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Papademos is new Greek PM, vows to stick with euro

By Elena Becatoros

Associated Press

Published: Thursday, Nov. 10 2011 9:10 a.m. MST

New Greek Prime Minister Lucas Papademos stands after his statements outside the presidential palace in Athens, Thursday, Nov. 10, 2011. Papademos was named Thursday as the prime minister of the new Greek interim government, charged with keeping the debt-strapped country out of bankruptcy and firmly in the 17-nation eurozone. After four days of intense political negotiations, the 64-year-old former vice president of the European Central Bank was chosen to lead a coalition backed by both the governing Socialists and opposition conservatives that will operate until early elections in February.

Thanassis Stavrakis, Associated Press

ATHENS, Greece — Senior banker Lucas Papademos was appointed prime minister Thursday of an interim Greek unity government that seeks to cement a European debt deal and stave off national bankruptcy.

Chosen after four tortuous days of power-sharing talks, Papademos immediately called for unity and promised to seek cross-party cooperation to keep Greece firmly in the 17-nation eurozone.

The 64-year-old former vice president of the European Central Bank will lead a government backed by both the governing Socialists and the opposition conservatives that will operate until early elections, tentatively set for February. He replaces outgoing Prime Minister George Papandreou midway through a four-year term.

The new Greek cabinet, whose members were not immediately named, will be sworn in Friday afternoon.

The announcement came as Italy wrestled with its own governing crisis, with economist Mario Monti in line to run another interim technocratic government. Italy's borrowing costs shot up Wednesday on fears that Premier Silvio Berlusconi would linger in office, prompting the country's president to promise that Berlusconi would be out likely by Saturday.

Europe has already bailed out Greece, Portugal and Ireland — but together they make up only about 6 percent of the eurozone's economic output, in contrast to Italy's 17 percent. Italy, the eurozone's third-largest economy, is considered too big for Europe to bail out.

Monti, 68, now heads Milan's Bocconi University but made his reputation as the European Union competition commissioner who blocked General Electric's takeover of Honeywell.

In Athens, hopes rose that Greece will avoid an imminent bankruptcy that could push Europe into a new recession and world financial markets into turmoil.

"I am not a politician but I have dedicated most of my professional life to exercising financial policy both in Greece and in Europe," Papademos said after the Greek president gave him the mandate to form a Cabinet. "The Greek economy continues to face huge problems despite the great efforts than have been made for fiscal reform."

He insisted Greece must defend its euro membership.

"The participation of our country in the eurozone is a guarantee for the country's monetary stability. It is a driver of financial prosperity," Papademos said, adding that just being in the eurozone will help Greece through its troubles.

Shares on the Athens Stock Exchange were up 1.6 percent at 779.6 on the news of the power deal power deal. That came despite more bad news for Greece's recession-hit economy: unemployment surged to 18.4 percent in August, up from 12.2 for that month in 2010.

European officials greeted the Greek news with relief.

"The agreement to form a government of national unity opens a new chapter for Greece," said a joint statement by European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy.

They stressed "it is important for Greece's new government to send a strong cross-party message of reassurance to its European partners that it is committed to doing what it takes to set its debt on a steady downward path."

Many Greeks are deeply angry after 20 months of government austerity measures, including repeated salary and pension cuts and tax hikes to get the country's first, €110 billion ($152 billion) international bailout. Despite the reforms, the Socialist government missed its financial targets as Greece fell into a deep recession. Furious labor unions held repeated strikes, with many demonstrations degenerating into riots.

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