Tuesday, October 06, 2009

New Papandreou defeats New Democracy in Greek election

George Papandreou has been sworn in as Greece’s new Prime Minister after his Panhellenic Socialist Movement (PASOK) won an absolute majority in this weekend’s general election. His victory ended five years of rule by the centre-right New Democracy party. PASOK were favourites to win but no-one expected the eventual margin: they have taken 160 seats in the 300-member parliament to 92 for ND. The socialist party took 43.8 per cent of the vote to 33.9 per cent for their opponents, its worst ever result. Outgoing PM Costas Karamanlis resigned from the ND party leadership immediately after conceding defeat while defending his unpopular economic policies as "the only realistic way of overcoming the crisis". (photo of Greek parliament by Derek Barry)

According to London’s Financial Times, Greece is slipping into recession later than most European countries with negative growth forecast for 2009 and 2010. While its service-based economy could face a long period of stagnation, Karamanlis’s prescription of two-year wage freezes, tax increases and economic liberalisation did not go down well with voters. But with the party hit by a series of corruption scandals, voters instead went with the 57-year-old Papandreou. He promised to streamline government with an emphasis on *green growth*, social and educational reforms and measures to bring more young people into the workforce.

After being sworn in Papandreou immediately announced a 3b euro economic stimulus package. This package stands in contrast to the country’s overdue 2010 budget plan that will need to tackle a budget deficit already twice the EU limit. Part of the package will pay for a campaign promise of above-inflation increases in wages and benefits for public-sector workers. Papandreou says he will fund the increase by cracking down on tax evaders and increasing the tax burden on the rich. But unless he can improve the economy soon he could well face the same social unrest that blighted the latter part of Karamanlis’ term in office.

Papandreou was born in the US and educated in Sweden, England and Canada and is a Harvard University fellow. He is the scion of an illustrious political dynasty and his father and grandfather have both served as Prime Minister. His grandfather George Papandreou was Prime Minister three times between 1943-1945, a short period in 1963 and again from later that year to 1965. According to Greek scholar Nicholas Rizopoulos, George Senior was a mercurial rabble-rouser whose liberal-republican credentials didn’t stop him from cutting deals with the right when it suited his career.

George Junior’s father Andreas Papandreou founded PASOK in 1974 as a descendant of an underground group that opposed the seven-year military dictatorship which ended that year. PASOK gradually shed its radical roots and became more moderate as it moved closer to power. The party ruled Greece for 20 of 23 years between 1981 and 2004 and Papa Papandreou was Prime Minister for most of the 1980s and early 90s. His son was a latecomer to politics but once inducted had a meteoric rise to foreign minister in 1999.

In this role Papandreou’s most notable success was patching up Greek relations with Turkey particularly over its role in Cyprus. He was instrumental in helping pave the way for Cyprus EU membership in 2004. By then Papandreou was out of office. Karamanlis’s ND had a sweeping victory in that year’s election winning 165 of the 300 seats. ND was re-elected in 2007 but with a greatly reduced majority. Financial scandals bedevilled Karamanlis’s second term. These ranged from a state land-swap deal in which high-value state property was traded for cheaper land owned by a monastery for 100 million euros, to a minister’s illegally-built villa which employed migrant workers without paying their social security taxes. Other social issues included the slow response to bushfires and the riots in Athens and Thessaloniki last year.

Karamanlis had two years left in this term but called the election early to prevent what he called PASOK blackmail. PASOK had threatened to force a new election after March 2010, when a new president was to be chosen. This would have meant a drawn-out election campaign which would have halted developments in social and economic policy, something Greece can hardly afford in the current economic climate. But Karamanlis’s snap election plan backfired. The 2004 result was almost completely overturned this weekend.

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