Greek caretaker Cabinet and legislators sworn in, elections next month

Members of the newly appointed caretaker Greek government are sworn-in during a ceremony in Athens. (Photo: Reuters)

May 17, 2012, Thursday/ 14:40:00

Greece's caretaker Cabinet was sworn in on Thursday and will lead the country into next month's election, after a deadlocked vote sparked more political turmoil and brought the country's use of the euro currency into question.

The 16-member Cabinet was sworn in during a ceremony in the presidential mansion in Athens, followed by the swearing in of Parliament's 300 legislators, who will take their seats for just one day before the body is dissolved for the new vote.

The parliamentarians were elected in the May 6 vote, which left no party with enough votes to form a government. Coalition talks collapsed after nine days.

Among the legislators who took their seats for the day were 21 from the extremist right-wing Golden Dawn party, which vehemently rejects the neo-Nazi label. The party campaigned on pledges to rid Greece of immigrants and clean up crime-ridden neighborhoods. It also advocates planting landmines along Greece's border with Turkey to stop more immigrants entering the country.

The party won nearly 7 percent of the vote on May 6, a massive increase from the 0.31 percent it had won in the 2009 parliamentary election.

The Cabinet sworn in Thursday is led by Council of State head Panagiotis Pikrammenos, a 67-year-old judge appointed Wednesday as Greece's interim prime minister.

Giorgos Zanias, a top negotiator in the nation's huge debt write down deal concluded earlier this year, has been appointed caretaker finance minister. Zanias is a senior Finance Ministry official and an Athens University professor of economics.

Veteran diplomat Petros Molyviatis was named foreign minister, a post he also held in 2004-06.

Elsewhere in London, British Prime Minister David Cameron on Thursday urged Europe to sort out its currency crisis, calling on the 17-country eurozone “to make-up or it is looking at a potential break-up.”

“Either Europe has a committed, stable, successful eurozone with an effective firewall, well capitalized and regulated banks, a system of fiscal burden sharing, and supportive monetary policy across the Eurozone. Or we are in uncharted territory which carries huge risks for everybody,” Cameron said in a speech in Manchester.

Cameron said that if Greece is forced out of the single currency union, the possible collapse of the eurozone poses huge risks to the UK economy but he said Britain was prepared to weather the fallout.

“Whichever path is chosen, I am prepared to do whatever is necessary to protect this country and secure our economy and financial system,” Cameron said.

The Prime Minister added that the danger for the eurozone laid in its peripheral economies such as Portugal, Spain and Italy and that these “high deficit, low competitiveness countries” in the eurozone need to cut spending, increase revenues and undergo structural reform.

“We all need to address Europe's overall low productivity and lack of economic dynamism, which remains its Achilles heel,” Cameron added.

“Most EU member states are becoming less competitive compared to the rest of the world, not more.”

In a news conference on Wednesday, Bank of England Governor Mervyn King warned there would be no trouble-free outcome to the euro crisis, whether it stays together or fractures.

“Whatever happens, there are major problems ahead; there are credit losses to be realized, and however they choose a solution here this is going to be a very difficult path to go through because countries like Germany and the Netherlands have yet to face up to their rebalancing which will be required, as well as the rebalancing of counties in the south.”

In its quarterly Inflation Report, the Bank of England warned that there was no way to quantify the most extreme possible outcomes in the Eurozone. King said Britain was already was feeling the impact in the form of bank funding costs, asset prices, exchange rates and business and household confidence.

“What is so depressing about it is that this is a re-run of the debates we had about the banking sector in 2007/08,” King said

“Back in 2008, the United States, United Kingdom did recapitalize the banking system. It did grip the solvency problem. What we now need is action to grip the solvency problem in Europe. And it's been two years -- two and a half years now -- in the making, this crisis. I hope the action will be taken.”

Alistair Darling, who was in charge of Britain's Treasury in 2008, said the impact could be severe.

“A Greek exit could start a fire that would spread all along the Mediterranean as other countries would come under pressure. The repercussions, particularly in the banking sector, could cripple Europe for years to come,” Darling wrote in Thursday's edition of The Scotsman newspaper.

“This is uncharted and highly risky territory,” Darling added.

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