Papademos takes the helm in troubled Greece

Greece's new unity government headed by Lucas Papademos took office on Friday to save the debt-stricken nation from bankruptcy after a historic power-sharing deal struck between warring parties. Papademos, 64, a former vice-president of the European Central Bank, will lead a transition government which will have to ratify a crucial 130-billion-euro ($178 billion) international bailout and pave the way for new elections. "The new government of cooperation will do the best it can possibly do to address the country's problems," the new interim PM said during a meeting with outgoing prime minister George Papandreou. "I believe that with cooperation from all, this is what the new government of wider cooperation highlights, and with unity, we will achieve the results (desired)," he said. Papademos was welcomed with relief in a country exhausted by two years of austerity and exasperated by political squabbling over cutbacks demanded by its global creditors, the European Union and the International Monetary Fund. Finance Minister Evangelos Venizelos, 54, kept his post in the incoming team which includes a former EU commissioner and several far-right lawmakers, a first since democracy was restored in 1974 after the fall of an army dictatorship. Ex-EU environment commissioner Stavros Dimas, 70, takes over the foreign ministry under a power-sharing deal between the socialist Pasok party, the conservative New Democracy and the nationalist Laos party. Twelve members of the outgoing socialist administration retained their posts, while the conservatives were also given the defence ministry, which will be run by ex-Athens mayor and former career diplomat Dimitris Avramopoulos, 58. The nationalists received the infrastructure ministry and three junior ministry positions. The new infrastructure minister, 47-year-old Makis Voridis, is a trained lawyer who formerly headed the Hellenic Front, a fledgling party with close links to the National Front movement in France. The new far-right deputy development minister in charge of shipping, 39-year-old Adonis Georgiadis, until recently ran a publishing house whose editions include an anti-Semitic pamphlet and books on ancient Greek history. The Athens stock exchange, flat since the morning, closed 0.86 percent down. The swearing-in ceremony was delayed by two hours owing to last-minute negotiations between the three coalition partners, reports said. The new government's first job will be to persuade the European Union and International Monetary Fund to disburse an eight-billion-euro slice of aid from a 2010 bailout deal that is needed by December 15 before state coffers run dry. Then it must force through painful austerity measures exacted as the price for a second EU rescue package which gives Athens 100 billion euros in loans, the same amount in debt reduction and a further 30 billion in guarantees. Also tasked with holding early elections as soon as the EU deal is ratified by parliament, the new administration can count on the support of 254 deputies in the 300-seat parliament. Papademos, who played a crucial role in Greece's entry into the eurozone nearly a decade ago, emphasised its benefits after weeks of speculation that Greece's problems could force it out of the 17-nation currency club. "The Greek economy is facing huge problems despite the enormous efforts made... Greece is at a crucial crossroads," he said after being named prime minister on Thursday. "The course will not be easy." In a telegram to the new premier, German Chancellor Angela Merkel said that Berlin would "stand by" Athens as it grapples with its debt crisis. The European Commission has warned that Greece has no hope of climbing out of recession next year, tipping a 2.8 percent contraction. Papademos's appointment took four days of talks between the top two parties -- the outgoing socialist Pasok and opposition conservative New Democracy -- after the embattled Papandreou pledged on Sunday to step down. Papandreou's position as prime minister had become untenable after he shocked his European partners with a call last month for a referendum on the bailout deal. He was admonished by EU leaders at the G20 summit and returned home to a party revolt. There was also simmering anger towards two years of austerity policies -- which Papandreou's successor is bound to continue -- with protesters even disrupting nationwide parades last month in honour of Greece's wartime resistance. The last unity government in Greece in 1989 was also headed by an eminent economy expert, former bank of Greece governor Xenophon Zolotas, and only lasted three months.