New Greek Leader Trusted but Untested

New York Times
November 10, 2011

If there is a Greek alive who can command the trust of international creditors and European leaders, it is probably Lucas Papademos. But the bigger question may be whether the reserved economist, a former vice president of the European Central Bank, can win the trust of the exhausted Greek people and accomplish anything lasting in what may be little more than a cameo as prime minister.

Mr. Papademos, who was named as prime minister on Thursday, has been far removed from the hurly-burly of Greek politics, which is probably a plus, considering that Greeks’ trust in their elected officials is at rock bottom.

He also enjoys credibility among key leaders at the European level, notably Mario Draghi, the new president of the European Central Bank, based here in Frankfurt. The two men were classmates at the Massachusetts Institute of Technology, where both earned doctorates in economics in the late 1970s, and remain close. The connection could come in handy, considering that the E.C.B. is probably Greece’s biggest creditor, with holdings of Greek bonds estimated at about euros 50 billion, or nearly $70 billion.

“Greece needs some reliable figure in the next three months, especially for the Europeans,” said Dimitris Drakopoulos, an analyst at Nomura in London. But reassuring skeptical foreigners is only part of the job that awaits the person who succeeds George A. Papandreou. It is less certain whether Mr. Papademos, who is not known as an inspiring public speaker, can lift the spirits of desperate Greeks who have endured two years of relentless austerity.

“He is a very methodical person and a very reserved and cautious person,” said Michalis Haliassos, a professor of economics at the University of Frankfurt who knows Mr. Papademos. “He is not the type of person to go out on the balcony and address the masses.”

“But maybe this is what is needed right now,” Mr. Haliassos said, adding that the Greek people “have had too many speeches. What is needed now is much more emphasis on reason.”

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