Incoming Greek PM to implement bailout
02:26 - Source: CNN

Story highlights

Leadership change "is not a silver bullet" but is an important step, analyst says

Analysts: Greece's incoming government is meant to insulate new officials during reforms

Lucas Papademos is a former banker and European Central Bank vice president

He has a master's in electrical engineering and a doctorate in economics from MIT

CNN  — 

As Greece attempts to fend off debt troubles that continue to threaten global markets, the man chosen to lead the country’s new government is an economist who’s been advising the outgoing prime minister for the past two years.

Newly inaugurated Prime Minister Lucas Papademos, 64, a former banker and European Central Bank vice president, faces the challenge of uniting the country behind his government during tough times.

Observers say his appointment is thought to mark a shift toward a more technocratic administration – an interim government made up primarily of experts rather than politicians.

“The task is big, and the responsibility I assume is even bigger,” Papademos said Thursday. “I am not a politician, but I’ve dedicated the biggest part of my professional life to the exercise of the economic policy, both in Greece and in Europe.”

Once a governor of the Bank of Greece and senior economist at the Federal Reserve Bank of Boston, Papademos taught economics at Columbia University and the University of Athens, accepting a visiting professor position at Harvard University last year.

He holds a master’s degree in electrical engineering and a doctorate in economics, both from the Massachusetts Institute of Technology, credentials he’s quietly employed in a recent effort to right his country’s debt-laden economy.

“He’s been advising at a technical level,” senior Brookings fellow Domenico Lombardi said. “But he’s also been distancing himself from the political fights that have been going on this month.”

As Greece gears up for the next round of austerity measures – a precondition for another much-needed European loan deal – it has been embroiled in hotly contested negotiations over Cabinet appointments in the new government.

Evangelos Venizelos, who was finance minister under Papandreou, retains that key role in the new administration.

But the foreign minister job goes to Stavros Dimas, a former environmental commissioner who belongs to the New Democracy party, the main opposition to Papandreou’s PASOK party.

Another New Democracy party lawmaker, Dimitris Avramopoulos, takes the important defense ministry post.

A technocratic administration is meant to “insulate (policymakers) from the pressure of the electorate,” Lombardi added, which may prove important in elections due early next year.

In September, thousands of Greek protesters took to the streets and hurled stones at police ahead of an expected announcement by then-Prime Minister George Papandreou that additional austerity measures were on the way.

“It is clear that the forthcoming stabilization measures are going to be very tough,” Lombardi said. “That’s why countries like Greece and Italy are likely to resort to governments led by eminent personalities and technocrats from outside the political circles.”

Charles Kupchan, a senior fellow at the Council on Foreign Relations, said the change in leadership “is not a silver bullet” but still is “an important move to stabilize the game.”

“Papademos is a well-known economist and has the right experience” to lead what many hope will be an administration of experts, Kupchan said, adding, however, that “one of the shortcomings of a technocrat government is that it tends to be a temporary fix to a long-term problem.”

The country’s politics still largely rely on a longstanding patronage system, leaving a variety of “domestic constituencies that will still be around, trying to get their hands on a slice of the pie,” he added.

Papademos, meanwhile, told reporters that the chief task of the transitional government is to implement a controversial bailout package agreed to with European leaders late last month.

He said the government’s formation would allow Greece to “face the problems in the near future in the best possible way.”

The country is “at a critical crossroads,” he said, and the choices it makes and policies it implements “will have a crucial importance for the welfare of the Greek people.”

Papademos added that his country’s course will not be easy, but Greece’s problems will be solved – and that will happen “sooner, at a lower cost and in a more efficient way, if there is unity, consensus and reasonableness.”

The crisis in Greece has shaken international markets, with investors wary that the new bailout deal – which has stringent reforms attached – may not be implemented.

Christine Lagarde, managing director of the International Monetary Fund, warned Wednesday of the potential for a “lost decade” if nations do not join forces against the “dark clouds” gathering on the horizon.

In neighboring Italy, President Giorgio Napolitano pledged his country will adopt a series of austerity measures promised to the European Union.

Silvio Berlusconi, the embattled Italian premier who has offered his resignation, is expected to step down shortly after the measures are approved.

Italy, which seems to be toying with the idea of its own incoming technocrats, floated political figures such as Gianni Letta, Berlusconi’s chief of staff, and Mario Monti, a former commissioner with the European Union, as possible candidates for the premiership.

CNN’s Laura Smith-Spark contributed to this report.