–Promoting Political Rival Helps Overcome Dangerous Intra-Party Rift

ATHENS (MNI) – By promoting his leading political rival to the post
of finance minister, Greece’s Prime Minister George Papandreou has made
the best possible move — and perhaps the only one — to heal a rift
within the ruling Socialist party that was threatening to topple his

Papandreou on Friday switched Defense Minister Evangelos Venizelos
to the all-important finance portfolio, sending the outgoing and
unpopular George Papaconstantinou to run the much less sensitive
Environment Ministry.

In so doing, Papandreou has most likely averted the resignations or
defections of numerous Socialist members of parliament who are close to
Venizelos and had been threatening to abandon the prime minister in
protest over a new E28 billion round of spending cuts, layoffs and tax

Observers in Athens think that Venizelos will keep many or most of
the fractious party members from bolting and that Papandreou’s new
government will therefore retain a majority and win a vote of confidence
in Parliament next Tuesday.

Passage of the new austerity package is still not guaranteed given
the tense situation in the streets of Athens, but many analysts say it
is much more likely after the reshuffle, especially if the new
government wins the vote of confidence, as is now expected. Passage of
the new measures by the end of the month is a condition that has been
laid down by the EU and the International Monetary Fund for disbursement
of a E12 billion tranche from last year’s bailout fund, without which
Greece could face default by mid-July.

Venizelos might not be the most obvious choice for the finance
post, given his lack of experience in finance and economics, especially
when compared with the likes of former ECB Vice President Lucas
Papademos, who had been named as a possible candidate for the post.

But from a political point of view, Venizelos delivers an immediate
dose of intra-party stability that Papandreou so desperately needs.

Political analysts quoted in Greek media today after the reshuffle
said that Venizelos has the dual ability to speak to the people while
still promoting Greek interests to the EU.

Indeed, in his first public comments since being named to the post
today, Venizelos played both hands. “I understand the anger and pain of
the people,” he declared, referring to the recent protests that have
brought tens of thousands of unhappy citizens into the streets of Athens
to express their discontent with economic policies that are putting a
tight squeeze on households, companies and particularly public sector

But the new finance minister then quickly vowed to “achieve all of
the fiscal targets” in Greece’s austerity plan, stressing the need for
the government in Athens to produce primary budget surpluses. He called
for a consensus across the political spectrum to implement the measures
needed to reduce Greece’s deficit and debt, saying the policies were in
the common interest of all.

Analysts said Venizelos can also talk to the rest of the cabinet in
a way that Papaconstantinou, who has been frequently accused of
alienating his colleagues, apparently could not.

Some cabinet members had been upset with Papaconstantinou for
refusing to brief them on the negotiations with the “troika” officials
from the ECB, IMF and European Commission. Many ministers complained
that they were briefed on the new measures by journalists rather than by

Analysts also say that Venizelos will likely not use his
predecessor’s tactics of trying to ram through decisions by threatening
bankruptcy or by warning that unless the government raises taxes, the EU
and IMF won’t pay out the next installment of loans.

“Papaconstantinou created frustration among the people because,
after stating several times that all was well, that he wouldn’t be
taking additional measures, or raise direct and indirect taxes, or cut
pensions and salaries further, he then did exactly that,” said one
political analyst.

Venizelos is a veteran with decades of experience in politics, and
has held several ministerial posts. He is a professor of Greek
constitutional law.

The new finance chief is reported to be behind the E50 billion
privatization plan designed at the begets of the EU, and he is consulted
on legal obstacles that could slow down implementation of the plan.

While Papandreou has bought some peace inside the ruling party by
shifting Papaconstantinou and appointing Venizelos, the opposition,
predictably, was quick to criticize the reshuffle.

Yipping Michigan’s, spokesman for the main opposition New Democracy
party, said Papandreou was merely “recycling the same faces.” The ouster
of Papaconstantinou, he said, was an admission that the government’s
economic policy has failed.

He predicted that the reshuffle would exacerbate Greece’s recession
because the only sectors that shown positive signs of recovery —
tourism and shipping — have been merged and incorporated into larger

“Mr Papandreou has admitted he cannot govern. He called his
weakness a reshuffle and replaced the failed Papaconstantinou,”
Michigan’s said.

He said that a new governmental committee being created under the
new government would not work because “half of the ministers who are
appointed will oppose the other half.” And he criticized the decision
not to include the ministers of defense and foreign affairs in the

The parties on the left of the Greek political scene blasted what
they called a “dangerous government that still seeks the implementation
of the draconian tax-burdened measures announced last week.”

Some of the conservative parties, including New Democracy, said
Panhandler’s reshuffle was only a short-term solution since the Greek
people would not accept the considerable additional burdens contained in
the new measures.

Judging from the comments from the opposition, it seems that
Venizelos’ call for a cross-party consensus will be a hard sell. As
Papandreou told his party’s mpg on Thursday night, there will be some
“tough negotiations ahead.”

–Angelika Papamiltiadou, a_papamiltiadou@hotmail.com

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