Greek deputy minister resigns

Nikos Nikolopoulos is the third cabinet minister to quit as the Greek economy suffers.

Greece Deputy Labour Minister Nikos Nikolopoulos resigns on 9 July, 2012. Picture: AFP

ATHENS - Greece's deputy labour minister Nikos Nikolopoulos resigned on Monday, saying the government was not being aggressive enough in pushing for changes to an unpopular bailout.

Nikolopoulos became the third cabinet member to quit the fledgling coalition in as many weeks.

The resignation is a new setback for Prime Minister Antonis Samaras whose government had already stumbled to a rocky start when his initial pick for finance minister stepped down over health problems.

"The sole reason for my resignation is my personal conviction that the issue of renegotiating with the troika, as well as the correction of significant distortions in labour, pension, social security and welfare issues, should have been emphatically put on the table from the start," Nikolopoulos wrote in his resignation letter.

Analysts said the resignation was far from a fatal blow to the government but suggested internal rifts were emerging over the coalition's stance on renegotiating the bailout with the three lenders - the European Union, the European Central Bank and the International Monetary Fund.

The government initially demanded numerous changes to the rescue package when it took power last month, but has struck a more conciliatory tone in recent days as it faces the prospect of running out of cash without more aid.

"It is an indication that the government will face internal problems between groups pushing for a 'hard' and 'soft' stance towards the troika and the terms of the bailout," said Theodore Couloumbis, political analyst at Athens-based think-tank ELIAMEP.

The challenge facing the coalition was underscored when a think-tank on Monday projected the economy would contract a steeper-than-expected 6.9 percent this year, a tumble that will further hamper efforts to cut the deficit and bring yet more pain to Greeks.

Such a decline would mean Greece's economy has shrunk by a fifth since the end of 2007, according to the data from the influential IOBE think-tank, formerly run by the country's new finance minister Yannis Stournaras.

He replaced banker Vassilis Rapanos who resigned as finance minister last month after being hospitalised days after he was named to the post. A deputy shipping minister also quit after it emerged he had run afoul of a law that prohibits cabinet members from owning offshore companies.

Nikolopoulos's resignation came hours after Samaras won a confidence vote in parliament and pledged to win back the trust of foreign lenders by pushing ahead on privatisations and long-discussed structural reforms. All 179 deputies from the three-party coalition, including Nikolopoulos, backed the motion in the 300-seat parliament. Samaras's government immediately named a replacement for Nikolopoulos, and said it was baffled by the resignation.

"There is no reasonable explanation for this," government spokesman Simos Kedikoglou told reporters.

"The negotiation with the troika has not started yet and only yesterday he voted in favour of the government. Not everyone is cut out for tough times."