Greece: Political Infighting Prevents Forming New Government


By Andy Dabilis

As Greeks watched with growing dismay, the chances of a new government being formed to keep international aid coming was bogged down in political bickering between the ruling PASOK Socialist party and its conservative New Democracy rivals.

Prime Minister George Papandreou, who has been ready to step down for three days, was locked in negotiations Wednesday (November 9th) with opposition leader Antonis Samaras, over who would serve as interim leader and the makeup of a temporary cabinet until elections could be held next year.

Leaders of Greece’s other minor parties urged Papandreou and Samaras to stop battling and reach a decision.

Former European Central Bank Vice-President Lucas Papademos is described as the front-runner to be caretaker prime minister, but says he hadn’t been contacted.

After winning a vote of confidence on November 4th, following the withdrawal of his plan to let Greeks decide whether to accept a second EU-IMF-ECB Troika bailout of 130 billion euros and more austerity measures to keep the country from going broke, Papandreou said he’d resign to make way for a coalition government. But after three days of negotiations and arguments, no resolution seems imminent.

With Papademos on hold, other names said to be under consideration are European Court of Justice President Vassilis Skouris, former Greek Ombudsman Nikiforos Diamandouros, former Parliament President Apostolos Kaklamanis and current Parliament Speaker Filippos Petsalnikos.

A government spokesman said a deal would be reached Wednesday, but similar announcements the previous two days fell through.

A stumbling block to Papademos is reported to be Finance Minister Evangelos Venizelos’ objections to letting the banker make his own appointments to an administration that must deal with the Troika.

Papademos is said to be a compromise choice, with wide support because of his independence, but that may be a problem for political leaders who want more of a say in running a government that would be a hybrid of old enemies.

“Papademos is a very good choice because the main problem is that any kind of Greek government that would be formed from the Greek parties is not able to implement the measures required,” University of Ioannina Economics Professor Pantelis Kammas told SETimes.

The Troika has demanded a written commitment before releasing an overdue 8 billion-euro tranche from an ongoing bailout of 109 billion-euro in rescue loans.

Samaras has said he would support the deal.

Without the aid, Greece will not have enough money to pay its workers and pensioners, who’ve been left on tenterhooks while the political feud rages behind closed doors.

European Economic and Monetary Affairs Commissioner Olli Rehn said without the signed documents, Greece would not receive the loan installment. “It is essential that the entire political class is now restoring the confidence that had been lost in the Greek commitment to the EU-IMF programme,” he said.

Greeks have been protesting, rioting and striking for 18 months over the austerity measures they say are aimed at workers, pensioners and the poor, while tax evaders owe the country more than 40 billion euros, according to a finance ministry report.

Leaders of the eurozone suggest Greece faces the prospect of being booted out of the 17-member group unless a coalition that supports the new bailout package agreed upon in July is backed.

The coalition government must also approve a budget for 2012 before the end of November.

Haralambos Tsardanis, director of the Institute for International Economic Relations in Athens, said a new government would buy Greece some breathing room. “The formation of a coalition [will be] a relief to the people because it signals that the economic crisis is not a political crisis anymore,” he told SETimes.

Michael Haliassos, chairman of macro-economics and finance at Goethe University in Frankfurt, said it might not make any difference who’s in power in the short term because of what he describes as a reluctance to institute reforms and create a more productive economy.

For now, he told SETimes, “It can’t be a single party government with a few changed people that does not have the complete support of all the parties.”


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