Greece PM to begin rescue mission ahead of confidence vote

Greece’s new prime minister Lucas Papademos will seek to take advantage of a rare political truce on Monday to push through austerity and radical reform aimed at restoring the country’s tattered credibility and staving off bankruptcy.

After Greece’s two biggest parties put aside a bitter dispute to give him the job last week, Papademos will launch a parliamentary debate on Monday evening that will culminate in a Wednesday confidence vote in his Cabinet.

He will then attend the Eurogroup meeting of European finance ministers in Brussels on Thursday, state television reported, where he will be expected to outline the country’s draft budget for next year before seeking its debate in Parliament as early as Friday.

Increasing the pressure will be inspectors from the “troika” of the International Monetary Fund, European Central Bank and European Union who begin arriving in Athens on Monday.

“It will most likely be a short visit to get in touch with the new government,” a source close to the troika told Reuters. “A larger mission, which will examine policies more thoroughly, is expected to come in December.”

Tepid backing
Papademos succeeds George Papandreou, whose proposal to hold a referendum on the country’s bailout terms prompted EU leaders to raise the threat of a Greek exit from the currency bloc.

With both Papandreou’s Socialist party and its rival, the conservative former opposition New Democracy party in the coalition, Papademos is expected to easily clear the confidence hurdle.

But all eyes will be on the position of New Democracy leader Antonis Samaras, who has given only tepid backing to the unity government and Greece’s second bailout worth €130-billion.

EU monetary affairs chief Olli Rehn has warned the EU and IMF will not release €8-billion of loans Greece needs by mid-December without written assurances from all parties that they will back the measures but Samaras has said he will sign no pledge under external pressure.

Greece must secure the tranche by mid-December to finance bond payments of €8.645-billion at the end of the year, according to Reuters data.

Hot on the heels of the new Greek government, Italy raced on Sunday to appoint an emergency administration after Silvio Berlusconi resigned to tackle a crisis that has quickly superseded Greece as the main worry for markets.

Above the fray
With his experience as a former ECB vice president and above the fray of Athenian politics, Papademos’s arrival has been hailed both by Greeks and by EU leaders who had lambasted the country’s failure to enforce tax payments, sell state firms, raise taxes and slash public jobs, wages and pensions.

French President Nicolas Sarkozy and German Chancellor Angela Merkel both phoned Papademos on Saturday to urge him to fully carry out all Greece’s reform commitments. ECB chief Mario Draghi and IMF Managing Director Christine Lagarde also called.

Polls published in Sunday’s newspapers show the 64-year-old has the support of three in four Greeks.

He will need all the goodwill he can get from weary and angry voters if the economy deteriorates further and the troika recommends further public spending cuts and tax rises.

Left-wing protesters are due to gather in front of parliament on Monday afternoon for their first demonstration against the new government which it accuses of working in the interests of bankers.

Quagmire
Five years after entering recession, there are few signs Greece is escaping its economic quagmire.
Data last week showed an alarming 2 percentage point jump in unemployment to a record 18.4% in August—peak tourist season when the rate should have fallen.

Papademos, who presided over Greece’s entry to the eurozone in 2002, must now aim to secure the €8-billion bailout tranche, push through the 2012 budget, and prepare the country for an early election in the first quarter of next year.

To do that, he must convince the troika’s inspectors that the country is doing enough to be given the second €130-billion bailout agreed with euro zone leaders last month.

Some analysts have questioned whether the new cabinet, largely comprised of Papandreou’s fallen administration, will meet the bailout commitments.

But Development Minister Mihalis Chrysohoidis, who held the same post in the previous administration, told state television the government recognised it must act now.

“We are seen as a problem abroad. We often lacked daring and resolve to achieve out targets,” he said. “If we step on the gas and restore our credibility, we can return to markets very quickly.”—Reuters

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