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PAGE 13 I CULTURE PAGE 9 I SPECIAL REPORT International Heralb Sribune FRIDAY, NOVEMBER 11,2011 THE GLOBAL EDITION OF THE NEW YORK TIMES GLOBAL.NYTIMES.COM

W hat banks Pulling back once saw as from brink, safe has now Italy looks to turned toxic a technocrat

PARIS ROME

Stung in subprime mess, Impasse shows signs lenders saw euro debt of cracking; Berlusconi as a profitable haven exit may be accelerated

BY LIZ ALDERMAN BY RACHEL DONADIO AND SUSANNE CRAIG Italy pulled back from the brink Thurs­ As the bets that European banks day as lawmakers seemed poised to wagered on U.S. m ortgage investments usher out Prime Minister Silvio Ber­ went bust a few years ago, bankers piled lusconi and replace his government into what they saw as a safe refuge: with a cabinet of technocrats, most bonds issued by countries in Europe’s likely led by Mario Monti, a former seemingly ironclad monetary union. European Commissioner. Now, the intractable financial and eco- A day after Italian bond yields hit 7.4 percent, raising fears of an Italian de­ NEWS ANALYSIS fault that could tear apart the euro zone and threaten the globed economy, market nomic crisis washing over the Continent pressure eased as it became apparent has turned European sovereign debt in­ there was a break in the political impasse to the new toxic asset, ushering a wave over what comes after Mr. Berlusconi. of uncertainty into the global financial Meanwhile, in Greece — until re­ markets not seen since the demise of the cently Europe’s most closely monitored Wall Street investment firm Lehman sick man — political jockeying over who Brothers more than three years ago. would lead the country ended where it Today, the troubles that ignited in had began, with the selection of Lucas Greece have caught fire in Italy, despite Papademos, a reserved economist and a frantic efforts by European politicians former vice president of the European to contain them. Banks face tens and Central Bank. possibly hundreds of billions of euros in While it was much too soon to predict THE ASSOCIATED PRESS losses on loans to countries that use the the dawn of a new era of politics along James Murdoch in London on Thursday after his second appearance before British lawmakers investigating the phone hacking scandal. Mr. Murdoch largely held to his original account. euro as their currency. They have been the Mediterranean, the trend in both scrambling to reduce their holdings of countries seemed clear: the rise of tech­ an investment that, like triple-A-rated nocrats. Both men are cut from distinctly subprime mortgage bonds, were once different cloth than their immediate pre­ thought to be bulletproof. decessors. Mr. Papademos succeeds the Murdoch son gets a tougher grilling “ When people started buying more scion of a political dynansty, and Mr. European sovereign debt, there was not Monti, if he is named, will replace a flam­ a cloud in the sky,” said Yannis Stourn- boyant billionaire more famous for his escapades than his governance. lu h u o n shockingly uninquisitive or strangely but accused two former underlings, tween Mr. Murdoch and his father, aras, director general of the Foundation cavalier about his corporation’s money. whose accounts directly contradicted Rupert, the company’s chairman. for Economic and Industrial Research The once-unstoppable Mr. Berlusconi During two and a half hours of his, of lying about it. Meanwhile, at least 16 former employ­ in Athens. Now, he said, “ this crisis is had initially pledged to step down as News Corp. deputy chief forensic, skeptical and even rude ques­ Much was riding on how Mr. Murdoch ees have been arrested, including two going to last because the perceptions of soon as the Italian Parliament passed expresses regret for tioning from a parliamentary panel on handled the lawmakers’ questioning, in­ former editors of The News of the World risk have changed dramatically.” austerity measures demanded by the Thursday, Mr. Murdoch, the 38-year-old cluding his personal credibility and the (none has yet been charged) and a How European sovereign debt be­ European Union. But until Thursday things that ‘went wrong’ deputy chief operating officer of News health of the News Corp. media empire. series of executives up the corporate came the new subprime is a story with the timetable was unclear, and it Corp., never wavered from his original The hacking scandal has tarnished the ladder have resigned, including Les many culprits, from the governments seemed that Mr. Berlusconi was hoping BY SARAH LYALL account: that he learned only recently company, forced it to summarily shut Hinton, who was chief executive of Dow that borrowed beyond their means and to buy himself more time. But now, with that phone hacking was widespread at down a newspaper, scuttled its$12 bil­ Jones and publisher of The Wall Street regulators who permitted banks to treat the Italian Senate expected to approve Nothing rattled James Murdoch. Not The News of the World, the company’s lion bid to take over the satellite giant Journal. the bonds as entirely risk free to in­ the measures on Friday and the lower being compared to the boss of a criminal now-defunct tabloid. BSkyB, destroyed its symbiotic rela­ Throughout his appearance at the vestors in the markets, who for too long chamber on Saturday, Mr. Berlusconi is enterprise run on fear and omerta. Not He said he had never misled the com­ tionship with Britain’s political estab­ House of Commons Select Committee, did not make much of a distinction be­ expected to step down by Monday. being accused of being willfully blind, mittee in testimony in July. And he all lishment and added to the strains be- MURDOCH, PAGE 5 tween bonds of troubled economies like ITALY PAGE 4 Greece and Italy and those issued by rock-solid Germany. NEW GREEK PRIME MINISTER NAMED Banks, like others, held to the seem­ The choice of Lucas Papademos, an ingly inviolable belief that countries in economist, came after four days of the euro zone would always pay their often chaotic negotiations, p a g e 4 ‘Oops’ lapse steals the debate bills. But the bankers, critics say in hind­ sight, were too complacent when it came as Republican draws a blank to fundamental risk management and were further encouraged by the pros­ ROCHESTER, MICHIGAN and avoid waste, he listed two but then pect for profit to overlook the perils. was unable to think of the third. Since 2005, European and U.S. banks BY JEFF ZELENY “ Commerce, Education,’’ Mr. Perry have amassed $1.1 billion in fees from AND ASHLEY PARKER said before pausing for an uncomfort­ selling bonds for European govern­ able moment as he looked from side to ments, according to data from Thomson Governor Rick Perry had arrived in side, counting on his fingers and flipping Reuters and Freeman Consulting. That Michigan on a mission to get his candid­ his notes. Then a moderator asked Mr. business enabled these same countries acy back on track, but he left on Thurs­ Perry if he could name the third agency. to grow increasingly indebted in the

day after an embarrassing stumble in the “ The third one, I can’t,’ ’ he finally said, past few years. YANNIS BEHRAK1S/REUTERS Republican presidential debate raised a sad look on his face. “ Sorry. Oops.” While many banks turned around and RELIABLE, BUT NOT INSPIRING questions about his candidacy and left The nearly minute-long lapse Wed­ sold this debt to clients, it was also at­ Lucas Papademos can probably Mitt Romney looking increasingly confi­ nesday night was almost immediately tractive for banks to hold the debt on command the trust of Europe, but can dent near the top of the Republican pack. posted on YouTube, and political ana­ BANKS, PAGE 19 he win the trust of Greeks? p a g e 4 Mr. Perry survived the first hour of the lysts declared it deeply damaging, if not debate focusing on the economy without necessarily fatal. One political scientist, EUROPEAN GLOOM ONLY DEEPENS RAY OF HOPE FOR SAVING THE EURO PAUL SANCYA/THE ASSOCIATED PRESS incident, but when he said later that he Larry Sabato of the University of Virgin­ The European Commission warned One expert — George Soros — thinks Governor Rick Perry, left, and Representative Ron Paul during the Republican debate. Mr. planned to eliminate three government ia, said it was one of the worst presiden- Thursday of the possibility of a double­ Europe has the means to resolve the Perry said he would eliminate three government agencies, but he could think of only two. agencies in Washington to save money PERRY, PAGE 8 dip recession. PAGE 18 crisis, Chrystia Freeland writes.PAGE 2

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Russia passes final W.T.O. test Penn State casualty list grows A.N.C. suspends youth leader U.S. adviser on Mideast to quit The last step in Russia’s bid to join the Joe Paterno, who has the most victories South Africa’s governing party said Dennis B. Ross, an influential adviser #· World Trade Organization came when of any coach in major college football Julius Malema, leader of its youth wing, to President Barack Obama, will the country reached a deal with Georgia history, has been fired by Pennsylvania brought the party into disrepute. PAGE 5 reportedly leave in December, p a g e s tied to commerce with the breakaway State University, and the institution’s PATEK PHILIPPE provinces of Abkhazia and South longtime president has also been GENEVE Ossetia. Russia was motivated to work removed in the wake of a sexual abuse harder toward W.T.O. membership after scandal involving Jerry Sandusky, a Begin your own tradition. witnessing China’s success, p a g e is prominent former assistant coach, and the university’s failure to act to halt U.K. stands pat on interest rates further harm. PAGE15 The Bank of England agreed Thursday to keep its benchmark interest rate COMING THIS WEEKEND unchanged at a record-low 0.5 percent because of growing concerns that the Romeo, ready for the big time debt crisis in Europe could push Anthony Santos, known to his Latino Britain’s economy back into recession. music fans as Romeo, the lead singer of It also kept its bond-purchasing Aventura, collaborates with the program unchanged, p a g e 18 rappers Usher and Lil Wayne on his first solo album. VIEWS Out of the shadow of Barolo A m erica’s real Iran problem Eric Pfanner tours lesser known A diplomatic presence in Tehran is vineyards of Piedmont, Italy, and finds CORENTIN FOHLEN FOR THE NEW YORK TIMES PAGE TW O critical to ensuring that Washington wines, red and white, that hold their avoids repeating the mistakes of its own against their more famous New place of remembrance President Nicolas Sarkozy of France will recent past, writes Reza Marashi. PAGE 6 neighbors at more affordable prices. inaugurate a new museum on Friday, Armistice Day, commemorating World War I.

