Tags: EU | Greece | euro

New Greek Government Pledges to Stay in Eurozone

Thursday, 21 Jun 2012 12:24 PM

 

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Greece's new conservative-led coalition government on Thursday pledged to try and revise the country's austerity commitments to its creditors, but insisted that would not endanger ties with the rest of Europe or Greek use of the euro currency.

The day-old coalition under Prime Minister Antonis Samaras — Greece's fourth in eight months — issued a statement saying it would seek to serve its full four-year mandate. It also named a 38-member Cabinet that includes prominent banker Vassilis Rapanos in the crucial post of finance minister.

The government's "aim is to tackle the crisis, to open the road to development and to revise the terms of the loan agreement without jeopardizing the country's European course or its presence in the euro," the statement said.

At the same time, it said, Greece will continue to reduce its fiscal deficit, control its debt and implement structural reforms.

Greece depends on international rescue loans, granted on condition of a harsh austerity program that has forced deep cuts in incomes and public services, amid soaring unemployment and a deep recession now in its fifth year.

After more than six weeks of political deadlock, the formation of a long-term government with broad parliamentary support has soothed global markets and Greece's European partners.

Many had feared a victory in Sunday's national election by anti-austerity parties could have prompted a disastrous confrontation with Greece's creditors, ending the flow of bailout funds and eventually forcing the country out of the 17-member eurozone.

In Brussels, European Commission President Jose Manuel Barroso welcomed the formation of Greece's new Cabinet, saying the EU will continue to work with Athens to bring back growth and job creation.

"I am particularly reassured that the new administration will count on ample and broad-based parliamentary support," he said in a statement. "I believe that this sends a clear signal of Greece's determination to honor its commitments and stay in the euro."

In Sunday's vote, Samaras' New Democracy party narrowly beating the anti-austerity Syriza radical left party but didn't win enough seats in Parliament to rule alone and formed a coalition with the third-place Socialists and the smaller Democratic Left party.

Samaras, a 61-year-old U.S.-educated economist, campaigned on pledges to boost growth, cut taxes, seek extended deadlines to implement the country's pledges for more austerity, and raise the incomes of low-earners, large families, police and fighter pilots.

"I expect the party to keep its word and do what is said it will do," said Athens resident Leonidas Tiniakos, 58. "Samaras and the other parties which support the government have said that some parts of the bailout have to change. But it's the actions that matter, not the words."

Tiniakos, who said he voted for New Democracy, added that the fact Greece now has a government "gives me a little hope."

Kyriakos Tzaferos, an out-of-work civil engineer now working as a real estate agent, said the government deal could help restore market stability.

"Probably the economy will try to pick up again and some money will be pumped into the market," he said. "Otherwise, if there's no money in the economy, there's going to be no improvement into what you get in your pocket at the end of the day."

Salaries have been deeply cut over the past 2 ½ years in the shrinking private job market and the large civil service. Still, civil servants have been spared from the kind of layoffs that have left more than one in five Greek workers jobless.

Pensions have dwindled and taxes have repeatedly been raised, although constant pledges to overhaul an inefficient tax system that primarily targets salaried employees and pensioners have failed to deliver.

The new ministers and their deputies were to be sworn in Thursday evening, shortly before the government's first Cabinet meeting. Rapanos will be sworn in as finance minister later, so the outgoing one, Giorgos Zanias, can represent Greece at Thursday's meeting of eurozone finance ministers in Luxembourg.

Rapanos, 65, is a non-executive chairman of the National Bank of Greece who teaches economic analysis and public economics at Athens University.

Former diplomat Dimitris Avramopoulos was appointed foreign minister, while former conservative development minister Costis Hadzidakis has been named minister of "development, competitiveness, infrastructure, transport and networks."

Stelios Karabasakis, an I.T. student doing his national service in the army, said the new Cabinet failed to impress him.

"Basically it's a mix of people we've seen before and which the people of Greece don't trust a lot," he said. "And ... about the new names, we'll have to wait and see."

Greek stocks rallied for a sixth straight session, closing the day up 1.83 percent. The stock market has gained nearly 10 percent in the past week, but has still lost nearly 90 percent of its value over the past five years.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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