Bloomberg News

Samaras Names Banker to Greek Cabinet as Troika Prepares Return

June 21, 2012

Samaras to Name New Greek Government as Euro Area Ministers Meet

New Democracy party leader and newly sworn in Greek Prime Minister, Antonis Samaras with supporters at the Prime minister's offices in Athens on June 20, 2012. Photographer: Louisa Gouliamaki/AFP/Getty Images

Greek Prime Minister Antonis Samaras appointed Vassilios Rapanos, head of the country’s biggest bank, to lead his finance team as the government prepares for talks with international creditors on relief from austerity measures.

Rapanos, chairman of National Bank of Greece SA (ETE), was named as finance minister today after Samaras, the head of the New Democracy party, met with his coalition partners, socialist Pasok chief Evangelos Venizelos and Democratic Left leader Fotis Kouvelis. Demetris Avramopoulos, a former defense and tourism minister and mayor of Athens, was named foreign minister.

“This government’s task is to tackle the crisis, open a path to growth and review terms of the loan agreement, without endangering the country’s European course or its place in the euro,” according to a joint statement issued by the three parties. “The goal is to create the conditions that will lead the country out of the crisis, and from the need to depend on loan accords in the future.”

The government, which includes 17 ministers and 21 deputy ministers, will be sworn in later today, to be followed by the first Cabinet meeting. Samaras was sworn in as prime minister yesterday, the country’s fourth premier since November, after New Democracy won a June 17 election with almost 30 percent.

Three Parties

Samaras joined forces with Pasok, which finished third, and the sixth-place Democratic Left, and will control 179 seats in the 300-member parliament, ending a period of political limbo that began with an inconclusive May 6 election. The partners have committed to keeping Greece in the euro and renegotiating austerity measures like cuts in pensions that have driven the country into a fifth year of recession.

European officials have held out the prospect of flexibility over fiscal austerity for Greece after the country’s election amounted to a referendum on remaining in the 17-nation euro currency union. Greece has slipped behind budget-cutting targets that euro-area nations and the International Monetary Fund imposed in exchange for 240 billion euros ($303 billion) in aid pledges in the past two years.

Greece will run out of money in mid-July, Syriza, the biggest anti-bailout party, said on June 13 after being briefed by caretaker Finance Minister Giorgios Zanias.

Repairing the damage will fall to Rapanos, who headed National Bank of Greece since December 2009, was an adviser in the Finance Ministry from 2000 to 2004 and deputy head of the Greek delegation to the Organization of Economic Cooperation and Development.

‘Finance Problem’

“He should have what it takes,” said Platon Tinios, an assistant professor at Piraeus University and adviser to former socialist Prime Minister Costas Simitis. “He has a feel for the numbers and he knows the public finance problem of Greece inside out. As chairman of National Bank, he’s fully aware of how the public finance problem feeds into liquidity and the problems faced by banks.”

The Finance Ministry’s Zanias is representing Greece at today’s meeting of euro-area finance ministers in Luxembourg as the coalition partners thrash out the issues to be negotiated with international creditors.

All three agree that Greece needs more time to implement its fiscal adjustment program, said a Democratic Left official involved in the talks and who asked not to be identified. Other issues that will be put on the agenda include scrapping promises to cut 150,000 jobs in the civil service; retracting a law lowering the minimum wage by 22 percent; and ensuring there are no further pension or wage cuts in 2013 and 2014.

Troika

European Commission President Jose Barroso said the so- called troika of inspectors from the European Union, European Central Bank and International Monetary Fund, will return to Athens in coming days following the formation of the government.

“We will continue to work with the Greek authorities to bring Greece back to growth and job creation,” Barroso said today in an e-mailed statement. “In the coming days the troika will return to Athens to exchange views with the new government and to begin to assess what has been done and what still needs to be done in relation to the essential reforms set out in the second economic adjustment program for Greece.”

European leaders have sent mixed messages about granting Greece leeway after extending two separate rescue packages.

German Chancellor Angela Merkel has said “there can be no loosening on the reform steps.”

In a note congratulating Samaras today, Merkel said “great hopes and expectations” are vested in the new government. Samaras begins office in “difficult times,” she was cited as saying in the e-mail distributed to news organizations.

Euro Declines

The Stoxx Europe 600 Index lost 0.2 percent at 3:08 p.m. in London while Standard & Poor’s 500 Index futures slid 0.4 percent. The euro fell 0.7 percent to $1.2615. The Athens Stock Exchange Index (ASE) rose 1.8 percent, its seventh day of gains.

Euro nations such as Germany, the Netherlands and Finland are increasingly skeptical about Greece’s ability to meet the austerity conditions of the rescue, which have imposed a fiscal straitjacket that has led to four governments -- including two caretaker administrations -- since late 2009.

Greece narrowed its budget deficit from more than 15 percent of gross domestic product in 2009 to 9.1 percent in 2011. The country’s spending gap is due to fall to around 7 percent of GDP this year. Unemployment in Greece has reached a record of more than 22 percent.

To contact the reporters on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net Natalie Weeks in Athens at nweeks2@bloomberg.net;

To contact the editors responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net; Jerrold Colten at jcolten@bloomberg.net; James Hertling at jhertling@bloomberg.net.


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