Venizelos Says Greek Loan a Priority as Papademos Takes Control
Papandreou announced agreement on a unity administration on Nov. 9 after his proposal for a referendum on a second Greek financing package roiled markets and angered Greeks and European Union partners.
Merkel Halts Funds
Disbursement was halted by German Chancellor Angela Merkel and French President Nicolas Sarkozy after Papandreou called a referendum on the European bailout terms. He later dropped the idea.
The euro rose 1 percent to $1.3747 at 10:17 p.m. Athens time yesterday. European stocks advanced, with the Stoxx Europe 600 gaining 2.4 percent to 240.98. Greece’s benchmark general index lost 0.9 percent to 755.65. The Standard & Poor’s 500 closed up 2 percent at 1,263.85 yesterday.
The yield on the 10-year Greek bond was little changed at 28.45 percent. Two-year note yields rose 81 basis points to 108.9 percent.
Greece’s new government includes six members of New Democracy and four members of LAOS as ministers or deputy ministers.sacs louis vuitton Papandreou’s Pasok party has 36 members in the Cabinet. The most senior position held by New Democracy is the foreign ministry post by Dimas, who served as EU environment commissioner starting in 2004 until 2010.
Lost Credibility
Dimas, 70, has degrees from the University of Athens and New York University. He worked as a lawyer for the World Bank from 1970 to 1975 and was deputy governor of the Hellenic Industrial Development Bank from 1975 to 1977. He has been elected to the Greek Parliament 10 consecutive times since 1977 with New Democracy, holding various posts including head of the energy and agriculture ministries.
The coalition “can resurrect the lost credibility of the political system,” Dimitris Sotiropoulos, associate professor of political science at the University of Athens, said in a telephone interview. “It is extremely important that more than two parties agreed on someone who hasn’t faced the mistrust and suspicion of voters. That can only help the economy as well as restore some faith in political life.”
Scale of Task
The scale of the task facing Papademos and his new team was underlined on Nov. 10 when the European Commission said the country’s debt will be almost twice the size of the economy in 2012 amid a fifth straight annual contraction. The unemployment rate rose almost two percentage points in August, a record monthly increase, to 18.4 percent.
Greece’s debt will reach 163 percent of gross domestic product this year and jump to 198 percent in 2012, the EU’s Brussels-based executive arm said in its fall economic forecast. That compares with 173 percent predicted by the Greek government in its 2012 draft budget.
Those figures are based on no policy changes and don’t include plans for a writedown of Greek debt that is included in the Oct. 26 plan and may slice as much as 100 billion euros off Greece’s debt burden.
Germany will support Papademos in his task of overhauling the country, according to a message from Merkel to Papademos released by the German government yesterday in Berlin.
Hopes and Expectations
Papademos faces “great hopes and expectations” and his government will have to undertake “reform measures quickly to lead Greece out of the current crisis,” Merkel said in the note. “Germany will stand by you and the Greek people in the difficult mastering of the common challenges in Europe and the euro zone.”
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