Europe News

Papademos named new Greek prime minister

By Christine Pirovolakis Nov 10, 2011, 14:20 GMT

Designated Greek Prime Minister Lukas Papademos. EPA/ORESTIS PANAGIOTOU

Athens - Greek President Karolos Papoulias on Thursday named Lucas Papademos, a former vice-president of the European Central Bank, as the country's new prime minister.

Papademos now faces the herculean task of keeping the debt-ridden country in the eurozone and away from bankruptcy.

The 64-year-old banker will head a new national unity government backed by the governing Socialists and the opposition conservatives.

The new government will have a caretaker role until elections are held. Shortly after being named, Papademos contradicted earlier reports suggesting the polls would be held on February 19, saying no firm date had yet been set.

Speaking to journalists outside the presidential palace, Papademos said the country's economy faced major problems despite months of austerity.

'Greece is at a critical cross-roads and the path that it takes will be important for the people ... it is not an easy one but those issues will be solved more quickly with unity, understanding and wisdom to deal with the problems in the best possible manner,' said Papademos, who until very recently had served as an advisor to outgoing premier George Papandreou.

Thursday's long-awaited announcement came after four days of marathon negotiations between Greece's political leaders.

A former economics lecturer at Columbia University in New York, Papademos played a key role in preparing Greece for eurozone membership, but had never held a political office before.

On Thursday he said his key priority would be to implement the decisions taken at an October 26-27 European Union summit in connection with a 130-billion-euro (175.6-billion-dollar) European debt deal.

His new cabinet was expected to be sworn in on Friday at 2 pm (1200 GMT).

'It is a great honor,' he said after being named, adding 'but the responsibility is greater.'

Political analyst Antonis Karakouris called Papademos' appointment 'a wise choice.'

Nikos Xydakis, a commentator with the Greek daily Kathimerini newspaper, expressed 'a sigh of relief' over Thursday's decision and predicted that a likely fresh round of belt-tightening measures would further test the patience of the public.

Shares on the Athens Stock Exchange were up 3.17 per cent on the prospect of a deal.

However, the news also coincided with the release of new unemployment data from the national statistics agency ELSTAT showing that the country's jobless rate had increased to 18.4 per cent in August, from 16.5 per cent in July and 12.2 per cent a year earlier.

Greece's financial crisis turned political last week after Papandreou said he would put the new European rescue package to a referendum, causing markets to tumble around the world and angering European leaders. He later withdrew his referendum proposal and agreed to step down to favour the creation of a national unity government.