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L 2 I FRIDAY, NOVEMBER 11, 2011 INTERNATIONAL HERALD TRIBUNE PAGE TW O

kets this week — is that the European Financial Stability Facility war chest of Ray of hope €440 billion, or $600 billion, is a continu­ ation of this pattern of insufficiency. Mr. Soros disagrees: “ It actually has for saving the bazooka in its hand, provided it uses it in the right way.” To do that, Mr. Soros said, Europe the euro must first acknowledge that its bazooka is too small to rescue Europe’s faltering members directly. The bailout fund, he said, “ was designed as a way of provid­ ing guarantees on government bonds, but for that purpose it is clearly inad­ equate. It cannot be stretched to cover Italy and Spain.” But the bailout fund is big enough, Chrystia Mr. Soros thinks, to save Europe in a different way. “ It needs to be used to Freeland guarantee the banking system,” he said. “ That would create a lender of last resort, which is currently lacking.” WAY OF THE WORLD The bailout fund, he continued, could take the solvency risk, which is beyond the legal right of the European Central BUDAPEST Europeans could use a Bank. “And for that,” he said, “ there is little cheering up this week. One man plenty of money.” Thus shored up, the who is trying to do that is George Sor­ banks would be able to buy the high- os. He knows his way around a cur­ yielding government debt of the Euro­ rency crisis, of course, and he isn’t usu­ pean countries that are currently ally accused of being a Pollyanna. Mr. struggling to find lenders. Soros thinks it is not too late to save Banks would be encouraged to hold Europe and the euro — but he warns their liquidity in Treasury bills, Mr. that time is running out and that Soros said, which they could sell to the Europe’s leaders must fundamentally European Central Bank at any mo­ change their strategy to succeed. ment. “ So it is the equivalent of cash, Let’s start with the bad news. “ Right and it would yield more than cash, now, the crisis has hit a new high, be­ therefore they would hold it,” Mr. Soros cause there’s an unresolved govern­ said. “ That would allow countries like ment crisis in Greece and in Italy,” Mr. Italy and Spain during this crisis peri­ Soros said. “ There is also a looming od to borrow at negligible cost.” worsening of the financial crisis, be­ His plan, Mr. Soros said, would make cause all the efforts to leverage the Italy’s debt “ sustainable, because the E.F.S.F. have run into legal or technical E.C.B. has any amount of money for difficulties.” He was referring to the the purpose of providing liquidity. At European Financial Stability Facility, the same time, it would not violate the PHOTOGRAPHS BY CORENTIN FOHLEN FOR THE NEW YORK TIMES the bailout fund for the euro zone. law against the E.C.B. directly financ­ Final preparations for the opening Friday of the Musée de la Grande Guerre near Meaux, France. Nearly all the exhibits are from the collection of one man, Jean-Pierre Verney. “ That means that currently Europe ing the governments.” has no ring fence against a possible Mr. Soros’s plan is essentially a way Greek default, and that is what is push­ to get around Europe’s fundamental ing the market into a renewed panic,” economic flaw — it has a single cur­ he said. “ I expect the market to fall in­ rency, but no lender of last resort: “ It’s to despair and panic and I expect that a trick, but a trick that would work.” to get worse.” The European crisis has metastasized Despair may indeed be the right because Germany has been adamant New place of remembrance emotion, if you accept Mr. Soros’s pre­ about blocking precisely this sort of bored soldiers out of shells and ammuni­ diction of what will happen if European trick. The second reason for Mr. Soros’s CHATEAU-THIERRY, FRANCE leaders don’t get ahead of the markets: relative optimism is his conviction that tion. There is a Browning FN 1910 pistol “ This crisis is potentially bigger than Germany and its leader, Chancellor An­ of the same type (and a sales catalog for the crash of 2008, because we have sur­ gela Merkel — the aforementioned most Collection of artifacts the gun, which cost 42 francs) that Gav- vived the crash of 2008 and we have not important woman in the world — have from W W I, the work of a rilo Princip used to assassinate Arch­ yet survived this one. There is a danger recently had a crucial change of heart. duke Franz Ferdinand and his wife in Sa­ if they get it wrong then you have a fi­ “ It is entirely in the hands of Ger­ lifetime, goes on display rajevo and, courtesy of the state, a 1917 nancial meltdown. If there is a dis­ many,” Mr. Soros said. “Angela Renault tank, a truck that housed carrier pigeons, and two warplanes, the fragile orderly default in Greece, and the rest M erkel’s attitude has changed. She rec­ BY STEVEN ERLANGER of the euro zone has not been insulated ognizes that the euro is in mortal Blériot XI and a Spad X III biplane. from contagion, then you could have a danger and she is willing to risk her Some of the last American doughboys of There is a re-creation of a French meltdown not only of the Greek finan­ political future to save it. I think she World War I to be identified were found trench and a German one with no man’s irenen and a German one with no man’s cial system, but of the European and in recognizes that Germany has caused just a few years ago, buried in a vegeta­ land in bet wecij. and om*« provide fact the global financial system be­ the crisis to get out of control, and she ble garden in this littie town, wine bottles Historical context of the years between cause we are so interconnected.” is now determined to correct that.” clasped in their crossed arms. They had 1870 and the end of the Great War. So far, so dire. But Mr. Soros has two Mrs. Merkel is very good at getting died of their wounds in a field hospital The museum, with workers racing to ideas that should perk you up. One is what she wants, so fans of Europe and set up in the adjoining farmhouse. finish in time for Mr. Sarkozy and the about the bazooka, and one is about the the euro should be somewhat reas­ Because dog tags rusted so quickly, public, cost €28 million, divided between most important woman in the world. sured by Mr. Soros’s verdict. But only soldiers created their own unofficial state and regional authorities. Some €3 The bazooka is the financial weapon somewhat. Mr. Soros is a persuasive method for future identification — they million came from corporate contribu­ Europe has created to defend ailing salesman of his plan to rescue Europe, wrote a note identifying the dead, with tors, including Disneyland Paris, only European economies from the skeptical but his most telling remark comes the date and manner of death, and two about 15 kilometers away, with which traders who are betting against them. To when I ask him what he would do if he comrades of higher rank signed it, as Aisne-Marne American Cemetery, at the site of the battle of Belleau Wood. Of the esti­ the museum expects to form a tourism end the crisis, Europe needs a bazooka were still actively trading. witnesses. They then stuck the note into mated 10 million soldiers who died in World War I, about 116,500 were Americans. partnership. big enough to convince the markets that “ I would be sitting on the fence like an empty bottle, corked it and buried it The organizers expect up to 100,000 making a wager against Frankfurt will everybody else, because the situation in the arms of the corpse, said David visitors a year; the memorial at Verdun be futile — and expensive. is so uncertain.” Atkinson, superintendent of the sweep­ American soldiers who fought in World niture and jewels,” he said. gets about 200,000 a year. Interest re­ Until now, the story of this financial ing Aisne-Marne American Cemetery, War I were not born in the United States, But in the 1970s, he said, “ people wer­ mains high; Michelin is publishing two crisis has been one of European leaders Chrystia Freeland is global editor at where the battle of Belleau Wood was Mr. Atkinson said ; many were first-gen­ en’t interested and the state was cau­ World War I battlefield guides on Fri­ consistently being one step behind the large at Reuters. fought, sacred to the U.S. Marines. eration immigrants from Europe who tious.” He proposed displaying his col­ day, for this area and for Verdun. markets: bringing a fist to a knife fight, Estimates vary, but about 10 million returned here to fight and die. lection at various museums and got no On Saturday, in nearby Fere-en- then a knife to the gun fight — and never e -m a il : [email protected] soldiers died in World War I. More than All the dead will be mourned on Fri­ answers. But in 2004, at a commemora­ Tardenois, there will be yet another me­ bringing out the bazooka. Conventional t o m o r r o w : Alan Cowell on Europe’s 116,500 were Americans, dying in less day, celebrated in most of Europe as Re­ tion of the battle of the Marne, he met the morial dedicated in the region — a wisdom — and the verdict of the mar­ crisis of expectations. than six months in the slaughter that membrance Day or Armistice Day, to mayor of Meaux, Jean-François Copé, bronze statue on a plinth in honor of the was supposed to be the war that ended mark the end of fighting on the 11th hour who now runs Mr. Sarkozy’s party. soldiers of the U.S. 42nd Infantry Rain­ all wars. In this region of France, today of the 11th day of the 11th month of 1918. A foreign museum had offered Mr. bow Division who died in the battle of a lush, rainy carpet of fields and hills, But on 11/11/11, which marks no special Verney €2 million, or $2.7 million, for his Croix Rouge Farm in July 1918. Sculpted roughly 300,000 soldiers were killed or centennial, there is still an unusual res­ collection, but he wanted to keep it in by James Butler, a Briton, the statue de­ wounded in less than four months , onance. France. Mr. Copé arranged to buy it for picts an American soldier carrying a 70,000 of them American, from June 1918 President Nicolas Sarkozy of France €600,000 with the promise of the mu­ dead comrade. The memorial was the gift onward. They were vital to the success­ will devote much of his day to commem­ seum. Only some 5 percent of Mr. of an Alabaman in the name of his father, ful effort to block the Germans from ad­ orations honoring Georges Clem­ Verney’s 50,000 pieces will be displayed Sgt. William Johnson Frazer, wounded in vancing on Paris, about 100 kilometers, enceau, France’s wartime leader, and — uniforms from more than 30 nations, the battle, which featured a bayonet or 60 miles, away. Charles Péguy, the beloved poet who guns, canteens, call-up notices, charge by the 167th Alabama regiment. The battle here is considered to have died near here in the first battle of the weapons, ammunition, grenades, gas As for Mr. Verney, what interests him been crucial, marking the end of a string Marne. “ Everything begins in mysti­ masks and protective suits, prostheses, is the human story of the war, especially of German conquests and the failure of cism and ends in politics,” Péguy once patriotic knickknacks, art made by now that the last serving soldier is Germany’s push for victory before the wrote, and Mr. Sarkozy will also come thought to have died. So he was stung American Army arrived in full strength. on Friday to nearby Meaux, to inaugu­ the other day when a well-known The American cemetery at Belleau, rate a new museum, Le Musée de la FRANCE French historian of World War I, An­ and another nearby at Seringes-et- Grande Guerre (the Museum of the nette Becker, dismissed him as “ a Meaux · Château- Nesles, known as the Oise-Aisne Am er­ Great W ar), a 7,000-square-meter, or handyman who has amassed bric-a- Paris · Thíerry ican Cemetery, which is laid out like an 75,000-square-foot oblong devoted to ' ' H * ' brac, with no historical legitimacy.” open-air cathedral, together contain the historical artifacts of the war, near Mr. Verney responded, “ Despicable,” more than 8,000 American graves. The an American memorial statue called and said: “ I am not a collector: I ’m a headstones of white Italian marble are “ Liberty in Distress,” erected in 1932. farmer, I made a furrow and I drew it set in ranks, like a parade formation of Nearly all the artifacts were amassed myself, with difficulty.” the dead. Many of the names — like by Jean-Pierre Verney, 66, the grandson Now, with the museum a reality, Mr. Mike Zlotchka, a private from Michigan of a German woman, who became fas­ Verney said, “ I ’m going to leave the who died on Sept. 23,1918, and Cataldo cinated by the war. Inspired by the tales trenches and reflect, and rest a little.” Carletta, a private from Pennsylvania, of veterans, he began buying from flea who died on July 16,1918 — were Euro­ markets and auction houses. He be­ Elvire Camus and Maïa de la Baume con­ 0 \ τ ε s a v /a /q pean in origin. At least 18 percent of the came obsessed, selling “ my wife’s fur­ tributed reporting.

