Greece swears in unity coalition

Papademos, a former European Central Bank vice-president, leads a government including ministers from three parties. The bitter rivalry of outgoing Prime Minister George Papandreou’s Socialists and the conservatives of Antonis Samaras has been set aside as Greece's politicians struggle to put the country back on track financially and ensure it can retain its cherished use of the euro.

Finance Minister Evangelos Venizelos retained his post, the conservatives got the key positions of foreign affairs and defense, while ministerial positions also went to members of a small right-wing party.

Papademos — who was appointed on Thursday after two weeks of political turmoil that infuriated European leaders, horrified Greeks and led to mayhem on international markets — must now ensure his government passes Greece’s latest debt deal: a €130 billion agreement reached by the European Union on October 27.

Deal provisions
It includes provisions for private bondholders to forgive 50 per cent, or some €100 billion, of their Greek debt holdings, details of which the new government will have to negotiate.

Papademos, who also served a stint as Greece’s central bank governor, must guide the country at a time of deep recession, with unemployment reaching a record 18.4 per cent in August, and Greeks furious at having to endure repeated rounds of tax hikes and salary and pension cuts.

He also must secure the next €8 billion installment of the country’s initial €110 billion eurozone and International Monetary Fund bailout, without which Greece will default in a matter of weeks. Once that is done and the country has implemented the new debt agreement, Papademos is to lead the country to early elections, tentatively scheduled for February.

Road ahead
Papademos’ tenure is expected to last only for a few months, but he will face the challenge of steering the country through the implementation of austerity measures already passed, including the suspension of 30,000 civil servants on partial pay and a series of privatisations.

Angered by nearly two years of austerity, including cuts to salaries and pensions and repeated tax increases that have led to a deep recession, Greeks have organised frequent strikes and demonstrations that often turn violent. Papademos’ appointment may dampen the protests, at least at first, some analysts argue.
“I think he will get that kind of brief honeymoon,” said Thanos Dokos, head of the Hellenic Foundation for European and Foreign Policy.