV characterized as “Political Acrobatics with Greece on the Brink,” dismayed citizens and ired European leaders who pressured the ruling Administration of Papandreou and the rival Conservative New Democracy party led by his former roommate at Amherst College in Massachusetts, Antonis Samaras, to strike a deal or lose the aid. “We have agreed on Petsalnikos but things can change … ” an unnamed source who is close to the discussions told Reuters news agency. Greek media immediately reported that the choice was confusing because Petsalnikos is a politician instead of an institutional leader above the political fray of Greece.
Before the expected announcement, Papandreou went on national television to give what was his farewell address and said he did his best since taking office more than two years ago to keep the country afloat and that Greece would enter a “new era” although Petsalnikos will have to deal with being unknown in Brussels, the seat of the European Union. Government officials earlier promised a “dynamic” choice, but choice of the little-known Petsalnikos after three days of animosity and infighting was uninspired, Greek media reports said. He was opposed by the Communists, the Leftist SYRIZA party, and the choice upset Right-Wing LAOS party leader George Karatzaferis, who had urged a resolution, while even some PASOK Members of Parliament said they were unhappy.
Papandreou spoke on national TV after meeting President Karolos Papoulias, ahead of the announcement of a new Cabinet charged with steering Greece until the next elections, said to be Feb. 19, and deal with international lenders who are demanding the government keep squeezing workers and pensioners, raise taxes and sell off state-owned properties and entities. “We have to believe in our country … we’re not (political) enemies, there should be no hatred, polarity, but solidarity but be able to find ourselves in neighborhoods and squares,” Papandreou said. He added that he had no thought of keeping his office but only to serve Greece. “We sent today a message of optimism. Our road will be easier, with more hope, and we can depend on ourselves more than on loans. Emphasis will be given on development and not austerity. We Greeks can unite in difficulties and transcend ourselves. I’m proud we kept Greece on its feet despite the adversities and avoided bankruptcy.”
It was high-stakes brinkmanship with the country’s economy at stake and played itself out in backroom political poker with Papandreou and Samaras bickering over who would become the temporary Premier and the makeup of the administration that will have to deal with the Troika that is lending Greece $152 billion to stay afloat, including an $11 billion installment held up until a new government was formed. Papandreou in July got them to agree on the second bailout of $157 billion, but only on the condition the government keep administering austerity measures, although other requirements to privatize state-run enterprises, sell or lease state properties and go after tax evaders costing the country more than $56 billion have stalled.
After getting a vote of confidence on Nov. 4 following withdrawal of his plan to let Greeks decide whether to accept a second Troika bailout of 130 euros and more austerity measures to keep the country from going broke, Papandreou said he’d resign to make way for a coalition government, but it took three days of political infighting that had Greeks furious and demanding a resolution. One of the major obstacles was said to be Samaras’ refusal to sign a written commitment to support the bailout – which he earlier said he would to allow makeup of a unity government but only orally. He has said he doesn’t approve of the austerity measures and wants to renegotiate the terms.
Leaders of Greece’s other minor parties urged Papandreou and Samaras to stop battling and come to a decision. Former European Central Bank Vice President Lucas Papademos was said to be the front runner to be caretaker Prime Minister, but said he hadn’t been contacted, despite flying into Greece from his position at Harvard University. After Petsalnikos’ name was floated as the choice and ran into resistance, Papademos said he would still accept the job and was said to be reconsidered. Other names said to be considered were European Court of Justice President Vassilis Skouris, former Greek Ombudsman Nikiforos Diamandouros, and former Parliament President Apostolos Kaklamanis.
Sources close to Venizelos told the newspaper Kathimerini that he didn’t block Papademos and denied the former ECB official was even a front-runner, despite numerous media reports he was, showing the intensity of the wrangling. Papademos was said to be a compromise choice with wide support because of his independence, but that seemed to have been a problem for political leaders who wanted more of a say in running a government that would be a hybrid of old enemies who’ve rarely agreed on anything since the fall of the military junta in 1974 and rejection of the Monarchy, when their parties were created.
The decision came after EU leaders squeezed the battling parties and threatened to cut off the aid. European Economic and Monetary Affairs Commissioner Olli Rehn said without a signed agreement, Greece would not receive the loan installment nor more loans. ”It is essential that the entire political class is now restoring the confidence that had been lost in the Greek commitment to the EU-IMF program,” he said before the resolution.
Greeks have been protesting, rioting and striking for 18 months over the austerity measures they said were aimed at workers, pensioners and the poor while tax evaders owe the country more than 40 billion euros, a report the Finance Ministry refused to release for months showed. That was given to a prosecutor who threatened to take action against government officials for withholding it as Greeks speculated who would be on it.
Leaders of the Eurozone, the 17 countries who use the euro as a currency, said Greece faced the prospect of being booted out unless a coalition which supported the new bailout package agreed upon in July was backed. The coalition government must also approve a budget for 2012 before the end of November. EU leaders fiercely objected to Papandreou’s referendum plan, which led Venizelos to balk as well as he said it had been rejected Greece could be forced out of the Eurozone and been cut off from rescue loans. The Greek drama was watched closely by not just European leaders but around the world as well, even drawing an entreaty from U.S. President Barack Obama’s office, which warned it was creating jitters on Wall Street and international markets.