November 10, 2011 / 10:26 AM / 8 years ago

Quiet academic Papademos to take helm of chaotic Greece

LONDON (Reuters) - There is an irony in Lucas Papademos taking over as Greek prime minister to help his country survive in the euro zone: He was one of those who eased Greece into the single currency in the first place.

As head of Greece’s central bank from 1994-2002, the cautious, quietly spoken technocrat fought rocketing inflation and sought to impose monetary discipline on a country that frankly has never had any.

Along the way, he gathered enough kudos among Europe’s leaders and with financial markets to find himself — to his own surprise — appointed as vice president of the European Central Bank, one of the highest international posts ever held by a Greek.

There is little doubt that background, along with a stint at the Federal Reserve Bank of Boston, qualifies him more than perhaps any one else to understand both the economic and international implications of Greece’ debt debacle.

He is also cut from that modernist Greek cloth that eschews the kind of nationalistic chest-beating and conspiracy-driven machismo that has so often hurt the country’s relations with others.

But the question is whether a somewhat introverted academic like Papademos can handle the rough and tumble of Greek politics, which includes violent street clashes and harsh personal enmities in parliament.

He is not unfamiliar with the syndrome but may be uncomfortable with it. As central bank governor he was widely condemned in the late 1990s for suggesting — rightly as it turns out — that Greece’s stock market was a dangerous bubble.

When stocks began their inevitable sharp fall, some people accused him of setting it off with his comments.

Similarly, he came under fire at the ECB when it became apparent that Greece’s debt figures used to bring the drachma into the euro zone did not include huge military spending.

He argued that he had made this clear all along to European officials when he was Greek central bank chief, but they had accepted it.


Papademos is criticized in his own country as someone who finds decision-making hard — which would not be a particularly good trait for one tasked with pulling chaotic Greece and worried Europe back from the brink.

“He takes a very long time to make a decision,” said a former colleague at the Greek central bank. “I wonder if his style will work at a moment when Greece needs a strong leader, fast on his feet.”

He is certainly cautious and keeps things very close to his chest.

To the chagrin of this correspondent, Papademos likes to talk about how he privately negotiated on the telephone the totally unexpected entry of the drachma into the Exchange Rate Mechanism at the same time he was hosting me at lunch.

Not a word leaked out. But something can be said for Papademos’ gentle, friendly character that he offered me a totally unnecessary apology afterwards.

In Frankfurt, meanwhile, he was known for never breaking with ECB policies, simply confirming them even in off-the-record discussions.

His stint there was low profile, sitting enigmatically next to then-ECB President Jean-Claude Trichet in news conferences offering only the occasional information about some inner-workings of the ECB.

Not for him, the constant sound bites of other ECB members — which may reflect a lack of dynamism but not necessarily discount a serious behind the scenes player.

All of which means that while Papademos has garnered respect from peers and from the all-important financial markets, it by no means certain that quiet thoughtfulness will do the job of leading Greece out of chaos.

Then again, maybe Greece could use a little quiet thoughtfulness.

Additional reporting by Dina Kyriakidou; Editing by Giles Elgood

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