Between rock and hard place

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Mr. Alexis Papachelas is a guest editorial writer to The Business Thinker. He is currently the Executive Editor of the long standing and highly respected daily Greek newspaper “Kathimerini”.

The lies are over. Greek Prime Minister George Papandreou has to choose between rock and a hard place. Finance Minister Evangelos Venizelos’s rift with EU and IMF inspectors, who left Athens late last week complaining that Greece had failed to fulfill the conditions to unlock more rescue funding, is jeopardizing his political future, and, more crucially, the future of the country.

On a practical level, the socialist government will try to execute the “Samaras tactic” — named after the leader of Greece’s main opposition party. PASOK will try to renegotiate the targets of the Memorandum — the bailout deal signed with the EU and the IMF — and lift pressure from Finland for a collateral deal in order to buy some time.

This is an extremely difficult undertaking for one good reason: no one really knows how much more our peers are willing to put up with. So far, the IMF and European officials have turned a blind eye because they could not afford the risk of a Greek breakdown.

Experts soon realized that Greece was not just another country needing a bailout and a bit of technical assistance. Rather, it was a state that needed to be rebuilt from the bottom. It is no coincidence that one German official has recently been talking about “nation building,” or that another European Commission official said about Greece that “anywhere you turn at, there is something rotten.”

Everybody senses that this government simply cannot carry out the task it has undertaken. Nor could New Democracy, or any other opposition party, for that matter. Our lenders have to decide what is to be done about Greece. They will either give Papandreou more time and room for manuever, or they will say: “Enough is enough. These are our terms, and either you fulfill them or you can no longer be a member of the eurozone.”

The risk is that Papandreou will try to elude the rock — a red card from Greece’s foreign lenders — and end up hitting against the hard place — the old guard of PASOK. The EU and the IMF are asking for a clear sign that will demonstrate that Greece is doing everything it can to slash spending and this can be nothing less than mass sackings in the public sector.

This is the issue that has been dogging the socialist administration for months. This is the issue that PASOK officials have debating over and over again, and the one that has, as always, divided the government.

In favor of layoffs in the country’s bloated state sector are ministers Andreas Loverdos, Giorgos Papaconstantinou, Yannis Ragousis and Anna Diamantopoulou. But Dimitris Reppas, who is minister for administrative reform, and other members of the old guard are vehemently opposed to such a measure.

Everyone in the government and the party knows it is unavoidable. Nevertheless, they are doing all they can to delay the day it happened or to undermine the policy by dragging their feet and by introducing all manner of complication.

Papandreou cannot make up his mind over the issue. Half of his advisers are telling him: “PASOK will lose the next general elections anyway, so we might as well hold onto our core of supporters for the next round. Let Samaras do the job instead.” The other half disagree: “We have lost virtually all private sector employees who live in a state of insecurity. We must try to win them back,” they argue.

It is certainly not an easy decision to make. It was PASOK’s grassroots supporters that gave Papandreou his victory, and Venizelos knows that he will have to depend on these votes if — or rather when — he decides to vie for the helm of the party again.

This is more or less where we stand: We are waiting to see how much longer our creditors will put up with us. Should he figure that we are stepping over their fine red line, Papandreou will eventually have to take on the core of his party. Which, of course, could spell the end of his rule.

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About the author

Mr. Alexis Papachelas is the Executive Editor of the long standing and highly respected daily Greek newspaper “Kathimerini”. He is the creator and principal presenter of the weekly news program “The New Files” aired in Greece for 10 consecutive seasons. He has been awarded a number of distinctions both on his broadcast as well as his print contributions.  He studied History, International Relations and Journalism at Bard College and Columbia University in the United States.

Papachelas is the author of the books “The Rape of Greek Democracy” (1997) and “File November 17” (2002).

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