ATHENS (AFP) - Greece named radical left-wing economist Yanis Varoufakis its new finance minister on Tuesday, giving him the mammoth task of leading negotiations with international creditors over the country's bailout.
The appointment of Varoufakis is seen as a signal that the new anti-austerity Syriza-led government will take a hard line in haggling over the €240 billion (S$363 billion) EU-IMF package.
The polyglot Varoufakis, 53, is a vocal critic of the conditions imposed on Greece in return for the bailout granted in 2010 and argues the country can never recover economically until they are relaxed.
His was the most eye-catching appointment in 40-year-old Prime Minister Alexis Tsipras' new Cabinet, which will give the rest of the world a better picture of a government that promises to challenge at every level the eurozone's belt-tightening measures.
The burly Panos Kammenos was named defence minister in return for leading his small nationalist Independent Greeks (ANEL) party into a coalition government with Syriza.
Kammenos threatens to be a controversial member of the government because of his claims that Germany, and its insistence on budgetary rigour, is the main cause of Greece's economic misery.
Greece's European partners have been quick to pour cold water on the issue of debt forgiveness since Syriza stormed to a stunning election victory in Sunday's snap general election.
German Chancellor Angela Merkel's spokesman said Monday that Greece's membership in the euro zone "means... sticking to its previous commitments."
Merkel offered warmer words to Tsipras on Tuesday, wishing him "much strength and success".
"You are taking office at a difficult time in which you face a great responsibility," Merkel said in the message from the chancellery.
In a sign of the EU's willingness to engage with the new leaders in Greece, the head of the 19-nation Eurogroup collection of countries who use the euro, Jeroen Dijsselbloem, had a 15-minute telephone conversation with Varoufakis on Monday.
But Dijsselbloem, the Dutch finance minister, said there was "not a lot of support" for Tsipras' insistence that a chunk of the debt should be written off.
The Greek stock market plunged 6 per cent earlier on Tuesday, in a sign of nervousness at the new government's intentions.
Fears that Greece could be forced out of the euro zone if it defaults on its debt saw the euro briefly hit an 11-year low against the dollar Monday, but it rose on Tuesday.
The EU has set the end of February as the deadline for Greece to carry out more reforms in return for a seven-billion-euro tranche of financial aid from the 28-member bloc and the International Monetary Fund.
Tsipras, who has vowed to reverse many of the belt-tightening measures that Greece's creditors insist on, must decide whether to prolong the deadline.
Syriza claims the stringent conditions attached to the bailout - including wage and pension cuts and widespread privatisations -have caused a "humanitarian catastrophe" in Greece.
It wants to release an immediate €1.2 billion package to increase the minimum wage and pensions for the poorest.
The first foreign dignitary to visit Greece since Syriza took power will be the social democrat head of the European Parliament, Martin Schulz, on Thursday.
Analysts have described Syriza's coalition with ANEL as "unnatural" and potentially short-lived, saying that the smaller party is unpredictable, while the two parties differ starkly on immigration policy.
However, the two parties - who together have 162 seats in the 300-member parliament - share a common opposition to the EU-IMF bailout.
The IMF extended an olive branch to the new Greek government, saying it was prepared to continue its financial support to the country.
"We stand ready to continue supporting Greece, and look forward to discussions with the new government," IMF managing director Christine Lagarde said in a statement.
Greece's economy is set to emerge from recession after shrinking by a quarter in five years, leaving one in four out of work.
Many Greeks say that even if Tsipras can deliver on a fraction of what he has promised, their lives will improve.
After the new prime minister was sworn in on Monday, Eleni, 41, said: "We are just asking to be able to live like any other European citizen.
"At the moment if you go to a state-run hospital in Greece, you feel as if you are in a warzone.
"Repaying the debt does not justify subjecting people to such suffering," she said.
Sunday's poll was Greece's fourth in five turbulent years, including back-to-back votes in 2012.
Tsipras stands alone as Europe's first anti-austerity leader for the moment, but Syriza's victory could inspire other anti-austerity parties, including Spain's Podemos, which has topped several opinion polls and is aiming for an absolute majority in the Spanish election in November.