By Paul Taylor - Analysis
ATHENS (Reuters) - To pull Greece out of a fiscal crisis that has shaken the European Union, Prime Minister George Papandreou will have to overturn part of his free-spending late father’s political legacy.
“He is very aware that history is making him commit an act of ideological and political patricide,” said a friend of the U.S.-educated Socialist leader, who spoke on condition of anonymity because of the confidentiality of their conversations.
Andreas Papandreou, a firebrand leftist who governed in 1981-89 and again in 1993-96, transformed the country helped by European Union funds. He expanded the civil service and state healthcare, promoted secularism and restored national pride.
But today’s debt-burdened Greece urgently needs to shrink the public sector, curb public spending, clean up corruption and tax evasion, and open swathes of the economy that are shuttered by clientelism, notably of Papandreou’s PASOK party.
The prime minister’s closest advisers, including his brother Nicholas, dismiss talk in Athens that George Papandreou is a latter-day “Oedipus Rex,” doomed like the king in Sophocles’ classical drama to kill his father.
“There is no difference in values between the two,” said Charalambos Pamboukis, chief-of-staff in Papandreou’s office with the rank of minister of state. “He admired and served his father. But these are very different times.”
Where the father was a Greek nationalist who railed against NATO, the European Union and the United States, the son is a “cosmopolitan patriot,” in Pamboukis’ words, who supports globalization, European integration and friendship with Turkey.
While Andreas was a charismatic orator who established and ran PASOK with an iron hand, George is a soft-spoken sociologist who prefers to rule by consensus.
“He is an extremely solid mixture of a realist and a dreamer,” Pamboukis said.
At times, the dreamer appears to have the upper hand. George Papandreou is an avid attender of seminars on “green growth” and “progressive governance.”
While his country’s borrowing costs have rocketed amid market jitters over its ability to pay its debts, Papandreou has spent much of the last few weeks out of the country, traveling to India, Russia, Paris, Brussels and London.
Greeks say he speaks English better than Greek, in which they say he makes occasional grammatical slips.
He has surrounded himself with advisers who, like himself, spent decades studying and working abroad, prompting critics to question how connected he is to ordinary Greeks’ reality.
The challenge he faces is not only to design a program to slash a huge budget deficit, but to maintain public support for a long fiscal adjustment and make a lumbering bureaucracy implement his tax and anti-corruption measures.
To counter the economic gloom, Papandreou has tried to project an optimistic vision of a modern, green Greece that would make the most of its assets of tourism, agriculture and shipping services, while serving as an energy and trade hub.
Many Greeks applauded when he publicly admitted the depth of corruption, nepotism, tax evasion and inefficiency. They do not doubt his sincerity in seeking to modernize the country, but some question his ability to enforce such changes.
Yannis Stournaras, who prepared Greece’s entry into the euro zone as chief economic adviser to former Prime Minister Costas Simitis, said Papandreou appeared slow to grasp the severity of the fiscal crisis.
“He ‘gets it’ now, but we would have avoided a lot of trouble if he had acted as soon as he took office in October,” Stournaras, who heads the Foundation for Economic and Industrial Research think-tank, said in an interview.
Papandreou ran on a tax-and-spend platform even though he was privately warned well before the election that the fiscal position was far worse than the previous government had disclosed.
He only delivered a first televised “blood, sweat and tears” speech in December. Despite two waves of austerity measures since then, EU finance ministers say Greece still needs to do more to achieve a promised cut in the deficit of 4 percent of gross domestic product this year.
The striking fact is that Papandreou’s approval ratings continue to rise even as he announces tougher sacrifices.
Stournaras says he should use his popularity to “front-load” public sector reforms and launch a radical liberalization of the Greek economy, abolishing price controls and opening up closed professions. He estimates that could add 10 percent to GDP.
To do that, Papandreou would have to tackle vested interests entrenched by his father’s patronage system.
“Unfortunately, he doesn’t want to be remembered as the man who reversed that,” Stournaras said.