Papademos takes the reins

"Problems will be solved by unity, understanding and prudence" was the rallying cry from incoming Prime Minister Lucas Papademos, as he prepared to be sworn-in last Friday to lead Greece's new national unity government


“Problems will be solved by unity, understanding and prudence” was the rallying cry from incoming Prime Minister Lucas Papademos, as he prepared to be sworn-in last Friday to lead Greece’s new national unity government.

Following protracted negotiations between the major opposition parties, the announcement of Papademos’ appointment came soon after the former European Central Bank vice-president was summoned to the presidential mansion on Thursday.

Papademos, 64, who is not a member of parliament, will be Greece’s 184th Prime Minister. He will head the coalition government until a general election, which is likely to take place in February.

The interim PM has said that his first priority will be to ensure Greece receives its latest bailout payment, by approving the new 130bn euro ($174bn) eurozone rescue package.

As Papademos’ appointment was made, a statement from the president’s office said that the new government has as its mission “the materialisation of the decisions of the eurozone summit of October 26 and implementation of the economic policy connected with those decisions”.

Within minutes of accepting President Papoulias’ instruction to head a new government, Papademos told reporters that Greece’s “problems will be solved with unity, understanding and prudence,” adding that he was convinced “the country’s membership of the euro area means a guarantee for monetary stability”.

“Greece is at a crucial crossroads,” said Papademos. “The path will not be easy but I am convinced the problems will be resolved faster and at a smaller cost if there is unity, understanding and prudence.”

The national unity government will comprise of Pasok, New Democracy and Popular Orthodox Rally (LAOS). Democratic Alliance (DISY) president Dora Bakoyannis has stated that her party will also support the new administration.

The KKE (Communist party) and Syriza (Radical Left Coalition) have expressed their opposition to the new government and called for immediate elections.

Meanwhile, across Europe a collective sigh of relief emanated from eurozone leaders following confirmation of Papademos as the new PM. European Council president Herman Van Rompuy and European Commission president Jose Manuel Barroso hailed the national-unity government as a “new chapter” for Greece.

“We reiterate that our European Institutions will continue to do everything within their power to help Greece. But Greece must also do everything within its power to help itself,” he said

German Chancellor Angela Merkel said that she would work with every Greek leader and that she welcomed broad political support for the reforms in Greece.

Who is Lucas Papademos?

Lucas Papademos is a former vice-president of the European Central Bank (ECB). More recently, as adviser to PM George Papandreou, he took part in the negotiations between Athens and the ‘troika’ of international creditors – the EU, IMF and his previous employer – the ECB. His career spans the worlds of academia and economic policymaking.

After completing secondary school in Greece, Papademos moved to the US where he studied physics and engineering. For his PhD, he moved to economics, graduating with his thesis on employment and anti-inflation policy.

After a period teaching at Columbia University, he returned to Greece where he lectured at the University of Athens.

In 1994 he became Governor of the Bank of Greece, where he worked to stabilise the Greek economy in order that Greece would meet the conditions set to join the euro. Critics maintain that as governor, Papademos was in a position to know of inaccuracies in Greece’s budget figures in its bid to join the euro. It is a charge he has denied.

Papademos left Greece’s central bank in 2002 to become vice-president of the European Central Bank (ECB), a post he held until 2010.

As Prime Minister, Papademos’ challenge will be to explain why further austerity measures are vital to restore the Greek economy to health, and to ask the Greek people to support such action.

Meanwhile, his brinkmanship in keeping Pasok and New Democracy fulfilling the responsibilities of a transitional national unity government, rather than acting for party political gain, will prove an equal test of his abilities.

Papademos’ appointment coincided with news that Greek unemployment jumped to a record high of 18.4 per cent in August (at the height of the tourism season when the rate traditionally falls), from 16.5 per cent in July.