Economist Papademos to lead Greece’s unity government

Economist Lucas Papademos will be Greece’s next prime minister, the Greek president’s office announced Thursday, giving a non-politician the job of passing an unpopular bailout plan before elections are held next year.

The selection by the two main political parties ended four days of squabbling over how to structure a unity government. Papademos, 64, and the rest of the government are to be installed Friday. The former vice president of the European Central Bank, an early favorite for the premiership, is seen as an able, if uncharismatic, bridge between Greece and its powerful creditors.

The gridlock over naming a successor to Prime Minister George Papandreou shattered any remaining sense that Greece’s political parties had united in the interest of helping the country through its economic crisis. It also demonstrated that electoral advantage — along with the costs of embracing the bailout too closely — remains on the minds of Greek politicians, analysts said.

But Papademos assured Greeks and anxious Europeans elsewhere that he would push through the austerity measures that are a condition of the $177 billion bailout plan announced at the end of October. The country is weeks away from running out of money, officials have said.

Greece’s “problems will be solved with unity, understanding and prudence,” Papademos told reporters after his selection was announced. He called Greece’s membership in the euro zone “a guarantee for monetary stability.”

As governor of the Bank of Greece from 1992 to 2002, Papademos helped usher Greece into Europe’s currency union, an achievement that the country’s financial crisis has threatened.

Papademos received his bachelor’s, master’s and doctoral degrees from the Massachusetts Institute of Technology. He taught at Columbia University for almost a decade starting in the mid-1970s.

More recently, he served as an economic adviser to Papandreou and a visiting professor at Harvard’s Kennedy School of Government. He had been scheduled to teach a class at Harvard during the spring semester called “The Global Financial Crisis: Policy Responses and Challenges.”

Papademos “is not the kind of extrovert figure that we’ve been used to having in Greece,” said George Pagoulatos, a professor of politics and economics at the Athens University of Economics and Business. “He doesn’t have the instincts of a politician. He’s been an academic.”

Pagoulatos said Papademos’s aversion to corrupt dealmaking could be a good thing amid the highly charged process of making painful cuts, although some Greek commentators said the incoming prime minister’s cautious nature would not necessarily inspire the country in a time of crisis.

The most immediate issue facing Greece is securing an $11 billion installment of its original May 2010 bailout package. Finance Minister Evangelos Venizelos said last week that without the bailout, the country’s coffers would be empty by Dec. 15.

When Papandreou announced last week that he would hold a national referendum on the bailout plan, shocking Europe and many of his own political allies, the leaders of Germany and France warned him that a no vote would spell the end of Greece’s membership in the euro zone.

The referendum call cost Papandreou his support. He survived a confidence vote last week, but only after he had pledged to step down upon the formation of a unity government. He was expected to formally bring his two-year premiership to a close on Friday, ending his stint in the post that his father and grandfather also held.

In a nationally televised address Wednesday evening, Papandreou said farewell to the Greek people before meeting with Greece’s president.

“Today, despite our political and social differences, we are setting aside sterile conflicts,” Papandreou said. “A government of political forces is taking over that goes beyond parties and personal biases. . . . We will take the necessary steps together, with national unity.”

The composition of the new cabinet was unclear, but Greek news reports suggested Thursday night that Venizelos would remain finance minister and that the government would include members of Papandreou’s Socialist party, the opposition New Democracy party and the far-right Popular Orthodox Rally, known in Greece as the Laos party.

Venizelos is expected to run for prime minister in next year’s elections. During the turmoil last week, he moved to assert control of the Socialist party as members turned against Papandreou. He has been a forceful advocate for the bailout plan, which will write off $136 billion of Greece’s debts in exchange for far-reaching reforms that will touch the lives — and pocketbooks — of most Greek citizens.

Michael Birnbaum is The Post’s Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.
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