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Greece swears in new government

Story highlights

  • Greece swears in its new Cabinet, bringing an end to months of political uncertainty
  • National bank Chairman Vasilis Rapanos takes the key finance minister post
  • The new government intends to push for a renegotiation of some terms of the bailout deal
  • The Greek crisis threatens European economic stability

Greece swore in a new Cabinet on Thursday, putting an elected government in charge of the country for the first time in 224 days.

The new governing coalition is made up of three parties: the center-right New Democracy, which placed first in Sunday's vote; Pasok; and the Democratic Party of the Left.

Prime Minister Antonis Samaras appointed Vassilis Rapanos, chairman of the Greek National Bank, to the key finance minister post.

Dimitris Avramopoulos becomes foreign minister, while Panagiotis Panagiotopoulos takes the role of defense minister, and Evripidis Stylianidis heads up the interior ministry.

New Democracy lawmakers dominate the 38-member government, with only a handful of representatives coming from Pasok and the Democratic Left.

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Samaras, who heads New Democracy, met with the heads of his two coalition partners, Evangelos Venizelos of Pasok and Fotis Kouvelis of the Democratic Party of the Left, earlier Thursday, the broadcaster reported.

The new governing coalition, which has pledged to push for a renegotiation of some of the painful austerity measures imposed under the terms of an international bailout, will face significant challenges.

The country is struggling to get out of the political and financial mire that threatens to drag down Europe's common currency and spark a new global financial crisis.

"Greece has a government. ... That is the message that we need to send abroad," Venizelos said as he announced the deal in a televised statement Wednesday.

Vassilis Monastiriotis of the Hellenic Observatory at the London School of Economics predicted that the international community will show patience with the new Greek government at least until September, not least because any alternative would be far more radical and anti-European.

But, he said, "There's no decision about how (they) actually deal with the immediate problems of acute poverty in parts of society and problems of tax collection."

Greece will go to a summit of European leaders in Brussels, Belgium, next week, determined to push them to renegotiate the terms of Greece's unpopular international bailout, most likely by extending the timetable for certain elements.

While few specifics are known, all three parties are keen to renegotiate a provision under which Greece's current minimum wage of 750 euros a month (about $950) would be cut by 22%, Monastiriotis said.

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While Samaras has been rather narrow in his views, Monastiriotis said, the politician has shown some leadership in recent days in making concessions to form the coalition.

"The Democratic Left is insisting that this platform will contain commitments that will ensure the removal of measures that have gravely affected the Greek society," Kouvelis said.

The leftist party has supported bailouts from international lenders while seeking to renegotiate the terms.

The party with the second highest number of votes, the leftist Syriza, which is against austerity measures, has declined to be a part of the government.

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International bailouts have kept Greece from defaulting in the face of an ongoing recession and low tax revenue, but lenders have demanded hugely unpopular government budget cuts in exchange.

Some observers had predicted that efforts to renegotiate the bailout could lead to a run on Greek banks and deeper misery.

The country must identify additional budget cuts by the end of June to be considered compliant with the terms of its bailout. After five years of recession, unemployment is running at about 22%, taxes are going up and many of those with jobs are suffering cuts to wages.

German Chancellor Angela Merkel, Europe's powerful advocate for balancing budgets to build a strong basis for economic growth, had urged Greeks not to walk away from the international loan deals. Resentment of Germany has run high in Greece during the course of austerity's implementation.

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