Papandreou calls up veterans to fight debt crisis

Embattled Greek Prime Minister George Papandreou on Friday picked a team of battle-hardened political veterans to carry out deeply unpopular austerity measures and ward off economic meltdown. Fighting against time to negotiate a new bailout with European peers, the PM reached across rival factions in the Socialist party to quell dissent that threatened to burst into open revolt amid mounting anti-austerity protests. Greece finds itself in a critical situation to secure new funds before its available resources run out next month, but the European Union and the International Monetary Fund demand action before extending additional aid. "I hope the new government can be approved rapidly, so that the process for continuation of financial assistance to Greece may continue smoothly," European Commission chairman Jose Manuel Barroso said on Friday. The new cabinet was sworn in on Friday and will be put to a confidence vote to be completed by Tuesday. Related article:Greek rescheduling could be 'fatal for euro' "I look to Sunday's Eurogroup to resolve remaining differences and come to a responsible agreement on financial assistance to Greece," Barroso said. Evangelos Venizelos, a tough-talking former defence minister who had challenged Papandreou for the party leadership in 2007, will be attending that meeting after his promotion to finance minister on Friday. "Papandreou has forged an alliance with his chief enemy," noted political analyst Ilias Nikolakopoulos. "This will essentially serve to calm party rivalries," he told AFP. Venizelos, 54, is a French-educated constitutional expert who previously headed Greece's frenetic preparations to host the Athens 2004 Olympics. "We must proceed with greater efficiency, Greek citizens expect to see this," new government spokesman Elias Mossialos told state television NET. "Clearly there are major social reactions, which are to be expected when there are so many cuts. We will strive to be efficient," said Mossialos, a former health policy professor at the London School of Economics. Papandreou initially sought to enlist former European Central Bank vice president Lucas Papademos to take over the finance ministry, reports said. Under fire from party backbenchers on Thursday for leading a failed effort to revive the Greek economy, the prime minister also slimmed down the government, axed a few unpopular allies and gave posts to dissenters. Outgoing finance minister George Papaconstantinou, who was blasted by fellow party cadres for failing to jumpstart the economy after an 18-month effort, was given the environment ministry, a move analysts see as a demotion. Papandreou on Friday also named a new foreign minister, 49-year-old Stavros Lambrinidis, formerly head of the ruling Pasok party's group of deputies at the European Parliament and a long-term confidant of the premier when the latter held the post a decade ago. The reshuffle also saw deputy defence minister Panos Beglitis, another close aide of Papandreou, promoted to full minister. Two other key officials who had handled tough reforms, Health Minister Andreas Loverdos and deputy labour minister George Koutroumanis, were given additional responsibilities, with the latter bumped up to full minister. But Papandreou axed two of his close associates, former foreign minister Dimitris Droutsas and former environment minister Tina Birbili, who had both drawn fire within the party. Papandreou's government is locked in tough negotiations with its European peers for a new bailout after a previous EU-IMF rescue was deemed insufficient to get the recession-plagued Greek economy back on its feet. German Chancellor Angela Merkel and French President Nicolas Sarkozy made a joint call on Friday for a new rescue package for debt-ridden Greece to be agreed upon as quickly as possible. Athens has warned it will be unable to pay next month's bills without a 12-billion-euro loan installment from the EU and the IMF, part of a broader 110-billion-euro bailout package agreed last year. A critical vote in parliament on a controversial new austerity package worth more than 28 billion euros ($40 billion), demanded by Greece's creditors in return for the latest aid infusion, must be held by the end of the month. Two Socialist lawmakers, former deputy ministers George Floridis and Hector Nassiokas, on Thursday quit their seats in protest at the government's economic policies and the failure of talks with the conservative opposition to form a national unity administration. Greek lawmakers have been subjected to scathing verbal attacks for weeks by thousands of protesters gathered outside parliament to reject new planned cuts.