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Subject to availability at participating 1911 Chinese Killed by Imperialist Troops 1936 World’s Longest Bridge to Open 1961 Co-operate or Perish, Nehru Says properties. Restrictions may apply. shanghai News of the most terrible character sanfrancisco The longest bridge in the world, u n I t e d N at I o N s, N. Y. India’s Prime Minister comes from Nanking this morning [Nov. 10]. The running across San Francisco Bay to connect Jawaharlal Nehru warned the UN today [Nov. Imperialist troops commenced a wholesale Oakland with San Francisco, will be opened for­ 10] that mankind must decide whether it wants slaughter of the Chinese inhabitants, and the de­ mally Thursday. The structure known officially to ‘ ‘co-operate or perish” and it faces the choice tails so far received by telegraph and by some as the East Bay Bridge and boasting an eight- of either “ peaceful co-existence or no existence survivors who have reached here make a most mile stretch from tip-to-tip, was first dreamed of at all.” The 71-year-old apostle of non-alignment ghastly story. The Imperialist troops rushed nearly a century ago, before engineering science told the 103-nation General Assembly that in­ EST· 1928 through the streets, slaying every man suspected was capable of giving serious attention to the feat stead of trying to solve basic problems like Berlin THE LEADING HOTELS of revolutionary tendencies. Hundreds of inno­ of throwing it across water. At least 306,000 cel- and Germany — which he is convinced can be cent Chinese were killed because they were not ebrators are expected to cross the bridge. They solved — people speak of escaping from the dev­ O F THE WORLD® wearing the queue, the emblem of submission to will hail the connecting of San Francisco and astation of a nuclear war by “ burrowing into the Ail Kinds of One-of-a-Kind the Ching dynasty. Meanwhile many of the Im­ Oakland, and will respectfully contemplate the earth like rats in a hole.” Instead of directing all perialist gunners have abandoned their positions result of engineering skill which threw two spans attention to conflicts that divide the world, he 00.800.2888.8882 | CONTACT YOUR TRAVEL CONSULTANT in front of the rebel army, owing to the lack of am­ across the bay, each resting on Yerba Buena Is­ said, the Assembly might resolve to declare a WWW.LHW.COM/LEADINGSUITES munition, are deserting to the popular cause. land, a central point for the general structure. year of co-operation.

