Greek PM Sacks Finance Minister In Reshuffle

Finance Minister George Alogoskoufis, criticised even from within his own party for a series of misfired policies, was replaced.

Greek Prime Minister Costas Karamanlis sacked his finance minister on Wednesday in a broad cabinet reshuffle to try to shore up his government's popularity, hit by riots, scandals and economic woes.

Finance Minister George Alogoskoufis, criticised even from within his own party for a series of misfired policies, was replaced. Foreign Minister Dora Bakoyanni will stay, the government's spokesman told reporters.

A series of scandals and discontent with economic measures have eroded the ruling New Democracy's support and saw the opposition socialists lead opinion polls for the first time in years, raising the spectre of snap elections.

Alogoskoufis, credited with an EU-applauded fiscal tightening soon after New Democracy swept to power in 2004, drew fire for basking in a consumer-driven GDP growth of about 4 percent and neglecting a ballooning public debt and current account deficit, threatening jobs.

"Karamanlis wants to show he is listening to public opinion and the best way to do that is to focus on the finance minister," said Theodoros Livanios, head of the Opinion polling agency. "He wants to make clear this is a substantial and not a cosmetic reshuffle."

Alogoskoufis, 53, will be replaced with one of his deputies, Yannis Papathanassiou, 55.

"The prime minister communicated directly with all the outgoing and incoming cabinet members," government spokesman Evangelos Antonaros said. "The swearing in ceremony will take place tomorrow."

RIOTS ADD TO WOES

Adding to the government's troubles, a police shooting of a teenager on Dec. 6 sparked the worst riots in decades. Analysts said the violence was fuelled by lingering public discontent as the global financial crisis begins to bite. Unions had been battling Alogoskoufis's privatisation plans and industrialists had repeatedly asked for measures to boost eroding Greek competitiveness.

He appeared to seal his fortunes when he announced a series of tax collecting measures in late August as other European economies braced for collapse. He announced a 28 billion euro bank support package before any measures to aid the poor, who officially make up one fifth of the Greek population.

"Alogoskoufis became the focus of criticism by most economic groups and was perceived as seeing to big bankers, that he had lost his touch with the small and mid-sized business sector," said Alexander Moraitakis, head of the Greek brokers association SMEHA.

"SMEHA feels the minister did not promote measures to see Greece become an international financial centre as was pledged by the prime minister in May 2005."

Although analysts see little room to manoeuvre on the economic front, Papathanassiou is seen as a good choice for the post as a ministry hand takes over.

"He is considered a good minister. His record at other ministries has been successful," Livanios said.

Apart from Bakoyanni, other key interior, labour and defence ministers will stay. The development, transport, education and tourism portfolios will change hands.