Lucas Papademos takes helm in troubled Greece

Greece’s new unity government headed by Lucas Papademos took office yesterday to save the debt-stricken nation from bankruptcy after a historic power-sharing deal struck between warring parties.

Mr Papademos, 64, a former vice-president of the European Central Bank, will lead a transition government which will have to ratify a crucial €130-billion international bailout and pave the way for new elections.

“The new government of cooperation will do the best it can possibly do to address the country’s problems,” he said during a meeting with outgoing prime minister George Papandreou.

Mr Papademos was welcomed with relief in a country exhausted by two years of austerity and exasperated by political squabbling over cutbacks demanded by its global creditors, the European Union and the International Monetary Fund.

Greece’s chief EU partners France and Germany, who are shouldering a major part ofloans keeping the country afloat, also weighed in with encouragement.

German Chancellor Angela Merkel said Berlin would “stand by” Athens while French President Nicolas Sarkozy said his country would continue to provide “support and assistance” to Athens.

The procedure to confirm the new government in parliament will begin Monday and its first job will be to persuade the EU and IMF to disburse an eight-billion-euro slice of aid from a 2010 bailout deal that is needed by December 15 before state coffers run dry.

Then it must force through painful austerity measures exacted as the price for a second EU rescue package which gives Athens €100 billion in loans, the same amount in debt reduction and a further 30 billion in guarantees.

Mr Sarkozy said he was “certain” that Mr Papademos’ administration would “keep close to heart” the need for fiscal measures to keep Greece in the EU.

European policymakers have already demanded written confirmation that Greece intends to honour last month’s debt deal.

The new Cabinet is a delicate balancing act reflecting the power-sharing deal between the Pasok socialists, New Democracy conservatives and far-right nationalist party LAOS that clinched a succession deal Thursday after four days of marathon talks.

Finance Minister Evangelos Venizelos, 54, kept his job ahead of tough negotiations with global bankers and creditors to help reduce the country’s debt.

Ex-EU environment commissioner and conservative party veteran Stavros Dimas, 70, takes over the foreign ministry, inheriting a name row with neighbouring Macedonia that has festered for two decades.

And four far-right officials were invited into the government in a first since democracy was restored in 1974 after an army dictatorship fell.