We're Not in Athens Anymore

by Yannis Palaiologos

American Prospect
November 11, 2011

Greeks, Europeans, and anyone else who knew the score breathed a huge sigh of relief at the news that Loukas Papademos, the former deputy head of the European Central Bank, will be Greece’s new prime minister. His appointment, especially compared with some of the other names that were bandied about during the past few days as candidates for the post, is the best one could have hoped for if—at least if one believes that Greece belongs in the eurozone and that an exit from it, which became an ominously fashionable topic of discussion among Europe’s leaders the last few days, would be a disaster not only for Greece but for the whole euro project.

As I mentioned Monday, Papademos is a serious man, who has the background and the respect among European leaders that will allow him to guide Greece through the treacherous months ahead.

As the country moves forward—his term is expected to last about four to five months, though as he said yesterday, there is no fixed date for new elections—his government must, among other things, negotiate and pass the new loan agreement, arrive at a deal with (most of) its creditors for a 50 percent haircut in privately held Greek debt, bail out Greek banks and pension funds that will take a hit from said haircut, and pass the 2012 budget. Papademos must also prepare himself for some of the known unknowns that will surely pop up during his time in office, like a few days of widespread rioting here and there, or the large number of taxpayers refusing (or not being able) to pay the new property tax that has started being levied in people’s homes as part of the electricity bill.

Yesterday, unemployment was revealed to have reached 18.4 percent (43.5 percent among those aged 15 to 24). There will be no honeymoon for Papademos's government.

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