Greece's unity government faces tough agenda

Nov 11, 2011, 17:52 GMT

Athens - Greece's interim unity government got down to work to push through unpopular austerity reforms demanded by the European Union as part of a bailout plan after being sworn-in on Friday, with technocrat Lucas Papademos at the helm.

'The new government will do the best it can to address the country's problems and I believe that with the cooperation of all we will achieve this,' said Papademos, a former vice-president of the European Central Bank.

The interim government he heads includes ministers from Greece's two largest parties as well as some members from the smaller right-wing LAOS party.

Evangelos Venizelos, who was involved in negotiating the latest EU bailout payment agreed during a October 26-27 European Union summit, retained his post as finance minister.

The government is to take on a caretaker role until elections are held. Shortly after being named, Papademos dismissed reports suggesting the poll would be held on February 19, saying no firm date had yet been set.

The new government will face a confidence vote in parliament in the coming days which it is almost certain to win since it has the support of three parties.

Papademos' appointment comes after a two-week political crisis that threatened to unravel the EU bailout plan and raised questions about Greece's continued membership in the eurozone.

Papademos replaces outgoing Prime Minister George Papandreou midway through his four-year term.

High on the agenda is approval of a 130-billion-euro (175.6-billion-dollar) bailout package, which includes provisions for private bondholders to take a 50-per-cent haircut on their Greek debt holdings.

The conservative New Democracy party, under the leadership of Antonis Samaras, received six ministries, including the key positions of foreign affairs and defence while ministerial positions also went to the smaller right-wing LAOS party.

Speaking to journalists outside the presidential palace on Thursday, Papademos said the country's economy faced major problems despite months of austerity. He stressed that the priority was for Greece to remain in the euro zone.

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

His government will be urged to approve the debt deal and secure the next 8 billion euro installment of the country's euro bailout. Without the emergency funding, Athens would default by mid-December, experts say.

The new prime minister will also face the challenge of implementing a round of austerity measures already passed, including the suspension of 30,000 civil servants on partial pay and a series of privatizations.