New Greek govt takes over, former banker at helm (AP)

ATHENS, Greece ? Greece's new technocrat Prime Minister Lucas Papademos assumed power Friday at the helm of an interim coalition government that will seek to push through tough reforms and ensure the country avoids a catastrophic default.

Papademos, a former European Central Bank vice president, leads a government including ministers from three parties. The bitter rivalry of outgoing Prime Minister George Papandreou's Socialists and the conservatives of Antonis Samaras has been set aside as Greece's politicians struggle to put the country back on track financially and ensure it can retain its cherished use of the euro.

Finance Minister Evangelos Venizelos retained his post, the conservatives got the key positions of foreign affairs and defense, while ministerial positions also went to members of a small right-wing party.

Papademos ? who was appointed Thursday after two weeks of political turmoil that infuriated European leaders, horrified Greeks and led to mayhem on international markets ? must now ensure his government passes Greece's latest debt deal: a euro130 billion ($177 billion) agreement reached by the European Union on Oct. 27.

It includes provisions for private bondholders to forgive 50 percent, or some euro100 billion, of their Greek debt holdings, details of which the new government will have to negotiate.

Papademos, who also served a stint as Greece's central bank governor, must guide the country at a time of deep recession, with unemployment reaching a record 18.4 percent in August, and Greeks furious at having to endure repeated rounds of tax hikes and salary and pension cuts.

He also must secure the next euro8 billion installment of the country's initial euro110 billion eurozone and International Monetary Fund bailout, without which Greece will default in a matter of weeks. Once that is done and the country has implemented the new debt agreement, Papademos is to lead the country to early elections, tentatively scheduled for February.

Papademos' tenure is expected to last only for a few months, but he will face the challenge of steering the country through the implementation of austerity measures already passed, including the suspension of 30,000 civil servants on partial pay and a series of privatizations.

Angered by nearly two years of austerity, including cuts to salaries and pensions and repeated tax increases that have led to a deep recession, Greeks have organized frequent strikes and demonstrations that often turn violent. Papademos' appointment may dampen the protests, at least at first, some analysts argue.

"I think he will get that kind of brief honeymoon," said Thanos Dokos, head of the Hellenic Foundation for European and Foreign Policy. "People were desperate enough and now (may) give a new face, a new person, who's not a professional politician some leeway to try to do his job in the proper way. And, of course, at some point they will be expecting some results, which I'm afraid will not be forthcoming in the short term."

The new government will face a confidence vote in Parliament in the coming days ? which it is almost certain to win as it enjoys the support of three parties.

The latest political turmoil was sparked by Papandreou's Oct. 31 surprise announcement that he would put Greece's new debt agreement to a referendum. His plan infuriated European leaders, rocked global markets and led many of his own Socialist party lawmakers to rebel and call for his resignation.

Papandreou withdrew the public vote plan after the main conservative opposition said they backed the deal, and agreed to step aside.

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Associated Press writer Nicholas Paphitis and APTN producer Apostolis Fotiadis in Athens contributed.

Source: http://us.rd.yahoo.com/dailynews/rss/business/*http%3A//news.yahoo.com/s/ap/20111111/ap_on_bi_ge/eu_greece_financial_crisis

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