Papademos to be Sworn in as New Greek Prime Minister

Posted November 11th, 2011 at 7:10 am (UTC-5)
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Lucas Papademos is set to be sworn in as the new prime minister of Greece, following nearly a week of intense talks over the formation of a coalition government that hopes to rescue the country from a deep financial crisis.

Mr. Papademos is expected later Friday to name his Cabinet, which is thought to include many of the same key ministers from the outgoing administration of George Papandreou, who stepped down on Sunday midway through his four-year term.

Greece’s feuding political leaders Thursday named Mr. Papademos, a former vice president of the European Central Bank, to be the country’s interim prime minister until a national election, provisionally set for February, is held.

The transition government is tasked with implementing deeply unpopular budget cuts required by European leaders in order to secure the next installment of a rescue package that would keep Greece from going bankrupt within weeks.

Mr. Papademos said “the course will not be easy,” but that Greeks “must all be optimistic about the final result.”

The world’s attention now turns to Italy, the eurozone’s third largest economy, which is under pressure to implement a comprehensive budget-cutting plan aimed at reducing the country’s $2.6-trillion debt.

Italy’s Senate on Friday began debating a series of tough austerity measures demanded by European leaders in order to ensure the stability of the euro.

The head of the eurozone crisis fund on Friday told several European newspapers that Italy must act swiftly on the measures, saying it was “running out of time to calm markets.” But Klaus Regling also said the eurozone bailout fund was ready to intervene and help Italy if necessary.

Both houses of Italy’s parliament are expected to pass the reforms by this weekend, after which Prime Minister Silvio Berlusconi has promised to step down.

Mr. Berlusconi’s most likely successor is former European Union Commissioner Mario Monti, who was named Wednesday by Italian President Giorgio Napolitano as “senator for life,” a move widely seen as a precursor to Monti being appointed as prime minister.

But Mr. Napolitano cannot appoint a new prime minister until Mr. Berlusconi follows through on his promise to resign, and many investors fear that the 75-year-old may once again stubbornly try to retain his position.

Mr. Berlusconi appeared to endorse Monti on Thursday. In a brief telegram, Mr. Berlusconi said he wishes Monti “fruitful work in the country’s interest” and congratulated him on his new post.

Yet some Italians remain skeptical that the self-made media mogul, who first became prime minister in 1994, will give up power so easily.

In Washington, the White House said late Thursday that U.S. President Barack Obama spoke with the Italian president, saying he was confident in Mr. Napolitano’s ability to form an interim government that “will implement an aggressive reform program and restore market confidence.”

In the meantime, Italy’s borrowing costs this week soared above 7 percent — higher than the rate that forced Greece, Ireland and Portugal to ask for bailout loans.