New Greek government in race against time

Greece’s new unity government under Lucas Papademos faces a race against time to save the debt-stricken nation from bankruptcy after an historic power-sharing deal struck between warring parties.

Buoyed by the change in leadership the daily Kathimerini hailed the new Cabinet — a power-sharing mix of Pasok socialists, New Democracy conservatives and far-right nationalist party Laos — as “a government of balance and agreement”.

But financial daily Naftemporiki reminded the new government that its priority was “stabilising of the economy in difficult conditions, both at home and in the eurozone”.

Greek Finance Minister Evangelos Venizelos, who kept his job, said Friday he hoped the latest slice of the bailout agreed for Greece would be disbursed soon after another summit for European Union (EU) finance ministers on November 17.

As for the Greek part of the bargain, to put in place the deal struck by EU leaders at a Brussels summit on October 26-27, Venizelos said this was “urgent” and would be done “no later than Monday or Tuesday”.

Write downs
As part of the deal, private banks are to accept write downs of 50% which will allow Greece to wipe out nearly a third of its €350-billion debt.

The procedure to confirm the new government — which was voted in with a comfortable 254 out of 300 cross-party votes — in Parliament will begin Monday with a crucial vote of confidence expected on Wednesday.

It must then force through painful austerity measures exacted as the price for a second EU rescue package which gives Athens €100-billion in loans, the same amount in debt reduction and a further €30-billion in guarantees.

But refilling the state coffers is not the only challenge for the new government, which will have to manage a delicate power-sharing deal and enact reforms quickly to appease public resentment.

“The government will have to be very quick on economic issues. We will have a 2012 budget vote before the end of December as well as the Brussels plan of 26/27 October” political analyst Ilias Nicolakopoulos told Agence France-Presse.

The strikes that started under Papandreou were set to continue as the main public service union Adedy called for employees to stop working for three hours, starting Tuesday, in protest at rising taxes and 30 000 job cuts across the civil service.

Demonstrations were expected on November 17, a date synonymous with rallies in Greece as it marks the anniversary of huge protests in 1973 by students at the Athens Polytechnic University against the then junta.

The government also faces continuing opposition from the KKE Communist Party and radical left party Syriza — both of which refused to join the new coalition — against Greek complicity with International Monetary Fund and EU-led policy which obliges Greece to impose austerity measures.

Predictions from the European Commission forecast a 2.8% contraction for the Greek economy in 2012 and a further increase in unemployment — which stood at 18% in August — meaning there is unlikely to be any respite for Papademos. — AFP

An actual Black Friday deal

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