New Greek PM Says Country at ‘Crucial Crossroads’

Posted November 10th, 2011 at 7:10 pm (UTC-5)
Leave a comment

Greece's newly named caretaker prime minister, Lucas Papademos, says his country is at a “crucial crossroads” and it will not be easy to fix the huge problems facing the economy.

Greece's feuding political leaders Thursday named Mr. Papademos, a former vice president of the European Central Bank, to be the country's interim leader until a national election is held, likely next year. Outgoing Prime Minister George Papandreou handed him the responsibility for carrying out Greece's hugely unpopular austerity measures demanded by its international creditors in exchange for more money to keep the country from defaulting on its debts.

Mr. Papademos, who is set to be sworn in Friday, said “the course will not be easy.” But he said the country's continued use of the euro currency is a “guarantee of monetary stability” and that Greeks “must all be optimistic about the final result” if they stay united.

The U.S.-educated economist has never run for elected office and is viewed as a non-partisan personality. Analysts say he is well-connected in European capitals.

Earlier, U.S. State Department spokesman Mark Toner said the United States looks forward to working with the new prime minister and that Greece is an important partner and a long-standing friend. He said the U.S. welcomed the consensus that has been reached in Greece over the need to implement the country's reform commitments to the International Monetary Fund and European Union.

The appointment of Mr. Papademos came as the European Union voiced new concern about the continent's economy, saying it could slide into “a deep and prolonged recession.” Economic affairs commissioner Olli Rehn said “growth has stalled in Europe.”

The EU predicted economic growth in the 17-nation eurozone would amount to just one half of 1 percent next year, plunging from an earlier 1.8-percent projection.

With the Greek selection of a new leader, the focus of the European debt crisis again turned to Italy. Italian Prime Minister Silvio Berlusconi, who has promised to step down after parliament passes tough austerity measures, appeared Thursday to endorse the man widely seen as his replacement, leading economist Mario Monti.

A former European Union commissioner, Monti could be named to head a new government that hopes to implement Italy's budget-cutting plan aimed at reducing the country's $2.6-trillion debt.

German Chancellor Angela Merkel said it is important for Italy, with the third-largest eurozone economy, to quickly push through its austerity measures and settle on its political leadership.

In the meantime, Italy's borrowing costs this week have soared above 7 percent — higher than the rate that forced Greece, Ireland and Portugal to ask for bailout loans. The EU predicted that Italy's economy will only grow by a tenth of a percent in 2012.