Greece gets caretaker PM until new vote in June

A senior judge has been sworn in to head Greece's caretaker government for a month as the debt-crippled country lurches through a political crisis that threatens its membership in the 17-nation eurozone.

The political uncertainty is worrying Greece's international creditors as well as Greeks themselves, who have withdrawn hundreds of millions of euros from banks since the May 6 election.

Council of State head Panagiotis Pikramenos, 67, was appointed Wednesday to head a government that will lack the mandate to make any binding commitments until a new election, which is expected June 17.

His 16-strong Cabinet will be sworn in Thursday.

About (euro) 700 million ($898 million) in deposits have left Greek banks since May 7, the day after the election, President Karolos Papoulias told party leaders after being briefed by central bank governor George Provopoulos.

"The situation in the banks is very difficult,'' Papoulias said according to a transcript of the meeting's minutes released Tuesday night. "Mr. Provopoulos told me that of course there is no panic, but there is great fear which could turn into panic.''

There were no queues at banks in Athens after the May 6 election, but Greeks have been gradually withdrawing their savings over the past two years as the country's financial crisis deepened, either sending the money abroad or keeping it in their homes.

A Greek banking official, who spoke on customary condition of anonymity, said the situation with deposit outflows was "calmer'' on Wednesday.

Theodore Krintas, managing director of Attica Wealth Management, said he ``would expect the population to quietly be doing what it has been doing in the last days.''

"In other words, some of the Greek citizens are afraid and are taking a portion of the money, but I'm not expecting a bank run,'' Krintas said.

Despite the country's financial situation, households and businesses still had (euro) 165 billion deposited in local banks in March, the last month for which Bank of Greece figures are available, compared to about (euro) 237 billion before the crisis broke in late 2009.

The May 6 election saw a massive rise in popularity for parties that advocate pulling out of Greece's commitments to its international bailout deal, under which it agreed to strict austerity measures in return for billions of euros in rescue loans. The spending cuts and tax hikes have left the country mired in the fifth year of a deep recession and sent unemployment soaring to above 21 percent, and many argue the country cannot hope for recovery if they stick to the deal.

"I want to believe that next time the people will express their opposition to the bailout agreement even more adamantly so that a strong government will be formed without the current parties,'' civil servant Christina Papadopoulou said of the repeat ballot.

Negotiations to agree on a coalition government collapsed Tuesday, nine days after voters furious with the handling of the country's financial crisis deserted the two formerly dominant parties in favor of smaller anti-bailout groups. The election left no party with enough votes for a majority in parliament.

"In a democracy, new elections are the natural consequence of the impossibility of forming a government following an election. It will now be for the Greek people to take a fully informed decision on the alternatives, having in mind that this will be indeed an historic election,'' said European Commission President Jose Manuel Barroso.

"We will of course respect the democratic decision of the Greek people,'' he added. ``At the same time, Greek citizens should be aware that there are 16 other democracies in the euro area.''

Greece is being kept afloat by bailout loans from other eurozone countries and the International Monetary Fund, and losing them would lead to state coffers running out of money, including for pensions, health care and salaries. It is unclear how the June election will affect the continued disbursement of the loan installments.

"The Greek people need to know what they are voting for,'' German Foreign Minister Guido Westerwelle said Wednesday. "Namely not about party politics but about the future of Greece in Europe and the euro. We hope and expect at the same time that all decision makers in Greece are now aware of their responsibility.

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