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New PM for Greece but will a new government save the country from the debt crisis?

The Greek Prime MInister is on the way out, but the new government has a lot of work still to do. AFP/Aris Messinis

The Greek Prime Minister will resign in an effort to save the bailout deal agreed by the European Union to dig the country out of its debt crisis.

George Papandreou agreed to go following talks with the country’s president and leader of the opposition. A new government of national unity will be formed later today.

The Conversation spoke to Dr Michális S Michael, Deputy Director and Research Fellow at the Centre for Dialogue, La Trobe University about the changes at the heart of the Greek government.

Will the resignation of George Papandreou make a resolution to the Greek economic crisis more likely?

I think the decision by PM Papandreou to resign in favour of a national unity government, which he would not lead, is a very stabilising development. It will bring all the major parties into government to share in the political, social and financial responsibilities ahead of fresh elections which are likely to be called in 2012. It also enables the EU financial package to be dealt with collectively by all political forces in a more consensual fashion. Part of the problem in Greece has been that the opposition has been very unhelpful. So this move will go some way towards addressing the lack of political consensus.

George Papandreou is a serious and sober politician. If you compare him with his neighbour Silvio Berlusconi in Italy, he has proved that he puts Greece’s national interest above personal ambition in holding onto office, as opposed to Berlusconi who has been clinging onto power. Papandreou delivered one of his best speeches as a swansong to the Greek parliament the other day.

Who is likely to lead the new government?

There are a couple of suggestions - the current Finance Minister Evangelos Venizelos is the most likley one. He has a different character and temperament, to the Prime Minister. He’s also been an internal political foe. He ran against Papandreou for the leadership position. There’s also the possibility of a technocrat Lucas Papademos. It may be good idea to have a neutral independent non-politian technocrat to head the government, but on the other hand a strong Prime Minister with political experience and skill is also required.

Is a government of national unity likely to hold?

President Karolos Papoulias brokered the deal which led to the government of national unity. AFP/Louisa Gouliamaki

I think it will hold as long as it has a clear mandate, terms of reference and a timeline towards fresh elections. There needs to be quite extensive negotiations about the terms of a colation government. But the important thing to remember is that it is a short term temporary government, rather than a medium to long term one.

What will be the key first considerations of the new government?

How they will implement the European package deal and austerity measures. There needs to be less kerfuffle about the politics. The public demonstrations are becoming less attractive to the people, not least because winter is approaching. But the middle classes now realise that they have to take their bitter medicine in terms of job, welfare and service cuts.

What do you think the Greek public will make of the new government?

Protestors have been out on the streets in Greece for months, but now many realise they will have to take a bitter pill to improve the economy. AFP/Louisa Gouliamaki

It will be seen as a step in the right direction. The government of national unity signals the country is in dire straits, and an all-party government is needed to lead. Allowing everyone to partake in that government will help towards that realisation. I foresee that some of the parties on the Left may continue to boycott it, but it’s a first step. They’re not out of the woods by a long shot. It will take Greece a good ten years to recover, politically, socially and economically. But they need to take stock. This is a chronic problem which has developed over decades

Will this be enough to satisfy the EU?

I think they are taking it seriously. Papandreou’s referendum annoucement sent shockwaves through the EU, but it did act as a circuit breaker by bringing the political crisis things to the fore, triggering a chain of events which led to the confidence vote in parliament, and the government of national unity. Obviously consultation needs to continue though.

Does the Greek public have an appetite for abandoning the Euro and returning to the drachma?

I don’t think so. That’s the politics of rumours - more a case of misplaced patriotism and hubris. The worst thing they can do politically and economically is leave the Eurozone.

What will the impact of new elections be on politics in Greece?

That’s a good question. There’s always a temptation during election campaigns to play to the lowest common denominator. There has been a polarising blame discourse in Greek politics for a long time. As much as anything that has led to the political crisis of the last decade. I can’t tell you how that will play out and emerge. Probably the best thing to happen in the elections is not to have a clear winner and force the parties into forming a coalition government.

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