Wednesday, September 23, 2015

Greece: Alexis Tsipras Retains Economics Team in Cabinet With Unenviable Task
Familiar names Dragasakis, Tsakalotos, Stathakis and Houliarakis assume office to meet bailout demands and rebuild economy

Helena Smith in Athens
Wednesday 23 September 2015 16.00 EDT

A new government tasked with taking Greece out of its worst modern-day crisis has assumed office, three days after the leftist Syriza party was triumphantly returned to power. The 27-member cabinet, faced with a forbidding agenda set by the creditors keeping the debt-stricken country afloat, was sworn in on Wednesday as prime minister Alexis Tsipras looked on. “Our goal is recovery and reconstruction,” said Yannis Dragasakis, the deputy premier, after the ceremony.

In the spirit of rebuilding Greece’s shattered economy, Tsipras retained the economics team that had negotiated Athens’s latest EU bailout during his first term in office. The Oxford-educated economist, Euclid Tsakalotos, who led the talks that finally sealed the €86bn rescue, returned as finance minister. Giorgos Stathakis resumed duties as head of the national economy ministry – renamed the ministry of growth and development – while Dragasakis, a former communist MP, remained as deputy prime minister to oversee the far-reaching fiscal consolidation programme that Athens now has to enforce.

Giorgos Houliarakis, the British-trained academic who acted as interim finance minister after Tsipras called the snap election following a revolt by hardliners outraged by his U-turn on austerity, assumed the role of junior finance minister.

With the economy badly hit by this summer’s closure of banks and imposition of capital controls, the government says it will prioritise improving the business environment for small- and medium-sized enterprises, the lifeblood of the Greek economy. Close to 40,000 are expected to declare bankruptcy by the end of the year, a path more than 150,000 companies have taken since the crisis erupted in late 2009.

“Our priority will be kick-starting the economy, the real economy,” the minister of state, Alekos Flambouraris, told reporters. Recovery to a great degree would rest on the rapid implementation of reforms. “The new government has no time to waste on trials and experiments. The third memorandum [bailout accord] leaves no space,” warned the leftwing daily Efimerida Twn Syntaktwn. “Within three months, 56.4% of the measures, or 127 actions, have to be taken, of which 15 have to be enforced in October.”

In the coming weeks the hugely sensitive issues of pensions cuts, tax increases on farmers, recapitalisation of banks, privatisation of state assets and liberalisation of closed markets must all be tackled. The measures, expected to spell further hardship for the long-suffering middle class, have to be enacted before international inspectors conduct a review of the economy – key not only to unlocking €3bn in badly needed aid, but also to addressing the crucial issue of debt relief.

At 180% of national output, and growing by the day, Greek debt is by far the highest in the EU and the biggest drain on the country’s finances. “There has to be a fourth bailout in the shape of a restructuring of Greece’s debt,” the prominent economist Vicky Pryce told the Guardian. “The current third bailout is a bit of a ‘fake’ bailout as a lot of it is a sort of recycling of what should have been paid to Greece under the second bailout,” she said.

“Still, far from solving all problems, it is a framework on which to work and will encourage a more lenient approach to Greece on the investment front and in eventual QE entry.” Europe has warned openly that there can be no second chance for Athens – an exit from the eurozone will ensue if commitments are not respected. But as ministers assumed their portfolios, political commentators voiced fears over the new government’s ability to deal with the challenges ahead. Many questioned its durability following Tsipras’s refusal to form a grand coalition with the main opposition New Democracy party, and other centre-left pro-European bailout forces.

The stridently anti-austerity rightwing Independent Greeks party (Anel) – his coalition partner of choice for a second time – is, like many in Syriza, lukewarm about imposing policies to which both parties remain ideologically opposed. “It is impossible that a government like this will be able to apply the necessary reforms,” said Fotini Pipili, a former conservative MP. “I don’t see it lasting long.”

Within hours of his swearing-in, the appointment of Anel MP Dimitris Kammenos as deputy minister of infrastructure and transport was causing waves inside and outside Greece. The lawmaker, who is accused of holding antisemitic views, was recently forced to apologise for posting a picture on his Facebook page doctoring the words above the gates of the Auschwitz concentration camp to “We’re staying in Europe”. Pipili described the appointment as “a national disgrace” at a time when Athens should be getting down to the business of ending its worst economic crisis in decades in its quest to remain at Europe’s core.

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