Alogoskoufis under scrutiny

Complaints about economy minister grow within New Democracy as bank bailout remains untouched

Pressure is mounting from some sections of the ruling New Democracy party for Economy and Finance Minister Giorgos Alogoskoufis, who is struggling to convince banks to take part in a bailout scheme, to be fired from his post, possibly as part of a wider reshuffle.

Sources said yesterday that Alogoskoufis’s inability to convince any Greek bank to join the support scheme that aims to provide 28 billion euros to help the sector through the global financial crisis is being seen by many conservatives as the latest sign that the minister is no longer in any position to handle economic affairs.

A number of ministers have distanced themselves from his policies over the last few weeks and murmurs of discontent have been growing within the party.

Prime Minister Costas Karamanlis made an effort yesterday to push banks to take part in the scheme. “Participation in the program is voluntary but nobody has the right to make society shoulder the repercussions of one’s decisions,” he said. “Growth and the economy will be adversely affected if this money is not used to boost market liquidity.”

Karamanlis warned the banks that he would not allow “behavior that turns against society.”

However, the prime minister’s efforts are unlikely to appease Alogoskoufis’s critics, who were riled by his decision in September to scrap a tax-free ceiling for the self-employed. The measure was widely unpopular and led to fellow ministers turning their fire on Alogoskoufis.

Foreign Minister Dora Bakoyannis and Public Works Minister Giorgos Souflias are two of those that have publicly distanced themselves from Alogoskoufis and his policies. Souflias suggested that now was the time to step up public spending even at the risk of increasing the deficit.

Sources close to Alogoskoufis said that, given the current financial crisis, it would be unwise to remove him from his post, as stability is needed to handle the situation.