By Andy Dabilis, Emmanouela Seiradaki
Lucas Papademos, a former European Central Bank Vice-President and an MIT-educated academian who also headed the Federal Reserve Bank in Boston, has been named the interim Prime Minister of Greece, replacing George Papandreou, and charged with the unenviable task of keeping an international lifeline of loans coming and overseeing the austerity measures that accompanied them. It took four days of stalled talks that broke down and at one point it was said that Papademos, the considered front-runner would not get the job but that it would go to a Parliament Speaker Filippos Petsalnikos, a political unknown outside Greece.
The decision came after four days of bitter wrangling and political infighting that seemed to have bumped Papademos, who was seen a likely choice because he is not a politician. He is widely considered to have been the most suitable compromise choice to try to stabilize a government he will take over from Papandreou, the Socialist PASOK party leader, and work with Conservative opposition party New Democracy leader Antonis Samaras. The new Cabinet is expected to be named later on Nov. 10 after Papandreou steps down.
A statement from the office of President Karolos Papoulias said Papademos will adopt and implement Greece’s $157 billion loan agreement with the Troika of the European Union-International Monetary Fund-European Central bank agreed on in July and the terms of an October revision which would require more pay cuts, tax hikes, slashed pensions and scores of thousands of layoffs and let Greece write off 50 percent of much of its debt. With a new government in place, Greece can now get an $11 billion delayed loan installment from a first round bailout of $152 billion begun last year that came with austerity measures that have triggered protests, riots and strikes. The EU said no more money would be forthcoming until Greece installed its coalition government, although it will be led by the two major parties and exclude the minor parties, leading the Communists and Leftist SYRIZA party to boycott negotiations to set up the so-called unity government which will rule until new elections, tentatively scheduled for Feb. 19.
Papademos was said to have held out for more power and less of a titular office as the major parties reportedly fought to rein in any power a new Premier would have. If Greece had failed to name a new government it could have threatened its position in the Eurozone of the 17 countries using the euro as a currency and even jeopardized its membership in the EU. The decision was watched closely in Europe and in the U.S. where jitters over the Greek economy and its effect on the Eurozone have occasionally battered the stock markets.
“He is a wise person. It is important that he has dealt with substantial issues in the past,” political analyst Antonis Karakousis of Papademos in an interview with SKAI radio. The announcement caused a bump up in the Athens stock exchange and helped Greece’s struggling banks, but came only hours after the national statistics agency ELSAT said the unemployment rate had jumped to 18.4 percent in August, up 1.9 percent from July and 6.2 percent over the same period last year. As he left, the battered Papandreou said, “I am proud that, despite the difficulties, we avoided bankruptcy and ensured the country stayed on its feet. I want to wish the new Prime Minister success. I will support the new effort with all my strength.”
Who is Lucas Papadimos?
Papademos, was in the US when it emerged on Sunday that political deadlock had been broken in Athens, with the country’s warring political factions finally agreeing on the formation of an interim administration that would include figures from the socialist Pasok party and conservative opposition.
MIT-trained Papadimos earned his first degree in physics at the Massachusetts Institute of Technology and is typical of Greek scholars who thrive abroad. After gaining a second degree in electrical engineering and a doctorate in economics, he went on to hold academic posts at Columbia University, Harvard University and the University of Athens. A specialist in macroeconomic theory and policy, he still teaches as a visiting professor in the US.
Returning to Athens in the mid-80s, after serving on the board of the Federal Reserve Bank of Boston, he became chief economist at the Bank of Greece. In 1994, he was elevated to the post of governor, overseeing Greece’s transition from the drachma, the world’s oldest currency, to the euro a decade ago. Mr Papademos passionately defended the euro advocating that it ensured price transparency and increased competition, saying: “The macroeconomic and microeconomic benefits for Europe and Greece from the introduction of the euro are numerous”.
In 2002, he joined the European Central Bank where he worked under the recently departed president Jean-Claude Trichet before crisis called, and once again, he returned to Athens to serve as an informal adviser to Papandreou. In fact, his ties to the ECB are seen as possibly valuable in helping Greece attract more generous terms from the masters of Europe’s monetary policy.
Will He Be Able to Survive in the Greek Political Jungle?
The past week was bizarre and chaotic even by Greek political standards.Yesterday, Papandreou wished his successor well and headed off to meet the president — only for it to emerge that there was no successor due to feuding in the political parties (!).
But Papandreou is not the only irrational leader poor Papadimos has to deal with. ND leader Antonis Samaras, despite agreeing in a coalition, he seems hesitant to appoint his own ministers. Samaras’ tactic is basically described along the lines of: I take part but not 100% so that I have no responsibility whatsoever and win the elections in February- very patriotic.
At the same time, Papadimos has also burly “Benny” to deal with. The past days there were rumors that a serious issue arose with Mr. Venizelos denying to quit and Mr. Papadimos insisting he wants to choose another Minister of Finance, namely Mr. Rapanos or Mr.Giannitsis. Mr.Venizelos denied these rumors yesterday, but knowing Greek politicians it’s almost certain Venizelos wouldn’t want to step down, even if such a move would contribute in the country’s rescue.
EU officials believe the 64-year-old technocrat fits the bill of being a “neutral” non-partisan personality who can stay out of the snake-pit that is the barbaric Greek political scene and they urgently need a reliable Greek negotiator,one that will not suggest an irrational referendum after they spent endless hours to agree on a deal.
However, in a country like Greece so bitterly divided by left and right, where memories of brutal civil war and military dictatorship still run deep coalition governments are almost non-existent, it’s rather hard to believe that a banker-even if it’s Papadimos- can command popular support or master the complicated political machine that is the Greek parliament.
In other words, Papadimos may be a highly respected technocrat internationally but whether he will be able to pull if off in Greece’s Balkan-style political jungle still remains a question. In fact, it’s a hundred per cent certain that from day one he assumes office, the leftists a.k.a SYRIZA and KKE will portray him as a “bankster tool”(“banker” and “gangster”) that will apply mercilessly any program the EU elite and the bankers want passed.
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