To Fill New Vacancy, Greece Appoints Economist to Finance Minister Post
By LIZ ALDERMAN
Published: June 26, 2012
ATHENS — The Greek government moved swiftly Tuesday to shore up its unraveling cabinet ahead of crucial talks with its international lenders, appointing a new finance minister with vast economic experience whose main aim is to keep Greece within the euro zone.
Giannis Panagopoulos/Eurokinissi, via Associated Press
Yannis Stournaras said he was optimistic about his new job despite the difficulties the country faces.
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Related
Designated Finance Minister Drops Out of Greek Cabinet, Citing Health Problems (June 26, 2012)
Greece’s New Leaders to Miss Crucial Meeting (June 25, 2012)
Times Topic: European Debt Crisis
Prime Minister Antonis Samarastapped Yannis Stournaras, the leader of an influential Greek nonprofit economic research group, to take the job a day after the man originally designated to assume the post, Vassilis Rapanos, chairman of the National Bank of Greece, resigned before he could be sworn in, citing health problems.
Mr. Rapanos, whose resignation threw new uncertainty into Greece’s leadership less than a week after a new government was installed, was released from the hospital on Tuesday.
An energetic, loquacious man who enjoys an almost rock-star status in national economic circles, Mr. Stournaras, 55, has been an adviser to the Finance Ministry and the country’s central bank and a consultant to previous Socialist governments, including that of Prime Minister Costas Simitis, under whom Greece’s entry into the euro zone was secured.
One of the few Greek economists who is seen as operating largely above partisan politics, Mr. Stournaras and his group, the Foundation for Industrial and Economic Research, have been a go-to source for Greece’s lenders seeking unvarnished assessments about the true state of the economy. His telephone number is one of the first dialed by members of the “troika” — the European Commission, the International Monetary Fund and the European Central Bank — when they want a readout on how things are faring, said an official familiar with the lenders’ thinking but not authorized to speak publicly.
“He is a person who can inspire respect and trust in negotiating crucial economic issues with the troika,” said Basil Dalamagas, an economics professor at the University of Athens, where Mr. Stournaras has taught macroeconomics since 1989.
One of Mr. Stournaras’s first tasks will be to talk formally with Greece’s lenders. Mr. Samaras won his recent election victory on pledges to push back some of the more onerous austerity requirements attached to the country’s $170 billion bailout.
Mr. Stournaras will have to immediately find more than $14 billion worth of cuts to meet the bailout terms.
He will need to figure out how to replenish the government’s fast-dwindling treasury at a time when the economy has contracted more than 6 percent and unemployment has reached 22 percent.
The urgency of the situation hit home Tuesday around 12:45 p.m., less than 12 hours after Mr. Rapanos resigned. Mr. Stournaras, who was at a book presentation in central Athens, received a call from Mr. Samaras asking him to take the position. “He told us he had just received a call saying, ‘Don’t you dare say no,’ ” said Raphael Moissis, the deputy head of the research group, who was present.
Speaking at the book presentation, Mr. Stournaras said he was optimistic about his new job despite the difficulties. “I think there are possibilities for Greece to emerge from the crisis,” he said. “Greece has enormous potential, but we must pass through a wall of established ways of thinking if Greece is to change.”
The new finance minister, who has yet to be sworn in, will not travel to a European Union leaders’ summit meeting on Thursday, where his predecessor, George Zanias, the departing caretaker finance minister, will represent Greece as part of a delegation led by President Karolos Papoulias. The president is standing in for Mr. Samaras, who has been advised against traveling after an operation for a detached retina.
Meanwhile, in the latest blow to Greece’s fragile new government, Giorgos Vernikos, deputy minister for Greece’s merchant marine ministry, resigned Tuesday. The reason was not given, but the news came a few hours after the leftist opposition party Syriza issued a statement saying that there was a conflict of interest, citing the minister’s involvement with an offshore business.
Mr. Samaras met his coalition partners — Evangelos Venizelos, leader of the Socialist Pasok party, and Fotis Kouvelis, chief of the Democratic Left — along with Mr. Stournaras on Tuesday evening to discuss the political situation and strategy ahead of the summit meeting.
Leaving the meeting, Mr. Stournaras promised “hard work” but refused to respond to reporters’ questions about the type of fiscal policies he was planning to carry out or his thoughts ahead of a visit by officials representing Greece’s international creditors, who will consider its request for the easing of some of the terms of the debt deal.
While he has condemned across-the-board austerity measures for deepening Greece’s economic troubles and defeating the overall goal of mending the nation’s finances, Mr. Stournaras has also long insisted that the only way Greece can get back on its feet is to pursue the types of unpalatable structural reforms that Greece’s lenders are pressing on the nation.
For instance, he has argued that Greece could add 15 percent to its gross domestic product over time if the government would seriously enforce reforms, like opening up protected jobs — including those of lawyers, taxi drivers and notaries — to free-market competition. He has urged freeing up capital for the shipping industry and pressing ahead with targeted reductions throughout Greece’s bloated government.
At a time when Greeks have seen their salaries cut by up to 50 percent and unemployment soar, those formulas may not sit well with the public.
Still, Mr. Stournaras was one of the sole voices to have warned back in 2009 — the year before Greece’s first bailout — that the policies of consumption and borrowing being pursued to pump up Greece’s economy were swiftly leading it toward a precipice.
These days, he has also been calling on Germany to stop resisting euro bonds, a move that many economists say would help stem the spread of Europe’s long-running debt crisis. And he has signaled a desire to push ahead with privatizations of a number of state assets, including vast tracts of idle land owned by the state. Such a move could raise billions of euros to replenish Greece’s coffers.
If Mr. Stournaras does things right and inspires confidence, Mr. Moissis said, good things might happen for Greece. “If you take away the lack of confidence that has plagued Greece, there are good investments to be made, and the cost of labor is being controlled,” he said. “If we can get confidence in his fellow ministers, too, we could get some surprises.”
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