New Greek government offers no austerity relief
ATHENS (Reuters) – Greece’s new cabinet may last a month or two longer than planned, a senior government official said on Saturday, but whatever happens Greeks should not expect any relief from the tough austerity measures they have endured for two years.
A national unity government, led by technocrat Prime Minister Lucas Papademos, took power on Friday with the task of tackling Athens’ huge debt load and meeting the terms of a 130 billion euro ($179 billion) bailout agreed with rescue lenders last month.
Papademos replaces George Papandreou, who unearthed years of fiscal cheating at the start of the global economic crisis and then fought a losing battle to push through unpopular austerity measures against public and political opposition.
The new crisis cabinet merges main players in Papandreou’s socialist administration — foremost among them returning Finance Minister Evangelos Venizelos — with members of its main rival party, the conservative opposition New Democracy.
It also includes the LAOS party, which won one portfolio in the first showing for a far-right party in government since a military junta was ousted almost four decades ago.
Bitter rivals, the parties have said they will do what is needed for Greece to fulfill commitments it has agreed to with the European Union and International Monetary Fund ahead of an election initially slated for February 19.
But Theodoros Pangalos, a returning deputy prime minister from the previous cabinet, said the government could stay in power longer than the initially envisioned 100 days.
“I don’t know if it will be 100 days. It could be 120 or 150. In any case it will last for the first quarter of the year,” Pangalos told state television NET on Saturday.
Greeks have largely welcomed the new government, saying the somber international policymaker Papademos is a safer pair of hands than those of politicians they say have put their own interests ahead of those of the country.
But Pangalos warned voters not to expect relief from the tough tax measures decided earlier this year to qualify for further bailout tranches.
“The maneuvering space for any relief measures in 2012 is very narrow,” he said.
In his first statement as prime minister, Papademos vowed to fulfill a deal forged last month with euro zone leaders that will release an 8 billion euro loan Athens needs to avoid running out of cash next month plus longer-term funding later.
“The government’s main task is to implement the decisions, the conclusions of the October 26th and 27th euro zone summit meeting, and secondly to put into force the economic policies which come together with these decisions,” he said.
A source from the so-called “troika” of the EU, the IMF and the ECB said inspectors would visit Athens early next week to speak with the new government and would clear the next tranche only when it pledged to meet its commitments.
Papademos said his first task would be to tackle runaway unemployment. He must also start chipping away at a debt load of more than 30,000 euros for each of Greece’s 10.8 million people which, at 162 percent of annual output, is almost double the EU average.
Pundits say that despite representing a fresh start in tackling Greece’s debt problems, Papademos will face the same two obstacles as the previous cabinet: political infighting and a public staunchly opposed to more economic pain.
After tax hikes, public wage and pension cuts and state sector layoffs, Greeks now face record unemployment of almost 20 percent and a fourth year of economic recession in 2012.
“I am not relieved at all there’s a new government,” said Eleni Papageorgiou, a 53-year-old housewife. “I know only one thing, no matter what government is up there, things will get worse for me rather than better.”
Activists scheduled the first demonstration against the new government in front of Parliament at Syntagma Square, the central site of months of demonstrations that have occasionally flared into violent clashes between protesters and police.
Greek media have also warned the cabinet’s large size — 48 ministers and deputies that analysts say were picked to appease rival parties — and the wrangling that preceded its birth are omens that it may still fall hostage to political squabbles.
Center-left daily Ta Nea ran an editorial with the headline “Attention! Danger!” that recalled Greece’s last unity cabinet, formed in 1989 under late central bank Governor Xenophon Zolotas, which collapsed after only three months.
“The advent of Papademos has created, after a long time, positive expectations among the Greek people. It is the duty of the prime minister, as well as his government, to not defy them,” it wrote.
But it added: “One can clearly see haggling between party leadership which continues to plan turning the Papademos government into the Zolotas government.”
(Additional reporting by Karolina Tagaris; Writing by Michael Winfrey; Editing by Jon Hemming)
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