09/20/2011 09:21 am ET Updated Nov 20, 2011

Insight: Greece's finance minister, the power behind the throne

By Dina Kyriakidou

ATHENS (Reuters) - When Greek Prime Minister George Papandreou canceled an official trip to the United States and flew back to Athens at the weekend, he looked the epitome of a leader taking charge of a crisis.

In fact, it was his finance minister who called him home, showing once again that Evangelos Venizelos is the protagonist of the Greek debt crisis and the man calling the shots.

In the three months since Papandreou appointed his Socialist party arch-rival as his number two, Venizelos has strayed far beyond the normal realm of a finance minister -- pushing ministries to enforce policies and keeping rogue MPs in line.

"Papandreou's position has been eroded," said Diego Iscaro of IHS Global Insight. "Venizelos was brought in to build consensus. Rather than having the economic credentials, he was a political figure," Iscaro said of the former law professor.

It was Venizelos, a former defense minister known for his eloquence and razor intellect, who stepped forward after an emergency cabinet meeting on Sunday to tell Greeks their country was at the most critical point in its recent history.

"I promise you sweat, blood and tears," he said, in a nod to British wartime leader Winston Churchill.

Making Venizelos, 54, the bearer of bad news may be a tactic to protect Papandreou from public discontent as pressure from the conservative opposition grows, Iscaro said.

But analysts say if Greece collapses, the two will sink together. So far, the duo has been unsuccessful in forcing ministers to impose unpopular measures on a public angry with two years of austerity, risking crucial EU/IMF funding.

Papandreou handed his old rival the poisoned chalice of the finance ministry after he failed to convince his adviser and ex-ECB vice president Lucas Papademos to take the job. Venizelos agreed on condition he also became deputy prime minister.


Government sources said the drama leading to Venizelos' Churchill-like speech was equally compelling.

EU finance ministers meeting in Warsaw on Friday made clear to Venizelos they would not release an 8 billion euro emergency loan until they were satisfied Greece was delivering promised austerity measures. For the second time this year, Greece was on the verge of running out of cash.

"Venizelos had advised the prime minister early on to cancel his U.S. trip," said a government official, who requested anonymity. "Papandreou decided to go anyway."

Papandreou was already in London, where his daughter is studying, and on his way to a United Nations meeting in New York, when Venizelos called him and told him he must come home.

An announcement of the canceled trip later on Saturday sparked talk of imminent bankruptcy and even snap elections or a fresh bid for a coalition government.

Instead, an emergency cabinet meeting was called to speed up measures that would satisfy the EU and IMF.

The finance minister then took on the difficult task of addressing the nation. And again he dominated headlines, saying he would do whatever it takes to stop Greece from becoming a scapegoat for Europe's inability to handle the crisis.

Papandreou has opted for more general speeches that often refer to Greece's "green growth" potential.

Viewed as one of Greece's most powerful political orators, Venizelos will need more than Churchill's war-time speeches to achieve victory.

"Obviously Venizelos thought that he could achieve something positive, otherwise he wouldn't have accepted the position. But things have got even worse since he took the job," said Peter Bratsis, political scientist at Britain's Salford University.

EU and IMF interlocutors say Venizelos, who also has a reputation as a short-tempered bruiser, has become better at listening and understanding issues but needs to move faster on all fronts.

"He has political clout and wants to become prime minister but he is not a technocrat," said a source close to the troika of international inspectors who regularly negotiate with him.

"If the government does not get to grips with this crisis, it is in serious trouble."

(Additional reporting by Renee Maltezou and Ingrid Melander; editing by Janet McBride)