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I \ 4 4 1 FRIDAY, NOVEMBER 11, 2011 INTERNATIONAL HERALD TRIBUNE EUROPE World News From chaos, a premier emerges for Greece Papademos is known ATHENS the statement was issued at midday and spoke briefly with reporters, striking an optimistic note. for acumen, Economist has little time “ The course will not be easy,” he said. to satisfy creditors and “ But the problems, I ’m convinced, will be solved. They will be solved faster, with not for flash secure €8 billion loan a smaller cost and in an efficient way, if there is unity, agreement and prudence.” FRANKFURT BY SUZANNE DALEY In the face of mounting domestic protests and building pressure from the Lucas Papademos, a respected econo­ European Union, Mr. Papandreou New leader is considered mist, was named prime minister of agreed last Sunday to step aside once a a political outsider, but Greece on Thursday to head a new unity coalition government had been formed. government that has pledged to abide But the parties could not seem to stop that could be an asset by the tough terms of a European aid fighting long enough to settle on a candi­ package in the hopes of saving the coun­ date. With elections expected early next BY JACK EWING try from bankruptcy. year, all sides were maneuvering for The choice of Mr. Papademos, a former strategic advantages. If there is a Greek alive who can com­ vice president of the European Central Mr. Papademos, however, is seen as mand the trust of international credit­ Bank, came after four days of often an outsider to the old-boy networks of ors and European leaders, it is probably chaotic negotiations that put Greece’s Greek politics — a technocrat, perhaps Lucas Papademos. But the bigger ques­ feuding political parties on full display. able to take Greece on a new path. Some tion may be whether the reserved econ­ Mr. Papademos almost did not get the analysts here have said that the political omist, a former vice president of the job. Only on Wednesday evening, parties were reluctant to embrace him European Central Bank, can win the former Prime Minister George A. because he would be an unknown, and trust of the exhausted Greek people and Papandreou went on television to give a perhaps a rival, at election time. accomplish anything lasting in what farewell speech before announcing an­ News reports earlier this week said may be little more than a cameo as other candidate. that Mr. Papademos had also set certain prime minister. But some 50 members of his party, and conditions before he was willing to take Mr. Papademos, who was named as members of the opposition as well, the post, which they did not like. For in­ prime minister on Thursday, has been pressed for Mr. Papademos instead. stance, the reports said he wanted a far removed from the hurly-burly of After five more hours of negotiations term of at least six months. Earlier, Greek politics, which is probably a plus, Thursday morning, the president’s office Greece’s major political parties had considering that Greeks’ trust in their issued a statement that Mr. Papademos’s agreed to new elections in just100 days. elected officials is at rock bottom. had landed the task of trying to bring Other reports said Mr. Papademos He also enjoys credibility among key Greece’s economy back from the brink. was insisting that members of the main leaders at the European level, notably As if to underscore the problems he conservative opposition N ew Democra­ ALKIS KONSTANTINIDIS/EUROPEAN PRESSPHOTO AGENCY Mario Draghi, the new president of the will face, the statistics service Elstat on cy party play a significant role in the Lucas Papademos leaving the presidential office in Athens on Thursday after being appointed to head a unity government. European Central Bank, based in Frank­ Thursday reported that unemployment unity government. It was widely report­ furt. The two men were classmates at had jumped to a record high of 18.4 per­ ed that the opposition, headed by Ant­ the Massachusetts Institute of Technol­ cent in August — a time when the tour­ onis Samaras, had resisted participat­ sure the country’s major foreign Whether he will succeed remains an Athanasia Katalianou, 50, the owner of ogy, where both earned doctorates in ism season is in full swing and the rate ing, not wanting to be linked to deeply lenders, who were shocked when, after open question. But some analysts said handmade craft shop said Mr. Papa- economics in the late 1970s, and remain historically falls. The unemployment unpopular reforms with an election negotiating a new €130 billion loan in Oc­ they considered his appointment to be demos’s appointment did not make him close. The connection could come in rate was 16.5 percent in July. around the corner. tober, Mr. Papandreou decided without Greece’s best shot. optimistic about the future. “ Papademos handy, considering that the E.C.B. is Mr. Papademos has only a few weeks But standing outside the presidential warning to submit the bailout package “ The political parties have opened a is a man of the memorandum,” she said probably Greece’s biggest creditor, with to convince Greece’s creditors, the so- palace, Mr. Papademos said he had not to a referendum. The move infuriated new chapter here and that is a good using a term that refers to the troika ‘‘He holdings of Greek bonds estimated at called troika — the European Union, the made any demands before accepting European leaders and eventually led to thing,” said George Kirtsos, a political doesn’t care about the country he’s with about €50 billion, or $70 billion. International Monetary Fund and the the job. Mr. Papandreou’s stepping down. analyst of the conservative daily City the creditors and not the debtors. He’s a “ Greece needs some reliable figure in European Commission — to release an He also said the new unity govern­ Mr. Papademos will also have to deal Press. “ Whether it will work is hard to champion of the banking system.” the next three months, especially for the €8 billion, or $10.9 billion, loan before the ment would be “ transitional,” and its with 2011 budget shortfalls and the pas­ tell. The problems get more complicated But others Greeks were more inclined Europeans,” said Dimitris Drakopoulos, country runs out of money. He will then priority would be to make sure that sage of a 2012 budget that is expected to all the time. European Union is a mess to celebrate the changing of the guard. an analyst at Nomura in London. have to turn his attention to fulfilling the Greece stayed in the euro zone. “ I am call for another round of austerity mea­ as well. Now, Italy and France. But this Tilemachos Sideris, 52, who is self- But reassuring skeptical foreigners is terms of an even larger loan negotiated convinced that Greece's continued par­ sures in a climate of growing social un­ is a good move.” employed, said Mr. Papademos might only part of the job that awaits the per­ in October. Getting that loan will require ticipation in the euro zone is a guarantee rest. He also will have to being what are But whether Mr. Papademos will be a be just the man to put the state in order. son who succeeds George A. yet another round of unpopular auster­ for the country’s stability and future expected to be difficult negotiations popular figure outside of government is “ I ’m an optimist; I think things will Papandreou. It is less certain whether ity measures, including lay offs. prosperity,” he said. with private sector banks that have less clear. His friends say he has little go better,” he said. Mr. Papademos, who is not known as an Mr. Papademos, who has a low-key, It remains unclear what his cabinet agreed, in principle, to write down by 50 gift for oratory. And some Greeks have inspiring public speaker, can lift the spir­ avuncular manner, emerged from the might look like. percent their Greek bond holdings as hecome deeply suspicious of anyone as­ Niki Kitsantonis and Demitris BouniäS it! 8 f fepgrafg SlM § Mtfi iR: presidential office budding shortly after He will have to move swiftly to reas­ part of the rescue plan. sociated with banking. contributed reporting. dured two years of relentless austerity. “ He isVvery methodical person and a very reserved and cautious person,” said Michalis Haliassos, a professor of economics at the University of Frank­ furt who knows Mr. Papademos. “ He is Italy starts to look toward not the type of person to go out on the balcony and address the masses.” “ But maybe this is what is needed technocratic leadership right now,” Mr. Haliassos said, adding that the Greek people “ have had too ITALY, FROM PAGE 1 win national elections — said that it is many speeches. What is needed now is Asked what had sped up the process, “absolutely ready to consider” an much more emphasis on reason.” Stefano Micossi, an economist and the emergency government of national Serving as prime minister will be a director of Assonime, an Italian busi­ unity led by a non-political figure, the sharp departure for Mr. Papademos, 64, ness research group, put it simply: party’s leader Pier Luigi Bersani, said who has spent his entire career either “ The view of the precipice.’’ in a telephone interview. teaching economics, including a decade The transition had been held up by in­ A centrist bloc, including Future and fighting among members of Italy’s en­ Liberty, a breakaway party led by the “He is not the type of person trenched political class, who were speaker of the lower house, Gianfranco to go out on the balcony and anxious to preserve their power, priv­ Fini, and the Union of the Center, a ileges and political bases. A major break grouping of former Christian Demo­ address the masses. But in the gridlock came on Thursday when crats, has also said it will back a national maybe this is what is needed.” a bloc of Mr. Berlusconi’s People of unity government. “ If we had had an­ Liberty party made clear it would back other government until now we an emergency government of national wouldn’t be under orders” of the Euro­ at Columbia and most recently at Har­ unity led by a non-politician. pean Central Bank, Mr. Bersani added, vard, or as a central banker. He was gov­ That was due largely to the quiet yet touching on a delicate issue here. ernor of the Greek central bank from forceful maneuvering of Italy’s presi­ In contrast to Greece, where greater 1994 to 2002, then became vice president dent, Giorgio Napolitano, an 86 -year-old European intervention is seen as an af­ of the E.C.B. In Frankfurt, he was former member of the Italian Commu­ front to national sovereignty, in Italy known as modest and accessible, but nist Party and respected elder states­ many in the ruling class see the Euro­ also such a perfectionist that he some­ man who is now overseeing the most pean Union as the only force strong times tested the patience of those who significant political transition in Italy in enough to dislodge an entrenched cul­ worked with him. 20 years. ture of political patronage that has At the E.C.B.’s monthly news confer­ On Wednesday, Mr. Napolitano not grown worse under Mr. Berlusconi, in ences, Mr. Papademos left the limelight only named Mr. Monti a senator for life, spite of his being elected three times as entirely to the president at the time, anointing him, but also transforming a reformer. Jean-Claude Trichet. Mr. Papademos’s him from a simple technocrat into a But the pressure on Italy has become contributions during his eight-year term freshly minted and untainted legislator. too great to bear, making Mr. Berlusconi were mostly invisible to outsiders. For Mr. Monti was expected to appear in the the most powerful European leader es­ example, he was a key figure in negoti­ Senate on Friday for passage of the aus- sentially ousted by market forces, ations to create a panel that has broad rather them the complex internal logic of authority to monitor the European econ­ “If we had had another Italian politics. omy and financial system and to sound Italy’s entrenched political and pa­ the alarm if there are problems. government until now we tronage system, overly generous pen­ At the central bank, Mr. Papademos wouldn’t be under orders” of sions and job protections, along with an stuck to the official line that Greece the European Central Bank. excessive web of competition-killing red should repay its creditors in full and cut tape, are often cited as the primary cul­ public spending to get its deficit under prits in a dismal economic record that is control. It will be difficult to cling to that terity measures. But even as momentum seen as the root cause of Italy’s trou­ position as prime minister. Austerity built for Mr. Monti’s candidacy, it was bles. has contributed to a savage economic not assured. The difficulties in Greece in In spite of the market fear, many of downturn, and the country’s private naming Mr. Papademos on Thursday as Italy’s economic fundamentals remain creditors agreed last month to accept interim prime minister of a unity gov­ strong. It is the E.U.’s fourth-largest just half the money they are owed. ernment offered a cautionary tale. economy and its budget deficit is a rela­ The E.C.B. is not taking part in the debt One key unresolved question is the tively manageable 4.6 percent, com­ relief, which at the end of the decade political formation of the likely transi­ pared to a projected 8.5 percent in would still leave the country owing 120 tional government, which will affect its Greece in 2012. But Italy isn’t growing, percent of annual economic output. Mr. ability to implement change. Many and is seen as needing technocratic Papademos could win the gratitude of the politicians do not want to be associated leadership to restore its credibility in­ Greek public if he persuaded Mr. Draghi with passage of a tough overhaul that ternationally after the Berlusconi era to contribute to a further reduction. might reduce their power and electabil- The measures that Parliament is ex­ Mr. Papademos will probably also ity pected to approve this weekend include have a good rapport with the troika of Mr. Berlusconi and a key member of a mixture of spending cuts and tax the E.C.B., the International Monetary his center-right coalition, the Northern hikes, the sale of some state real estate, Fund and the European Commission League, have insisted that they want including farmland, and the privatiza­ that has Greece on a drip feed of financ­ early elections rather than allowing a tion of municipal public utilities. They ing contingent on restructuring the technocrat to govern Italy. But with the would also loosen the grip of Italy’s economy and cutting government. extreme market pressures, it was look­ powerful professional guilds and make But regardless of his connections and ing increasingly unlikely that Italy it easier to transfer public servants. qualifications, Mr. Papademos will have could weather the weeks or months of They also spell out tax breaks for em­ precious little time to accomplish any­ instability ahead of elections. Under a ployers who hire young people and thing, serving for a few months at most. hypothetical Monti government, the women, and a move toward streamlin­ “As a nonpartisan technocrat he’s as Northern League would become part of ing Italy’s cumbersome judicial process good as they come,” said Kevin Feather- the opposition, as would a prominent in certain cases. stone, a professor of European politics at center-left party, Italy of Values, whose But they fall short of addressing seri­ the London School of Economics. “ But leader has also called for early elec­ ous pension or labor reform. the shelf life will be relatively short.” tions. For its part, the center-left opposition Elisabetta Povoledo contributed report­ London Thomas contributed reporting Democratic Party — which would likely ing. from Athens.

