New Greece Prime Minister: Lucas Papademos, Former ECB Vice-President

A former European Central Bank vice-president, Lucas Papademos, was appointed to form a new Greek government after days of wrangling, the Greek president’s office said Thursday.

In an effort to right Greece's course amid the ongoing European debt crisis, former European Central Bank vice president Lucas Papademos has been named interim prime minister of Greece, replacing the outgoing George Papandreou. Photo: Wikipedia

Lucas Papademos is supposed to lead a unity government that has pledged to quickly approve the tough terms of a European aid package and save the country from financial collapse. Mr. Papademos, 64, was chosen after four days of tense negotiations that put Greece’s feuding political parties on full display.

In a written statement, issued by the office of President Karolos Papoulias, Mr. Papademos’s appointment was confirmed. “Chief role of the new interim administration will be the implementation of the decisions of the European Union summit of Oct. 26 and the policies that are connected to this,” the statement said.

Shortly after the announcement Papademos said membership of the euro would eventually bring monetary stability and ensured that Greece would made the adjustments needed to restore economic grow.

“The course will not be easy,” he said. “But the problems, I’m convinced, will be solved. They will be solved faster, with a smaller cost and in an efficient way, if there is unity, agreement and prudence.”

After a long period of domestic protests and building pressure from the European Union, new Prime agreed on Sunday to step down once a coalition government had been formed. But the talks dragged on, apparently hostage to political maneuvering by all sides.

Mr. Papademos, however, is seen as outside the old-boy networks of Greek politics, perhaps will be able to take Greece on a new path.

According to previous reports, Mr. Papademos insisted on some measures he believed were crucial to his success, including a minimum of at least six months at the helm. Earlier, Greece’s major political parties had agreed to new elections in just 100 days.

The reports also said that Papademos announced that members of the opposition New Democratic Party played a significant role in the unity government, which would have to impose additional austerity measures almost immediately.

But Mr. Papademos denied making any demands before accepting the job. He also said he hoped that the new unity government would be “transitional” and that Greece stayed in the euro zone. “I am convinced that Greece’s continued participation in the euro zone is a guarantee for the country’s stability and future prosperity,” he said.

It was also reported that new prime minister had accepted the president’s mandate to form a unity government as he thought everyone should help in the country’s recovery. “The task is big and the responsibility I assume is even bigger,” he said.

The new government is to be sworn in at 2 p.m. Friday, according to the president’s office said. The country will hold fresh elections in February.

 “We have long stressed the need for a broad political consensus around measures to lift Greece out of this deep economic crisis,” European Council president Herman Van Rompuy and European Commission president Jose Manuel Barroso said.

In an interview on Wednesday George Papandreou promised that a government of national unity would do its best to drag Greece out of its economic crisis. “A new season is opening,” he said.

Greek crisis has affected international markets; as a result, investors are afraid that the new bailout deal may not be implemented.

Managing director of the International Monetary Fund, Christine Lagarde, warned about the potential for a “lost decade” if nations do not join forces against the “dark clouds” gathering on the horizon. “The global economy has entered a dangerous and uncertain phase,” she said.

“If we do not act, and act together, we could enter a downward spiral of uncertainty, financial instability, and a collapse in global demand. Ultimately, we could face a lost decade of low growth and high unemployment,” Lagarde said, addressing the 2011 International Finance Forum in Beijing. [Via CNN and The New York Times]

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