Greek PM replaces finance minister in reshuffle

June 17, 2011 - 2:44 AM
Greece Financial Crisis

Greek Defence Minister Evangelos Venizelos enters the Parliament to attend an emergency meeting of Socialist lawmakers, in Athens Thursday, June 16, 2011. Venizelos was appointed as new Finance Minister after Prime Minister George Papandreou reshuffled the Cabinet, scrambling to marshal his dissent-prone party to approve new austerity measures needed to receive more vital rescue loans from European countries and the IMF. (AP Photo/Dimitri Messinis)

ATHENS, Greece (AP) — Greek Prime Minister George Papandreou replaced his finance minister Friday in a broad cabinet reshuffle to counter widespread anger over tough new austerity measures essential to prevent Greece from a disastrous default.

The critical position which has been held by George Papaconstantinou since the debt crisis began in late 2009, will now be taken over by Evangelos Venizelos, a Socialist heavyweight who challenged Papandreou for the party leadership four years ago.

Papaconstantinou will move to the environment and energy ministry, government spokesman Giorgos Petalotis added.

The 50-year-old former finance minister handled negotiations with the European Union and the International Monetary Fund last year to get the country a euro110 billion bailout, imposing harsh budget cuts and tax hikes in return, and has been in crucial talks over more financial help for Greece.

Generally well-respected among his European peers, he has faced criticism from large sections of the public in Greece — as well as from other ministers — over the stringent austerity measures, and the fact that Greece has missed many of its fiscal targets that are essential for it to continue receiving funding from the bailout loans.

Papandreou has struggled to garner support for a crucial new package of euro28 billion ($39.5 billion) in spending cuts and tax hikes demanded by the EU and IMF.

Despite the insistence of both Papaconstantinou and Papandreou that the country had no other option and that it would default on its debts without reforming the economy, the anger has led to riots on the streets and a party revolt within the prime minister's governing Socialists.

Papandreou tried to face down the rebellion by negotiating with the rival conservatives to form a coalition government earlier this week, but the talks quickly collapsed.

The reshuffle was his next step. He is to seek a Parliamentary vote of confidence in the new government, probably early next week.