I 6 I FRIDAY, NOVEMBER 11,2011 INTERNATIONAL HERALD TRIBUNE EDITORIAL OPINION Views international iticralb {¡tribune Americas real Iran problem THE GLOBAL EDITION OF THE NEW YORK TIMES More important but less understood, hood of misperceptions, miscalcula­ way street. With the Iranian govern­ STE PH E N D U N B A R -JO H N S O N Publisher IRANI Reza Marashi however, are two longstanding and in­ tions and dangerous mistakes. ment operating an Interest Section in A diplomatic creasingly dangerous institutional prob­ Intelligence is not a substitute for the Washington, it would almost certainly M ARTIN GOTTLIEB Editor, Global Edition presence lems within the U.S. government that critical work of diplomats on the ground have to reciprocate an American re­ ALISON SMALE Executive Editor this Case has brought to the fore: an — and perhaps no foreign policy issue quest to establish a similar diplomatic TOM REDBURN Managing Editor in Tehran is WASHINGTON After weeks of hyping overreliance on intelligence and under­ demonstrates this more forcefully than presence in Tehran — lest Iran’s lead­ PHILIP McCLELLAN Deputy Managing Editor critical to intelligence on the military aspects of utilization of diplomatic resources when Iran. Simply put, a vital national security ers risk appearing even more obstinate. They do care about their international URSULA LIU Deputy Managing Editor ensuring that Iran’s nuclear program, the Obama ad­ formulating Iran policy. By treating di­ process has been broken for over three KATHERINE KNORR Assistant Managing Editor ministration’s public statements on the plomacy with Iran as a reward to be decades, and American politicians are image, if only to avoid greater global Washington RICHARD BERRY Editor, Continuous News recently released International Atomic earned rather than the vital national se­ exacerbating rather than repairing it. consensus against them.

