After weeks in limbo, Greece ushers in new government

Greece ushered in a new government on Wednesday that will put it back at Europe’s bargaining table, ending a seven-week leadership vacuum that had destabilised this already fragile nation and cast a shadow over the future of the entire euro monetary union.

Antonis Samaras, the leader of the New Democracy party, was sworn in Wednesday afternoon as prime minister in a televised ceremony conducted by Archbishop Ieronymos of the Greek Orthodox Church. Samaras is preparing to work with two other parties that agreed to form a coalition. But whether his coalition government will last more than a few months, or succeed in renegotiating some of the harsh austerity terms of Greece’s multibillion-euro bailouts with its European partners, remained an open question.

 

Together with the Greek Socialist party known as Pasok and the Democratic Left, a small party that won only 6.2 per cent of the vote, Samaras is maneuvering to form an airtight majority coalition in Parliament that he hopes will resist opposition from the popular far-Left Syriza party, which has vowed to protest if the new government fails to repudiate the most onerous terms of Greece’s loan deals.

In comments to reporters after being sworn in, Samaras, emphasised the need for “patriotism, national unity and trust that with the help of God we can ensure that the Greek people emerge from the crisis as soon as possible” He said he would press the members of his new cabinet — expected to be named by late Wednesday — to work hard, with the aim of giving Greeks “tangible hope.”

During the handover with the outgoing caretaker prime minister, Panagiotis Pikrammenos, Samaras said, “I am fully aware of the critical moments we face as a country,” adding that the Greek people were “injured” and needed “healing.” Pikrammenos, for his part, wished Samaras good luck and said he was assuming power “at a difficult and historic crossroads and will have many battles to fight at home and abroad.”

In a written statement issued after Samaras was sworn in, Syriza said the new government would not be able to renegotiate the country’s loan deal, noting that the administration had been “built on the basis of continuing the policies of the memorandum,” a reference to the debt deal. “The political balance within the government suggests that it is not willing or able to strive for an essential renegotiation of the terms of the debt deal nor to doubt the dominant neoliberal austerity policies within a Europe that is trying to change its architecture,” the statement added.

With the economy in a downward spiral and the government bleeding cash, Samaras’s government can “incrementally develop a certain sense of stability and certainty, but it will always be vulnerable to any shock — whether political or economic,” said Marco Vicenzino, director of the Global Strategy Project, a geopolitical risk analysis firm based in London.

Evangelos Venizelos, the Pasok leader, said the composition of the new cabinet would be announced later Wednesday night.

Venizelos, a former finance minister who negotiated Greece’s second debt deal with foreign creditors, said George Zannias, the outgoing finance minister, would represent Greece at a European finance ministers’ summit meeting on Thursday. It is expected that the president of the National Bank of Greece, Vassilis Rapanos, will assume the finance portfolio in the new cabinet.

Venizelos said he and the leaders of the other two parties in the coalition would meet with Zannias Wednesday night for a briefing ahead of the finance ministers’ meeting.

“We have to prepare very well for the European summit; it will be the first battle to change the program and return to growth,” said Venizelos, referring to Greece’s debt deal with creditors. He again criticized Syriza, which came second in Sunday’s elections, for not joining a “national negotiating team.”

As expected, Venizelos said his party would not contribute politicians to new cabinet, apparently to avoid being associated with any additional austerity measures. The Democratic Left leader, Fotis

Kouvelis, made similar remarks earlier.

Earlier on Wednesday, Samaras met with Kouvelis. In a televised statement after the talks, Kouvelis confirmed his party’s support for a New Democracy-led coalition. He said he expected an agreement on a common policy platform within a few hours.

Venizelos noted that many of the tough terms of the bailout that he helped work out while serving as finance minister had been “imposed” on Greece during the first phase of the negotiations, when the critical goal was to seal a deal quickly to ensure that Athens did not run out of money to pay its bills. He said the agreement was always seen as open to revision.

The new government will face a daunting double mandate to enforce Greece’s loan agreement with its foreign creditors — the European Central Bank, the International Monetary Fund and the nations of the European Union — while renegotiating enough of the bailout terms to keep the government in power in the face of growing social unrest among the rapidly unraveling middle class. It must also reassure investors enough to slow the flight of deposits from Greek banks.

“Greek banks may be small,” said Carl Weinberg, the chief economist at High Frequency Economics, a consulting firm in Valhalla, N.Y., “but if the public doesn’t see that government authorities can ensure that the banks are safe at all times, then the banking system won’t be stable.”

Greece’s official creditors had made it no secret that they wanted Samaras to prevail over Syriza, with its calls to tear up the loan agreement.

The creditors have indicated that they are willing to talk about changes to the agreement, but it is unclear how far Europe’s leaders, particularly Chancellor Angela Merkel of Germany, are prepared to go in making concessions.

© 2012 The New York Times News Service