ATHENS – Greek prime minister George Papandreou dumped his finance minister yesterday in a reshuffle meant to stiffen resolve for harsh economic reforms and avoid a default that could cause global economic turmoil.
Mr Papandreou picked the outgoing defence minister, Evangelos Venizelos, as the new finance chief, jettisoning George Papaconstantinou, architect of a belt-tightening programme that has provoked violent unrest and a revolt in his Socialist Party.
The move seemed likely to buy time for the prime minister, but analysts said it could also weaken the austerity drive after Mr Venizelos said he would try to reach an agreement with Greece’s bailout lenders to let it soften the deeply painful reforms.
The European Union and International Monetary Fund have made a new bailout for Greece, estimated at €120 billion, conditional on Mr Papandreou’s five-year package of cuts and tax hikes worth €28 billion ($39.59 billion).
Greece’s political upheaval and three weeks of protests have pounded markets and drawn criticism from other EU states, where policymakers have dithered over how best to keep funding Greece and forestall a disastrous “credit event”.
EU officials lined up to urge Greek leaders to stop playing politics and get behind the reform plan, however painful. “This is no time for party politics, there is too much at stake,” European Council president Herman Van Rompuy said.
Analysts said the reshuffle was aimed primarily at quelling dissent in the Socialist Party (PASOK) by moving the unpopular Mr Papaconstantinou and appointing Mr Venizelos, a powerful political figure and the prime minister’s top party rival.
But they said that while the cabinet was expected to approve headline figures agreed with the EU and IMF in the mid-term reforms package, they may look for wiggle room when it comes to passing laws to meet those targets.
Mr Papandreou told the new cabinet they had the resolve to push through reforms and save the Greek economy.
But he added that the new administration would try to focus more on supporting growth – a difficult prospect for a country trying to cut its budget deficit – and Mr Venizelos said he would go to Brussels tomorrow to try to agree changes to the plan already approved by the ruling party in parliamentary committee.
“All the changes, as marginal as they may be, to the mid-term plan and the implementation law, serve social justice,” Mr Venizelos told Mega TV. “Our fiscal targets can afterwards be served by other means if these means are accepted by our partners.” He gave no details, but his predecessor pledged this week to change the package to refrain from hiking heating fuel tax and raising the tax-free threshold for property.
Mr Papaconstantinou becomes environment minister in the reshuffle.The new cabinet was sworn in yesterday by Orthodox priests in traditional robes and a confidence vote is due by Tuesday night.
The prime minister also removed the labour and environment ministers who had resisted some of the economic reforms. – (Reuters)