RICHARD ALLEN News Editor avoids repeat­ Energy Agency report are curiously curity tool that it is, American politicians A diplomatic presence in Tehran is During my tenure at the State De­ critical to ensuring that America avoids partment, we tried twice to push the ing the mis­ moderate. Off the record, U.S. officials have been administering a self-inflicted say that not all of America’s intelli­ wound. ’ repeating the mistakes of its recent idea of sending U.S. diplomats to SERGE SCHMEMANN Editor of the Editorial Page takes of its gence findings were included in the The recent allegations against Iran past. Inherent limitations of intelligence Tehran. Both the Bush and Obama ad­ recent past. I.A.E.A. report — which aims to reflect show the critical role that intelligence make the status quo unsustainable. In ministrations decided against it. PHILIPPE MONTJOLIN Senior Vice President, Operations international consensus. This fact can play in helping policymakers gath­ Iraq, an overreliance on intelligence and My former State Department col­ ACHILLES TSALTAS Vice President, Circulation and Development speaks to a larger challenge — that the er information and make decisions on dearth of diplomatic leagues are now building a cadre of CHANTAL BONETTI Vice President, Human Resources United States faces a credibility prob­ the most challenging issues. However, America reporting allowed Iran-focused diplomats for an eventual JEAN-CHRISTOPHE DEMARTA Vice President, international Advertising Bush administration on-the-ground presence. Nevertheless, lem. Key countries do not share Wash­ intelligence is not meant to be taken in closed its CHARLOTTE GORDON Director of Strategy and Marketing ington’s assessment of Iran, and thus . isolation — and when it comes to Am er­ officials to make de­ the 10 percent rule remains precariously embassy in RAND Y WEDDLE Managing Director, Asia-Pacific it’s unlikely that the U.S. will disclose ica’s Iran policy, it almost always is. cisions with impunity. imbalanced because America is trying SUZANNE YVERNÈS Chief Financial Officer more substantial information. While serving in the State Depart­ Baghdad in They claimed that to gauge the intentions of a country with Some administration officials would ment’s Office of Iranian Affairs, I learned 1991. For the highly classified, raw which it has little direct contact — a situ­ Stephen Dunbar-Johnson, Président et Directeur de la Publication like to see harder evidence made public the 10 percent rule: intelligence is meant next 12 years, intelligence suppor­ ation that it rarely replicates elsewhere. — if for no other reason than support­ to make up approximately 10 percent of it operated in ted their policy, but Things do not have to be this way. ing calls for more “ crippling” sanctions the overall information used to analyze an informa­ failed to conduct the Diplomatic relations are not a gift to the on Iran. But U.S. intelligence agencies strategic issues. The remaining 90 per­ tion vacuum. standard process of Islamic Republic that will entrench a THE TRUTH ABOUT IRAN reportedly oppose more detailed dis­ cent consists of embassy reporting and integrating it into the government with declining popular ap­ closures for fear of jeopardizing intelli­ unclassified, open-source information. broader context with peal. Naysayers need not look far for gence-gathering and sources. The U.S. As a whole, this symbiotic process is other reporting. Intelligence that was compelling evidence. Ambassador The International Atomic Energy is therefore unlikely to secure more ro­ meant to provide a balanced, broader not properly checked for accuracy led to Robert Ford’s shrewd diplomacy in Syr­ Agency’s new report leaves little doubt bust U.N. sanctions when it makes its context to policymakers. Intelligence is imbalanced analysis and disastrous de­ ia firmly pursued U.S. national interests, case to the Security Council. supposed to be the missing piece of the cision-making. engaging with the Syrian government about Tehran’s nuclear ambitions. puzzle — not the only piece. Over­ America closed its embassy in Bagh­ while also showing support for protest­ reliance on intelligence to support key dad and severed diplomatic ties with ers seeking their universal rights — a Tehran was in full dudgeon on Wednesday, denouncing the policy decisions results in skewed or in­ Iraq in 1991. For the next 12 years, it op­ demonstrably more effective approach International Atomic Energy Agency — calling its top inspec­ complete analysis that lacks the fuller erated in an increasingly injurious in­ than any amount of bluster or sanctions formation vacuum. The inability to that Damascus would inevitably ignore. tor a Washington stooge — after it reported that Iran’s scien­ context needed for sound decision­ making. As this information vacuum complement intelligence with diplomat­ Politicians like to opine on foreign tists had pursued secret activities “ relevant to the develop­ grows over time, so too does the likeli- ic reporting led to policymakers cherry- policy, but they change with election ment of a nuclear device.” The agency did not back down, picking raw intelligence that lacked a cycles. Career diplomats and intelli­ and neither should anyone else. fuller context. As this information vacu­ gence officials are often left to clean up The report is chillingly comprehensive. It says that Iran cre­ um grew, so did Washington’s misper­ the mess elected officials and political ated computer models of nuclear explosions, conducted ex­ ceptions and miscalculations — to the appointees leave behind. N o foreign periments on nuclear triggers and did advanced research on a point of choosing to launch a costly war. policy issue better demonstrates this This proven recipe for disaster has self-defeating principle than Iran. The warhead that could be delivered by a medium-range missile. alarming parallels to America’s Iran executive and legislative branches What gives the report particular credibility is its sourcing. crisis. The only missing piece is the must stop politicizing diplomacy vis-à- The agency’s director, Yukiya Amano, built a case on more catastrophic miscalculation at the end. vis Iran, and let diplomats do their job. than a thousand pages of documents, the assistance of more The 30-year freeze in diplomatic rela­ More than any new sanctions legisla­ than 10 agency member states and interviews with “ a number tions with Iran has produced a U.S. gov­ tion, this is how politicians can truly act of individuals who were involved in relevant activities in Iran.” ernment that knows precious little in pursuit of America’s vital national se­ The United Nations Security Council — particularly Russia about a country that is integral to stabi­ curity interests. and China, which have been shielding Iran — has no more ex­ lizing American national security in­ terests in nonproliferation, terrorism, r e z a m a r a s h i is director of research at cuses. It needs to quickly impose a new round of even tougher Afghanistan, Iraq, energy security and the National Iranian American Council sanctions on Iran, which is also enriching uranium five years the Israeli-Palestinian conflict. and a form er Iran desk officer at the after the Council ordered it to stop. Russia, which is still doing HORACIO CARDO Still, diplomatic relations are a two- State Department. a lot of business with Iran, ruled out more sanctions, saying they would be seen as an “ instrument for regime change.” China said it would study the report. The enrichment pro­ gram is having technical problems, and sanctions are making it harder to import materials. But not hard enough. W e’re not sure any mix of sanctions and inducements can Theres time to deal with the Iran threat wean Tehran of its nuclear ambitions. We are sure that an at­ tack would be a disaster — and the current saber-rattling ous political position in Israel — in part The Israeli public is wrestling with legislation that would make it “ illegal from Israel should make everyone nervous. A military strike IRAN II Juliette Kayyem by playing on American domestic poli­ this last point; four-fifths agree an at­ for any American diplomat to have any would not set back Iran’s program for long. It would rally Ira­ Tehran does tics. The problem with this war frenzy is tack on Iran would lead to war with contact with an Iranian official.” nians around their illegitimate government. And it would pro­ not have a nu­ that it may inhibit a strategy of contain­ Hamas and Hezbollah. Aerial strikes But U.S. engagement with multina­ duce a huge anti-Israeli and anti-American backlash around ment against Iran that has been working will have regional consequences as clear bomb, tionals — and even with Iran — can the world — whether or not Washington had tried to stop it. Israel’s leadership is publicly suggest­ Israel enjoys strong support among missiles from Lebanon would strike Is­ only help Israel’s security. We are Isra­ The last round of sanctions was approved 17 months ago. and nothing in ing that a military strike against Iran’s U.S. politicians of both parties — so rael. Iran would unleash violence in el’s best, and sometimes only, ally. nuclear industry is necessary. But time much so that many in Congress take a Iraq. There is no quick fix; as many in Ironically, what might be called the Since then, Russia and China have balked at further penalties the I.A.E.A. re­ is on Israel’s side, and Am erica’s. The much harder line on security threats to Israel’s defense community note, a BFF strategy — best friends forever — while stalling on implementing those already approved. So port brings the greatest risk now for the United States Israel than Israeli public opinion does. shock-and-awe aerial strategy against has paid off, at least up to now, in the long as that enabling continues, Iran will keep pushing its nu­ world any would be to let Israeli Prime Minister A bipartisan coalition of American Iran is unlikely to solve the problem. Iranian nuclear debate. clear program forward. closer to Benjamin Netanyahu’s bluster make politicians and policymakers is now The United States should instead be “ The U.S. has continued to communic­ Americans impatient. pushing the argument that, on Iran, we maintaining a strong voice in interna­ ate and consult that we are on the same doomsday. Iran does not have a nuclear bomb, have no time. Though most in Congress tional institutions that can be used to boat here. That strategy is based on the and nothing in the International Atomic have stopped short of calling for imme­ isolate Iran and buy us more time. But in correct assumption that Israel was less Energy Agency’s report released Tues­ diate military action, demands for “ de­ a mindless game to punish the Palestin­ likely to go off on its own if it felt that its BACK TO COMMON SENSE day brings the world any closer to cisive action” have grown more urgent. ian Authority for seeking U.N. recogni­ ‘B FF’ was with it and did not underesti­ doomsday. The report is disturbing; it “ The clock is ticking,” the House For­ tion, we are no longer even in the room. mate the (Iranian) threat,” says Shai concluded that Iran had let up on past eign Affairs Committee chairwoman Under a 1994 law, no U.N. body which Feldman, a Middle East scholar at Bran- In state after state, the extreme agenda efforts to build nuclear weapons but, as Ileana Ros-Lehtinen said recently. admits Palestine can be funded by deis. But this view also assumed that do­ of Republican lawmakers has been suspected, has conducted significant In fact, we do have time. And there Washington. Period. Last week, Unesco mestic political interests in the United rejected by weary voters. work more recently. The report will are a whole host of questions that are voted to accept Palestine as a member. States would not impede the very help build international support for isol­ either being ignored or dismissed. That seems like no big loss. But the Pal­ nimbleness necessary to buy more time. ating Iran; that is its intent., Would an aerial strike actually work estinians will seek recognition else­ Boxing ourselves in and imposing a It might have been “ too much too soon,” a chastened Gov. Yet Netanyahu’s rhetoric suggests a against Iran, which has spent a lot of where, and a key agency in its sights is gag order on ourselves serves no one’s John Kasich of Ohio admitted on Tuesday night, after his more immediate crisis. In interviews, he time hiding its efforts? If Israel were to the I.A.E.A. If the United States refuses interest. A military strike will be a state’s voters overwhelmingly rejected his attempt to break has likened the current standoff over nu­ strike Iran militarily, wouldn’t the to pay dues there, we would no longer nightmare for Israel. The United States public employee unions. He certainly was right about “ too clear issues to the appeasement of Nazi world view Israeli action as implicitly have a say in holding states like Iran ac­ ought to position itself in the best way Germany in 1938. This crisis atmosphere condoned by the United States? And countable. Meanwhile, the House For­ possible to stop that from happening. much,” an analysis that also applies to other examples of Re­ helps Netanyahu shore up his own tenu­ what would happen after the strike? eign Relations Committee has proposed BOSTON GLOBE publican overreach around the United States: an anti-abor­ tion amendment in Mississippi, a voting restriction in Maine, the radical anti-immigrant agenda of a politician in Arizona. These policies, and similar ones in other states, were passed by a Tea Party-tide of Republicans elected in 2010. Many of them decided that they had a mandate to dismantle some of the How to leave the euro basic protections and restrictions of government. They went too far, and voters had to drag them back toward the center. between the German chancellor and courts to determine whether pre-2010 cess to international bond markets, As a result, Tuesday brought an overdue return of common For Greece, Stergios Skaperdas the French president, and would thus public debt would follow suit, but there is making bilateral borrowing from anoth­ sense to government policy in many states. Many voters are returning lead to a more sustainable debt burden. no reason to think they would treat it er country Greece’s only option abroad. tired of legislation driven more by ideology than practicality, to the Because of problems with financing any differently from domestic debt. But this is less a concern than some of measures that impoverish the middle class or deprive Greek banks and pension funds, default Loans from the European Union and think, because Greece is soon expected drachma people of basic rights in order to prove some discredited eco­ IRVINE, CALIFORNIA · Having been led would be likely to mean leaving the the International Monetary Fund, to achieve a primary budget surplus nomic theory or cultural belief. offers a bet­ down an ever-worsening spiral by the euro. But that’s a good thing, as it would though, would probably be kept in (the government budget surplus, ex­ euro zone and its own government, give Greece control of its own monetary euros. That’s a problem, because once cluding interest on debt) which would That was most evident in Ohio, where voters overwhelm­ ter chance Greece now faces two options, both of policy. This is especially important now, Greece leaves, the euro itself would make domestic borrowing sufficient. ingly repealed a law pushed through last spring by Republi­ of econom ­ them painful: stay the course, or de­ with Greek credit and liquidity severely substantially increase in value — and Initially, foreign exchange would be cans to shred collective-bargaining rights for public employ­ ic growth fault and exit the monetary union. restricted, most critically in its vital thus the loans’ price in drachmas would scarce, making it harder to import es-. ees. It prohibited bargaining on health benefits for state and than stay­ Each presents difficulties and uncer­ small-business sector. Moreover, since increase. But since incomes would also sential goods. In the short term, then, local workers, including teachers, police officers and fire­ tainties, but in the long run there is no the “ new drachma,” as the post-euro drop if the country stayed in the euro Greece would need to limit the outflow fighters, and made it much harder to collect union dues or ne­ ing the question that default, and a return to currency might be called, would depre­ zone, the real, productive resources the of foreign capital, an aggressive but not gotiate on staffing. course. the drachma, offer the better chance of ciate, both tourism and exports would country would need to service that debt uncommon practice. The private, euro- economic growth and employment. rise, and imports decrease, all of which denominated external debt of banks and Many states are bleeding because of high salaries and lav­ wouldn’t be much different. Staying the course — which, despite would make Greece more competitive. Apart from these steps, the transition other companies would also need sup­ ish benefits, but, as New York and Connecticut have shown, it the impending change of government, So why have Greek leaders stuck with would take time. It could take perhaps port through government guarantees. is possible to reduce them without breaking unions. The is still Greece’s plan — means continu­ the euro at all? In part, it’s because the months to print enough new drachmas Some of these steps may seem daunt­ roughshod course chosen by Ohio, as well as Wisconsin and ing austerity and unemployment for thought of defaulting and leaving the to support domestic transactions, and ing, but they are not much different Indiana, made the real agenda all too clear: breaking the the foreseeable future. The young and euro is so intimidating. But while not during that time euros would stay in cir­ from what Greece faced before its political power of public unions. Blue-collar voters in Ohio, skilled will go abroad, leaving behind without costs, it would in fact be relative­ culation. Banks would also need time to adoption of the euro. In any case, the many of whom got to the middle class through collective bar­ an older and needier population to en­ ly straightforward, especially if prepara­ adjust their accounting, computers and policies followed so far have demon­ gaining, understood the game. dure a crushing debt. In the meantime, tion is underway behind the scenes. clearing routines. Still, a few distinctive strably failed. Greece must contem­ all important economic decisions will To minimize the number of days banks details of the euro aside, managing the plate, and then undertake, an exit from It is not clear that Tuesday’s votes add up to a national be made in Paris, Berlin and Brussels. would need to be closed, the decision to transition from one currency to another the euro zone. The sooner a transition trend that will have an effect on2012 or even the deadlock in Default at Greece’s initiative, by con­ move to the new drachma should be is well understood: the change of cur­ occurs, the better for everyone. Congress. But they do offer a ray of hope to any candidate trast, would allow Greece to influence made on a Friday. Bank deposits and do­ rencies that followed the breakup of who runs on pragmatic solutions, not magical realism, to cre­ its destiny. The process would be large­ mestic debt would be immediately Czechoslovakia, for example, took sever­ s t e r g io s s k a p e r d a s is a professor of eco­ ate jobs and reduce the pressures of inequality on the middle ly governed by Greek law, instead of its converted to new drachmas at the initial al weeks and by all accounts went well. nomics at the University of California, class and the poor. being a matter of private discussions exchange rate. It would fall to the Greek True, such a move would close off ac­ Irvine.

