'Skilled' banker without political ties to lead Greece - The Best from Greece

Posted on: 11/Nov/2011

Lucas Papademos will guide nation through debt crisis

BERLIN -- Lucas Papademos, named Thursday to be interim prime minister of Greece, steered the country into the euro region as central bank governor more than a decade ago. Now the former European Central Bank vice president will have to secure the country's euro membership for a second time.

Papademos, who has never held elected office, helped foster economic growth rates that surpassed Germany's and France's in his eight years at Greece's central bank before moving to the ECB in 2002. Most recently a visiting professor at Harvard and an adviser to departing Prime Minister George Papandreou, Papademos takes over a country weeks from being unable to meet its debt obligations.

"He's a leader who can temporarily see Greece through troubled times but keep in mind that he has no political base," said Spyros Economides, a senior lecturer at the London School of Economics. "A cross-party coalition will put up with him for a defined, temporary period only."

Papademos, 64, will assume office after a week that saw Germany and France warn Greece they would cut all aid to the country until it signs up to a bailout plan agreed to in Brussels on Oct. 26. Failure to do so could call Greece's membership of the euro into question after the two countries' leaders ordered Papandreou to decide once and for all whether his nation can stay in the currency.

Papademos' task will be to navigate parliament, the focus of a wave of street protests in recent months, through the legislation needed to secure the next rounds of emergency funding.

Even before his appointment was announced after three days of squabbling among parties, Papademos was the top choice to lead a national unity administration, a Kapa Research poll of 1,009 people for To Vima newspaper showed on Oct. 29.

"He's a skilled and thoughtful banker," said Fredrik Erixon, head of the European Centre for International Political Economy in Brussels. "And he's got sufficient distance from Greek politics to be seen as someone standing above Greek party political corruption."

Papademos will now have to deal with an issue that he acknowledged a year ago. Last Nov. 10, he said that while fears Greece would restructure its debt were overestimated, they couldn't entirely be ruled out. In May, he told the Wall Street Journal that "haircuts" for holders of Greek debt should not be part of a rescue package. The accord agreed to on Oct. 26 by European leaders includes a 50 percent writedown of Greek debt.

"He's inexperienced on the political side," said Tobias Blattner, European economist at Daiwa Capital Markets in London, who knows Papademos from his time at the ECB. "He's really just a nice guy. In this situation, where you need to push through draconian reforms, it requires a tough guy with political weight and skills."

source: http://www.delawareonline.com

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