Athens: Greece’s new coalition government will reveal its main policies on Monday at the start of a confidence debate that will shed light on whether the country’s two main rival parties can cooperate on reforms and save Greece from default.
Inspectors for Greece’s international lenders, known as the troika, were due to meet the new administration of Prime Minister Lucas Papademos following Wednesday’s confidence ballot but uncertainty surfaced over whether they would indeed come .
A majority of Greeks have hailed Papademos’s appointment, but tens of thousands of people angry at more than a year of austerity measures are expected to rally on Thursday, the anniversary of a 1973 student uprising that helped bring down a 1967-1974 military junta.
Prime Minister Lucas Papademos (3rd L) leads the first cabinet meeting of the newly appointed Greek government at the parliament in Athens on 11 November, 2011. Reuters
That could complicate discussions between the “troika” and the new cabinet, as the demonstration is expected to shut down central Athens and could be the biggest rally in months of protests that have at times erupted into violence.
“They may come at the end of the week but nothing is fixed,” Carlos Martin Ruiz de Gordejuela, spokesman for the European Commission’s mission in Greece, said of the troika team, which on Friday was expected to arrive early in the week.
Greece’s new coalition government is expected to easily win the confidence vote with the backing of both the Socialist PASOK party of toppled prime minister George Papandreou and the opposition conservative New Democracy party.
The government’s task will be to come up with a plan to convince Greece’s rescue lenders that it is worthy of a second €130 billion bailout deal agreed by euro zone leaders last month and prepare the country for an election in early 2012.
But it may face more of the wrangling between the Socialists and New Democracy, whose bickering over who would lead the cabinet pushed the country to the brink and prompted EU peers to contemplate a euro zone without Greece.
All eyes will be on New Democracy leader Antonis Samaras and what he may say in three-day debate.
He favours tax cuts and greater spending to dig Greece out of its four-year recession, and said last week he reserved the right to seek changes to Greece’s bailout deal -- putting him on a potential collision course with lenders.
He has also balked at signing a pledge to meet Greece’s bailout commitments demanded as a key requirement for more aid, saying he would do so but not under pressure from abroad.
Troika timing unclear
Without a positive report from the troika, the International Monetary Fund, European Union and European Central Bank may withhold essential loans -- most immediately an €8 billion tranche the country needs by mid-December to avert bankruptcy.
Inspectors are responsible for assessing if Greece has hit agreed revenue and spending targets. If Athens slips -- as it has repeatedly in the past -- or the economy weakens, the troika would have to suggest further tough measures.
The troika is certain to cast an eye on budget data due out later on Monday that may show a further widening of Greece’s central government deficit in the year to end-October.
Contributions to government coffers have dwindled as the economy has shrunk by an estimated 15% in the last three years and persistent tax evasion has made for poor revenues.
Greece’s jobless rate also jumped to a record 18.4% in August, just when hotels and restaurants taking on extra staff during the height of the tourist season should have pushed the rate down.
Papademos, a former vice president of the European Central Bank sworn in on Friday to stabilise Greece’s grossly indebted economy, will travel to Brussels on Thursday to meet European finance ministers -- a signal of his focus on the economy.
The 64-year-old was asked to succeed Papandreou, whose proposal to hold a referendum on the country’s bailout prompted EU leaders to raise the threat of a Greek exit from the currency bloc.