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i I, i i A. KATHIMERINI English Edition

Established 1919 ■ No 27 ,907-6 www.ekathimenni.com ATHENS, FRIDAY, NOVEMBER 11, 2011

— IN BRIEF = PSQMIADIS IN CUSTODY______Lucas Papademos Fugitive soccer club owner awaits extradition in Skopje named PM, vows to Police in the Former Yugoslav Republic of Macedonia said yesterday that businessman and soccer club owner Makis Psomiadis has keep Greece in euro been remanded in custody for 40 days after being arrested in Skopje on Wednesday. Psomiadis is wanted in Greece on match-fixing N ew cabinet due to be sworn in today charges, which he denies. Athens is expected to begin extradition proceedings soon. Psomiadis appears to have fled Greece last month only Lucas Papademos, a former vice cies connected to that.” The priority, days after spending three months on the run president of the European Central he said, is for Greece to rem ain in the from authorities who arrested him near Athens. Bank, was yesterday named the coun­ eurozone. “I am convinced that try’s new prime minister after the Greece’s continued participation in CIGARETTE SMUGGLING leaders of the three parties participat­ the eurozone is a guarantee for its sta­ ing in a new coalition governm ent fi­ bility,” he said. Five coast guard officers caught nally managed to overcome their dif­ Papademos refuted reports - ferences following five days of tense leaked by Papandreou’s office late on A total of 21 people, including five coast guard negotiations. Wednesday - that he had asked party officers, have been charged in connection with Emerging from the president’s resi­ leaders to meet specific conditions. Lucas Papademos leavesthe Presidential Palace in central Athens yesterday after accepting the invitation to the smuggling of cigarettes into Greece. The dence moments after his appointment After the talks with the president become Greece's interim prime minister. Papademos has worked as an economics professor at the University of arrests were made on Wednesday following was announced by President Karolos yesterday, ou tgoing PM G eorge Pa- Athens, the governor o f the Bank o f Greece and the vice president o f the European Central Bank. raids in Athens, Patra and loannina. The Papoulias, Papademos told a throng of pandreou, New Democracy leader An­ damage to public coffers from the gang's action journalists that he was confident that tonis Samaras and right-wing Popular the composition of his cabinet re­ racy will contribute around four party Party (KKE) chief Aleka Papariga say­ is estimated to run into tens of millions of euros, the n ew interim governm ent he has Orthodox Rally (LAOS) leader Giorgos mained unclear yesterday. It is widely officials - not MPs - to the new cabi­ ing that the coalition’s main goal was authorities said. been tasked to lead will be able to push Karatzaferis made no statements. Of­ expected that Finance Minister Evan- net and that tw o LAOS deputies w ill “to crush the popular movement through tough reforms on which cru­ ficials from the three parties were dis­ gelos Venizelos w ill remain in his role take ministry posts. shortly before the country goes ■ Food program. Several tons of pasta, cial rescue funding depends. “The patched to the premier’s office for and that the ministers of education, The appointment of Papademos bankrupt.” Members of the KKE- rice and cheese are to be distributed to the poor country is at a crucial crossroads,” he talks on policy details. transport, health, agriculture and the was broadly welcomed by most par­ backed labor union, PAME, staged a and homeless over the next six weeks as part of said. “The course ahead will not be Papademos and his new cabinet are environment will also keep their ties. Leftist parties however rejected small protest rally in central Athens a European Union-backed program, Agricultural easy but I am confident that the prob­ to be sworn in at 2 p.m. today though posts. It is thought that N ew Democ- the development, with Communist last night. Development Minister Costas Skandalidis said lems can be solved and they will be yesterday. The program foresees the distribution solved faster, at smaller cost and more of some 7 tons of pasta, 5 tons of rice and just efficiently if there is unity, coopera­ European leaders emphasize need for interim administration to work together under half a ton of cheese (of the Cretan tion and a prudent approach.” graviera variety). The aim is to distribute 9 kilos The 64-year-old economist, who European leaders welcomed yesterday the ap­ sistance must be rapidly concluded... the vol­ like the reform efforts for a better and m ore effi­ of food to each individual and between 16 and was educated at the Massachusetts pointment of former central banker Lucas Pa­ untary bond exchange with private sector in­ cient and consolidated Greece to have broad po­ 78 kilos to each family depending on its size. Institute of Technology and has pademos as Greek prime minister but placedmore vestors should take place as planned at the be­ litical support. served as governor of Greece’s central emphasis on the need of the interim government ginning of 2012. “I wish everyone who is going to take on re­ ■ Fraudster rumbled. Officers from bank, suggested that his economic in­ to work together. “It is important for Greece’s new government sponsibilities in Greece the best, and Germany the police's immigration department yesterday sights w ould make up for his lack o f In a joint statement, European Council Presi­ to send a cross-party message of reassurance to w ill do everything in its means for a good cooper­ detained a 22-year-old Algerian national after political experience. “I am not a politi­ dent Herman Van Rompuy and the head of the Eu­ its European partners that it is com m itted to do­ ation,” she added. finding two packages containing some 20,000 cian but I have exercised economic ropean Commission, Jose Manuel Barroso, said ing what it takes to set its debt on a steady down­ The United States also emphasized the need for forged watermarks for Spanish passports in his policy in Greece and Europe,” he said, that Athens must now focus on adopting and ward path.” consensus under Papademos’s leadership. “We possession in the central Athens neighborhood adding that his appointment was “a keeping to last month’s bailout agreement, which German Chancellor Angela Merkel also focused welcome his appointment. We look forward to of Kypseli. According to police, the packages great honor and an even greater re­ is likely to see Greece receive another 130 billion on the need for the Greek government to cooper­ working with the new prime minister,” said State had been sent to Greece from China. sponsibility.” euros in loans and holders o f Greek bonds accept ate rather than on Papademos’s credentials. Department spokesman Mark Toner. Papademos stressed that the new a 50 percent haircut. “W e will work with every Greek leader who is “We also welcome the consensus that’s been ■ Migrants in transit. A charter plane government would be “transitional” “Although this w ill be a transitional govern ­ appointed,” Merkel said during a news confer­ reached in Greece on the need to implement the carrying 63 Pakistani nationals left Athens for and that its chief goal would be “the ment, its workload will be extremely intense,” ence in Berlin. “We would like Greece to get on country’s reform commitments to the IMF as well Lahore and Islamabad, police said yesterday, implementation of the decisions of the pair said. “A second program o f financial as­ the right path as quickly as possible and we would as the European Union,” he said. noting that deportation orders had been issued the October EU summit and the poli- for the immigrants. The deportations are part of a European Union-funded crackdown on illegal immigration.

