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2 September 2014 19:00 (South Africa)
Business

'Mr Euro' named Greek finance minister

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Yannis Stournaras, a well-respected liberal economist, was appointed Greece's new finance minister on Tuesday after the sudden resignation of the first choice for the job at a crucial moment for the debt-laden country. By Deepa Babington and Lefteris Papadimas 

The new conservative-led government scrambled to make a quick decision on the post after banker Vassilis Rapanos quit on Monday on the advice of doctors after spending four days in hospital with dizziness and abdominal pains.

His sudden resignation threw the government into confusion at a time when it faces the daunting task of trying to persuade sceptical international lenders to ease the harsh terms of a bailout that has enraged the population.  With Greece weeks away from running out of cash and in desperate need of a minister to lead negotiations with lenders, party officials said the three ruling coalition leaders quickly agreed on Samaras's choice of Stournaras, 55, who is nicknamed "Mr Euro" in Greece.

He faces a difficult juggling act - pushing for more time and money from sceptical foreign lenders while coaxing reluctant officials at home to push through unpopular reforms.

"Stournaras is a serious, respected person who will inspire some confidence in the markets. But he is entering a bad government, where many old-style, spendthrift politicians are occupying key positions," said political analyst John Loulis.

"He will have to wage a hard battle against them. He is entering the wolf's lair and he won't survive without the prime minister's solid support."

The Samaras government has been in place less than a week but already looks accident prone after deputy Shipping Minister George Vernikos also resigned on Tuesday. He had been attacked by the media and opposition for using offshore companies.

Ministers are banned from using such companies, which are a common tactic by wealthy Greeks to avoid taxes.

Stournaras is an economics professor at the University of Athens and the head of the influential IOBE think-tank. Most recently he was development minister in the caretaker government that led Greece to elections on June 17.

Described by colleagues as affable, he is considered an ardent supporter of structural reforms to make the economy more competitive - ideas that are likely to win him favour with international lenders exasperated with the slow pace of reform.

INEFFICIENT AND BADLY MANAGED

He was part of the team that negotiated Greece's entry to the euro in 2001, as chief economic adviser to former Prime Minister Costas Simitis. He later became CEO of Emporiki Bank, where he initiated its gradual sale to France's Credit Agricole.

That experience has opened him to opposition criticism. The anti-bailout Independent Greeks party said both he and his predecessor's experience was "stained by the scandalous era" of euro-zone entry.

People who have worked closely with Stournaras say he is well qualified to take on a role that is often dubbed the world's toughest job.

Stelina Hatzichristou, a researcher at IOBE, said Stournaras was adept at managing people and had a strong understanding and knowledge of the Greek economy, which has been ravaged by five years of crisis.

In a speech in April, he blamed Greece's "inefficient, one-size-fits-all, party-dominated and badly-managed public sector" for the country's woes together with tax evasion, social security fraud, high defence spending and bureaucracy.

He criticised the economic policy pursued by the previous Socialist government, saying it cut spending in the wrong way, while failing to slash red tape and boost competition.

"Laws were passed but not implemented," he said. He also complained about unjustifiable delays in privatisations.

It was unclear whether Stournaras would be ready for a European summit on Thursday and Friday, where Greece's demand to renegotiate the bailout and its off-track reform programme are likely to come into focus.

Samaras, who emerged from hospital on Monday with a bandage over one eye following eye surgery, will miss the meeting.

SAMARAS TALKS TO MERKEL

A government official said Samaras had spoken to German Chancellor Angela Merkel by phone to discuss the new government and he would embark on a European tour, including Berlin, to seek a softening of the bailout deal as soon as he recovered.

Samaras also spoke by phone to Eurogroup chief Jean-Claude Juncker, Dutch Prime Minister Mark Rutte and European Council President Herman Van Rompuy, the official said.

Stournaras's biggest challenge in the days ahead will be to handle talks with the "troika" of EU, European Central Bank and International Monetary Fund lenders, who postponed a scheduled trip to Athens this week because of the illnesses of Samaras and Rapanos.

Greece needs its next tranche of aid to keep the state functioning beyond July, but the money is unlikely to be granted without a showdown with lenders angry that Athens wants to renege on austerity measures agreed in exchange for the rescue.

The bailout has prevented Greece from going bankrupt and suffering a humiliating exit from the euro zone, but it has also deepened a recession now in its fifth year, left one out of five Greeks jobless and caused violent protests in Athens.

Samaras's New Democracy party narrowly won the June 17 election against the radical leftist Syriza bloc which wants to tear up the bailout agreement. DM

 

Photo: Newly appointed Greek Finance Minister Yannis Stournaras makes statements after a meeting with Prime Minister Antonis Samaras in Athens June 26, 2012. Stournaras, an affable and well-respected liberal economist, was appointed Greece's new finance minister on Tuesday after the sudden resignation of the first choice for the job at a crucial moment for the debt-laden country. REUTERS/John Kolesidis

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