New Greek PM wins key Parliament vote

Greek Prime Minister Lucas Papademos speaks to members of the Parliament in his first address to Parliament since taking office.

Story highlights

  • Lucas Papademos wins a confidence vote in Parliament
  • He faces a tough job to implement reforms and win the Greek people's backing
  • Angela Merkel restates Germany's commitment to a strong eurozone
  • Fears of Greek default sent shock waves through international markets

The new Greek prime minister, Lucas Papademos, won a vote of confidence in Parliament on Wednesday, following his appointment to replace George Papandreou.

The motion was passed by 255 in favor to 38 against, as 293 of Parliament's 300 lawmakers cast a vote.

The vote paves the way for Papademos's government of national unity to take the reins and seek to restore political and financial stability in Greece.

Papandreou quit last week, forced out by public anger at the budget cuts he was pushing through to get international funds to pay his country's debts.

Fears that Greece might default caused shock waves through the European and American banking systems and sent stock markets on a wild ride that at times wiped billions of dollars of value out of existence.

Papademos, a former banker and European Central Bank vice president, became his country's interim prime minister Friday after several days of political wrangling.

Under a motion of confidence, lawmakers signal to the head of state whether the government has the support of Parliament. A loss typically results in the government's dissolution and the holding of a general election, unless the head of state asks someone with more support to form a government.

Papademos had been expected to survive the vote, since the new national unity government has the approval of Greece's main parties.

He has a tough job ahead, however, in implementing unpopular reforms before elections due in about three months' time.

Papademos told Parliament on Monday that staying in the eurozone "is the only choice" as his country seeks to avoid default.

He said his government's main task will be to implement a bailout package brokered on October 26.

He cited "a crisis of trust" among the country's European allies about whether Greece has the will and the ability to restore its economy, but he said "big progress" has already been made toward restoring fiscal stability, pointing to the reduction of the deficit from 15% of GDP to 10.6%.

Fiscal support is needed from Greece's European allies and the International Monetary Fund, he said.

German Chancellor Angela Merkel, speaking Wednesday in Berlin after meeting with Irish Prime Minister Enda Kenny, restated Germany's commitment to a strong European Union of 27 nations and to the 17-nation eurozone.

Merkel said the pair had talked about the need to make the eurozone -- the nations that use the euro as a single currency -- stronger in the face of crisis and about treaty changes to make it easier to monitor countries.

"I made clear that Germany sees a necessity here to show the markets and the world that the euro stands together and must be defended, but also that we are willing to give up a part of national sovereignty," she said.

"Overall we share the assessment that we still have a problem in terms of debt, but also competition, but we also share the opinion that the Europeans are willing to overcome the problems and to show the world that we stand together."

Her comments come amid speculation that the crisis in Greece and elsewhere could, if unresolved, lead to a breakup of the eurozone.

Papademos previously has stressed Greece's commitment to the euro, saying its membership in the eurozone is a guarantee of financial stability.

The drama in Greece has shaken international markets because investors were afraid the new bailout deal -- which has stringent austerity measures attached -- might not be implemented.

Papademos said the October 26 bailout, worth 130 billion euros ($177 billion), calls for austerity measures but "will ensure the financing of Greece over the following years and the completion of the effort of the economic recovery."

Papademos said work should get under way "immediately, at a very high pace," with the first priority being to secure disbursement of the next tranche of bailout money from a 2010 bailout package by no later than December 15 to ensure the government can pay its bills.

In addition to the new austerity measures, his government must also implement promises made by the previous administration in relation to the 2010 bailout, including privatizations of state-run firms and cuts to the public sector.

Public anger over the cuts led Papandreou to propose a referendum on the new bailout plan, triggering anger among Greece's European partners and political turmoil at home.