In-tray full for Greece's new finance chief

June 17, 2011 - 6:59 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) — Evangelos Venizelos, a long-time political rival of Greek Prime Minister George Papandreou, faces the biggest challenge of his political life as he tries to convince deputies in his own party as well as the markets that Greece can avoid a devastating debt default.

Venizelos was appointed finance minister and deputy prime minister by Papandreou Friday in a wide-ranging Cabinet reshuffle intended to bring an end to a damaging 48-hour political crisis that raised fears that Greece could run out of money in less than a month.

Perceived as smart and ambitious, the 57 year-old has served quietly as Papandreou's defense minister, after challenging him unsuccessfully in 2007 for the party leadership in the wake of a general election defeat.

His in-tray couldn't be fuller. As well as convincing skeptical deputies in the governing Socialist Party that further austerity measures are needed to get more bailout cash, he has to get onside with his peers in the eurozone, potentially as soon as this weekend in a crucial meeting in Luxembourg.

Sunday's discussions in Luxembourg come at the end of a week when the Greek state faced a battering from inside and out. While demonstrations against austerity measures turned violent, Papandreou sought to form a coalition government with rival conservatives before facing down a revolt by Socialist backbenchers against punishing austerity measures. Investors all around the world looked on aghast at the seeming disintegration of the Greek government.

The constitutional law professor, once prone to making long speeches, has long been seen as a rising star in the party, since earning his first cabinet post as government spokesman at age 36.

Venizelos, who is a representative in Greece's second city Thessaloniki, is currently among the most experienced serving members in Papandreou's 20-month-old government, having previously headed the portfolios of justice, transport, development, media and culture in previous Socialist administrations. As culture minister, he played a lead role in preparations for the 2004 Athens Olympics, which ended up costing way more than initially thought.

His immediate task as finance minister is to get on top of budget slippages and setbacks in cost-cutting reforms as well as pushing ahead with a massive privatization drive worth euro50 billion ($70.5 billion). At the same time, he will have to negotiate a vital second bailout package with Greece's frustrated international creditors.

All this though hinges on whether Papandreou's new government wins a confidence vote in Parliament, likely in the early part of next week.

His rise to the post comes after a dramatic seven-hour meeting between Socialist lawmakers and Papandreou on Thursday, at which they demanded that the prime minister remove inexperienced loyalists from the Cabinet and replace them with more experienced party veterans, mostly in their late-50s.

Manolis Diamantopoulos, chief editor of the financial daily Express, said outgoing finance minister George Papaconstantinou had grown too unpopular among Socialist lawmakers.

"This is a move aimed at calming the ranks of the party, so that (Papandreou) can secure majority in parliament to pass the measures," Diamantopoulos told the AP.

"This new government must prove everyone wrong — there is financial uncertainty, political uncertainty, and a lot of skepticism about the new measures which must be carried out," he said. "Mr. Venizelos must throw his weight behind negotiations with (Greece's) creditors."

Lawmakers, under pressure from austerity-hit constituents, had threatened an open revolt against Papandreou ahead of a crucial vote on new austerity measures in late June — potentially destabilizing a government that has a majority of five seats in parliament.

"The government has a month or even less than that to turn things around, and change the atmosphere," Diamantopoulos said. "Things must change very fast. There is no honeymoon for this new cabinet."