Greek PM reshuffles cabinet, stays fiscal course

By Dina Kyriakidou

ATHENS (BestGrowthStock) – Greek Prime Minister George Papandreou reshuffled his cabinet early on Tuesday to try to better deal with the debt crisis and signaled he would stay the fiscal course by leaving his finance minister unchanged.

Less than a year since coming to power, Papandreou switched several ministers around in an effort to improve ministries dealing with economic growth and chronic problems such as health and social security, but brought few new faces to his cabinet.

“The new cabinet will be sworn in at noon,” said government spokesman George Petalotis, announcing the changes at 1:35 am (2235 GMT on Monday) after hours of deliberations.

Municipal elections across the country on November 7 had forced some changes as three deputy ministers will run for local office and must be replaced. Papandreou took advantage of the vote to conduct a wider reshuffle.

The changes are not expected to affect spending cuts and tax hikes required in a 110 billion euro ($140 billion) IMF/EU bailout aimed at rescuing Greece from bankruptcy, with Finance Minister George Papaconstantinou staying in place.

But they are aimed at boosting other key economic and social policy areas that are seen as lagging behind and at appeasing a public angry with tough austerity measures.

MUSICAL CHAIRS

Economy Minister Louka Katseli will be moved the Labour portfolio while Labour Minister Andreas Loverdos will go to the Health Ministry. Agriculture Minister Katerina Batzeli is replaced with party stalwart Costas Skandalidis. Police Minister Mihalis Chrysochoidis gets the Economy portfolio.

“I am not sure these changes to ministries are productive, coming in less than 12 months,” said Costas Ifantis, political scientist at the University of Athens.

Analysts said Papandreou was pulled by opposing forces. On one side the business world wanted policy continuity and a substantial reshuffle so early in his four-year term was sure to be interpreted by political enemies as a weakness.

“It took just 11 months and one long night … for the Prime Minister to admit his government’s failure,” said main conservative opposition New Democracy party spokesman Panos Panagiotopoulos.

But polls also show the public have been demanding changes and several ministers have been seen as dragging their feet.

After plunging into its first recession in 16 years, Greece’s economy is expected to shrink 4 percent this year, with salary cuts and tax hikes stifling consumption. Unemployment and inflation have soared.

The government is anxious for social peace as austerity sinks in after the summer and many analysts predict unrest as Greeks return from holidays to face a tough winter.

People have already taken to the streets, angry at the belt tightening measures and impunity for the corrupt politicians they hold responsible for the crisis, with protests turning violent and killing three people in May.

According to a GPO polling agency survey last week, 60 percent wanted changes in the government but Papandreou still enjoys more support than his conservative party opponent and most Greeks feel the measures are necessary.

Papandreou has been criticized for taking months to announce drastic measures after revealing the budget deficit he inherited from the conservatives would be more than two times bigger than expected, triggering a debt crisis that shook international markets and the euro zone.

But tough measures are starting to work, with drastic state spending cuts already reducing deficits and pleasing international lenders.

Greek PM reshuffles cabinet, stays fiscal course