■ Marathon Friends, in a public EDITORIAL debate starting at 6 p.m. tomorrow, the Diesel cars to get right of way? Marathon Friends International Association, chaired by Germany's deputy ambassador to R eason Greece, Guy Feaux de la Croix, is set to present It has been the subject o f discussion for years with­ Environment Minister Giorgos Papaconstantinou ring” in Athens to replace the current restrictions a declaration on the "renewal of democracy and out ever happening, but the government appears set unexpectedly submitted the amendment to Parlia­ that mean cars which have a license plate ending com es out lessons from the Classical Athenian experience," to lift the ban on diesel-powered cars from the cen­ m ent on Wednesday afternoon, when the focus o f with an odd number can only enter the city center on on the occasion of the Athens Classic Marathon, ters of Athens and Thessaloniki. The move, however, most people was on Prime Minister George Papan­ an odd day and vice versa. Instead, the restriction o n to p which is scheduled to take place on Sunday. The has drawn criticism from environmental groups. dreou’s imminent resignation and the expected an­ will be based on carbon emissions. debate will be in English and admission to the The change in the law that bans private vehicles, nouncement o f the next prime minister. Only cars that issue emissions below 140 g/km will ntrusting the formation of a event at the Electro Palace Hotel in Plaka is free. apart from taxis, that use diesel from entering down­ However, the ministry defended its plans to lift be allowed into the city center. Any vehicles pur­ E national unity government town areas was included in an amendment submit­ the restrictions on diesel-powered cars. “The m in­ chased before 1990 will only be allowed to enter dur­ to Lucas Papademos was a piv­ ■ Bond probe. Journalist Dimitris ted to Parliament on Wednesday afternoon. istry’s decision was based on extensive studies and ing off-peak hours. otal and responsible act on the Kapranos was remanded in custody yesterday It proposes that all diesel cars that use Euro 5 tech­ was taken after consultation with the relevant par­ The environmental group WWF Hellas slammed part of the country's political after being questioned by a magistrate in nology be allowed into the city centers. European liamentary committee," the ministry said. “It has the the governm ent for rem oving the diesel ban at the leaders, even if the decision was connection to claims that he profited from an Union regulations limit carbon monoxide emissions interest of the public and the protection o f the envi­ same time that an EU study showed that diesel-pow­ reached at the very last minute. investment in a structured bond by the Pension to 500 mg/km, particulates to 5 mg/km, nitrogen ox­ ronment at heart.” ered cars had contributed to increases in nitrogen Split between the Interests of so- Fund for Press Employees (TSPEATH), which he ides to 180 mg/km and combined emissions o f hy­ The ministry wants to incorporate the lifting of dioxide emissions. WWF said the restriction should called "deep PASOK” and those was president of. TSPEATH invested in the 130- drocarbons and nitrogen oxides to 230 mg/km. the diesel ban w ith its intention to create a “green have been made stricter. of the country, George Papan- billion-euro government note in July 2006 with dreou eventually chose the lat­ several other funds. Documents submitted to the ter and did the right thing. court indicated that 1.8 million euros was Meanwhile, Antonis Samaras deposited in Kapranos's Swiss bank account a dared to go against the will of a few days after the bond purchase. Kapranos Teens picking number of his more extreme fol­ denies any wrongdoing. lowers, but at the same time reaffirmed that New Democra­ cy Is the middle-class, center- up bad habits right alternative solution for gov­ WEATHER erning the country. The number of adolescents smoking, drinking alcohol and What Is Important in this case Is Athens______¡f W 11°/17° experimenting with drugs increased steadily between 2006 the defeat of party mechanisms and 2010, according to a new study by the Athens-based on both sides, mechanisms Thessaloniki & fit 1Q°/13° University Research Institute for Mental Health. which upto the verylast moment The study found that two in five Greeks under 15 claim to tried to press for an exceedingly have smoked cigarettes at least once, with one in three ad­ average solution for the pre­ RADIOTAXI Police mitting to drinking alcohol at least once a week and 7.2 per­ miership, disregarding the grav­ 100 cent saying they have tried cannabis. The survey, conducted ity of the situation, the interna­ ATH£NSAthinal210.921.7942Asteras 210.614.4000 Ambulance on 4,944 adolescents at the end o f last year, showed that 42 tional challenges and, most im­ C o sm o s (for all areas) 1300, (for the city center) 166 percent had smoked at least once in their lives, with one in portantly, the people's wrath. 210.522.2218, (for the suburbs) 210.520.0020 En o ti- Fire dpt 10 admitting to smoking an average o f six cigarettes daily. The choice of Papademos Is ta 210.645.9000 Hellas (for northern suburbs) 199 As for alcohol, one in three 15-year-olds admitted to in­ above all due to Greek society, 210.801.4000/4(for southern suburbs) 210.996.1420 Coast Guard dulging at least once a week, with most opting for beer and (for downtown Athens & Piraeus) 210.645.7000 Ex­ 108 but also to the brave politicians, p re ss 210.993.4812 G lyfa d a 210.960.5603/5 Icarus Road Assist. alcopops. Between 2006 and 2010, the number of adoles­ who, irrespective of their party 210.515.2800 Kifissia 210.6233.100 Parthenon 1 0 4 0 0 cents who drink alcohol at least once a week rose to 35.3 per­ affiliation, for once placed the In­ 210.5223.300 Protoporia 210.222.163. PIRAEUS 50S Doctors cent from 27.6 percent. The increase o f cannabis use was terest of the country above their Hermes 210.411.5200 Piraeus 1 210.418.2335. 1016 sharper, with 7.2 percent of adolescents claiming to have own and that of their parties. Directory THESSALONIKI Euro Taxi 2310.866.866 Macedonia tried it at least once compared to 3.7 percent in 2006. 2310.517.417 W h ite T o w e r 2310.246.104 11888

Commentary / b y A l e x is p a p á c h e l a s Sk Η ΚΑΘΗΜΕΡΙΝΗ Ethnarhou Makariou & 2 Falireos, Athens 185-47 G reece Tel: 210.4808000, Fax: 210.4808460 Maybe this time will be different £ KATHIMERINI E n glish E d itio n omething an experienced New Democracy anger justifiable. Maybe, though, we will all take a will help dispel the many myths that have emerged the right and left will again start talking about the PUBLISHED BY I.H.T.-KATHIMERINI S.A. S cadre told me yesterday afternoon stuck with step back from the edge of the abyss. to fan the flames of rage, such as that there Is a occupation of the Fourth Reich. The high priests of me. He said that for three days, as negotiations to Papademos yesterday exuded a sense of calm and third path for Greece to follow other than strict fis­ populism and the drachma will create another con­ Editor Nikos Konstandaras find the next prime minister wavered, the switch­ knowledge of the tough situation. He Isn't part of cal discipline and remaining In the euro, or return­ spiracy, dismissing Papademos as a puppet of the Deputy Editor Nick M alkoutzis board at the conservative party's headquarters was a burnt-out political status quo that battled tooth ing to the drachma, or the story about a great na­ International banking system. E-mail: [email protected] bombarded by exasperated ND supporters. But he and nail over the last few days to survive and keep tional betrayal through the presence of foreign However, maybe something has changed after the said the complaints died down soon after the new control of the system. Maybe Greeks will now re­ technocrats, or even the Idea that we can bring fiasco of George Papandreou's appearance at premier, Lucas Papademos, made his first public alize that beyond the regulars on the political de­ about a renegotiation of our lending terms and em­ Cannes and the emergence of a new type of gov­ Call 210.4808222 to order a subscription statement. Maybe It was just coincidence, but bates on their TV screens, there are actually peo­ barrass the Europeans. ernment. Maybe raw honesty, reliability, correct ne­ 12 months EUROS 430.00 maybe there Is an explanation. ple with knowledge and morals who can offer I know that all this sounds optimistic. The party gotiation with our partners and dignity will for now SUBSCRIPTION 6 months EUROS 235.00 Clearly people's rage won't just die down overnight. something positive to the country when it needs it mechanisms will fight to ensure that the Pa­ act as a strong antidote to the madness, hysteria RATES 3 months EUROS 125.00 Unemployment, high taxes and the Incessant at­ so desperately. pademos government does not succeed. The left and violence that made us stand out so much more tack on the middle classes' quality of life make this Maybe a calm and honest analysis of the situation will revert to Its usual role and the uber-patrlots on than any other country experiencing a debt crisis.

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