Venizelos Reappointed to New Greek Cabinet

weather.info/home/index.cfm?city=Athens,%20Greece&latlon=37.97945,23.71622&u=c”>Athens—Greek Prime Minister Lucas Papademos Friday appointed a new cabinet, which will be tasked with implementing the country’s latest €130 billion ($177 billion) bailout before leading the country to elections.

Mr. Papademos and his new cabinet were sworn in at a ceremony in the presidential palace, ending an 11-day political crisis in Greece that forced outgoing Premier George Papandreou to step down, rocked European markets and raised fresh questions over Greece’s future in the euro zone.

The new government, which includes appointees from both of the country’s two major political parties—the majority Socialists Pasok and the opposition New Democracy party—as well as the small, nationalist Laos party, opens a new chapter in Greek political history.

It marks the first time in the 37 years since the country returned to democracy in 1974—following seven years of military rule—that the country’s two major parties have agreed to operate in coalition.

 All but three of the 16 ministerial positions remained with the Socialist, or Pasok party, including the finance ministry to which Evangelos Venizelos was reappointed as finance minister. Mr. Venizelos will also continue as deputy prime minister of the new government.

But New Democracy also took control of two key ministries—foreign affairs and defense—while the Laos party was also awarded one ministerial post, marking its first time in government.

“This government represents 85%-plus of the Greek electorate,” said Anthony Livanios, an independent political analyst. “It is the first real grand coalition in Greek history since the restoration of democracy.”

But the government also faces tough challenges ahead. Greece remains mired in a deep recession, unemployment is at record highs, and the government only has enough cash to last it for the next few weeks.

The first task will be to secure a badly needed €8 billion aid tranche promised to Greece by its European partners and the International Monetary Fund. Its disbursement has been left in doubt by political turmoil.

After that, the government will have to approve and implement the latest European aid package and start talks with the country’s private-sector creditors on a controversial plan to cut in half the roughly €200 billion debt it owes them.

“They plainly have plenty of work to do, but they also have a reasonable majority in parliament,” said David Lea, an analyst at Control Risks, an independent risk consultancy. “I think they won’t have any difficulty passing legislation in the coming weeks.”

Although most of the cabinet posts remained in the hands of the Socialists, New Democracy’s participation in government was marked by two party heavyweights—former European Commissioner Stavros Dimas and former Health Minister Dimitris Avramopoulos.

Both men serve as vice presidents of New Democracy, while the party named several deputy and assistant ministers. Among them, a new assistant minister of finance, Ioannis Mourmouras, who is seen as a close adviser of New Democracy party leader Antonis Samaras.

Less clear, however, is how Greece’s increasingly crisis weary public will greet the new government—and the difficult policies it must follow in the weeks ahead.

“It remains to be seen what the public reaction will be,” said Panagiotis Petrakis, head of the economics department at weather.info/home/index.cfm?city=Athens,%20Greece&latlon=37.97945,23.71622&u=c”>Athens University. “I think the public will give the new government a short honeymoon, but then it will start making demands.”