December 5, 2022

Tapped by a Rival, Greece’s New Finance Minister Faces Daunting Task

But more than any other Greek politician, including perhaps the prime minister himself, Evangelos Venizelos is a Socialist party heavyweight who now stands responsible for convincing Greece, Europe and skittish investors the world over that Athens is capable of reforming the Greek economy and making good on its financial obligations.

With no growth to speak of and a government debt burden equal to 150 percent of its annual economic activity — one of the highest in the world — such a task may well be too much for any one person, regardless of his political skills.

Late Tuesday night, however, in a speech to Parliament, Mr. Venizelos took an important first step by promising structural reforms and a broad crackdown on tax evasion.

As expected, Mr. Papandreou’s reconstituted government helped solidify the Socialist party, known by the acronym Pasok. Early Wednesday morning, it overcame the opposition of the New Democracy Party to win a desperately needed vote of confidence, 155 to 143. All Pasok members voted in favor.

Now Mr. Venizelos, 54, a constitutional lawyer with minimal economic policy-making experience, must persuade Parliament next week to pass the government’s most recent economic plan — centered largely on a 50 billion euro, or $72 billion, privatization effort. That is the requirement imposed by Europe and the International Monetary Fund to make an immediate cash payment and to allow Greece to qualify for a second batch of rescue money needed to stave off default.

More crucially, he must succeed in doing what no other politician in Greece has done before him: persuade Greeks to pay their taxes and get public sector unions to accept the shrinking of the state.

“He is a political animal and he will cut the privatization Gordian knot because he knows the law and the political tricks of how to get the job done,” said Theodore Pelagidis, an Athens-based economist and one of Mr. Venizelos’s top advisers.

Mr. Pelagidis cites Mr. Venizelos’s experience in negotiating a deal with the powerful electricity unions and his role as minister in charge of putting on the 2004 Olympics as examples of Mr. Venizelos’s ability to get things done.

That said, there is a difference between operating in Athens and Brussels, especially now.

Arriving for his first meeting with fellow European finance ministers in Luxembourg on Sunday night, Mr. Venizelos misjudged the mood, according to several European diplomats briefed on the discussions but not authorized to speak publicly.

According to one person, he seriously underestimated the frustration among his European colleagues at Greece’s failure to honor some of its previous pledges.

The new minister began by trying to explain the limitations Greece faced, a stance interpreted by some ministers as an attempt to reopen the austerity package already negotiated.

That prompted several firm responses after which Mr. Venizelos recalibrated his message, according to another diplomat. He was, however, largely sidelined when the ministers’ communiqué was drafted.

Mr. Venizelos, through a spokesman, declined to comment.

In Greece, by contrast, he is thoroughly plugged in. He was most recently defense minister and has had other Cabinet posts including culture, justice and transport — a political résumé that far exceeds that of his predecessor, George Papaconstantinou, whose rapid fall in stature within his party forced the prime minister to call on Mr. Venizelos last week.

It was in many ways a last resort. Having been turned down by Lucas Papademos, the former vice president of the European Central Bank, and several other prominent economic experts, Mr. Papandreou made his offer in a 3 a.m. phone call last Friday.

Article source: http://www.nytimes.com/2011/06/23/business/global/23euro.html?partner=rss&emc=rss

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