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Socialists Swept from Power in Greek Elections

March 7, 2004

( Research Service)- ‘Smaller government’ was the rallying cry of the center-right Nea Demokratia party of Costas Karamanlis, which as expected displaced the longtime ruling Socialist PASOK of Prime Minister Costas Simitis in voting Sunday in Greece.Despite attempting to revitalize its sagging fortunes with the appointment of the charismatic George Papandreou late in the game, it was not enough to hold back Nea Demokratia. According to exit polls, the party surpassed its previous 3-point lead and appears to have won by around 5 percent.

“…New Democracy has won the elections. I wish Karamanlis success in his work for the good of Greece,” said Papandreou, whose party has ruled 20 out of the last 23 years.

Reducing state interference in the economy and fighting the ingrained hold of the labor unions is one of Karamanlis’ first tasks ahead. Nea Demokratia has pledged to demystify the tax system and rein in the “bloated state bureaucracy” for which Greece is famous. According to Bloomberg, ND has plans for “…loosening the government’s grip on the economy with deregulation and state asset sales. Karamanlis also has pledged to curb government spending.”

Greek business interests are happy about the result. “‘…The market will see the result positively,’ said George Satlas, who helps manage $9.6 billion in assets for Diethniki MFM SA. ‘Now, their program to keep the economy on track will have to be implemented.’” Miranda Xafa, an economist at the Bank of Piraeus and former adviser to ND’s last prime minister, Constantine Mitsotakis, added that the new government would be pushed into confrontation, “…and the main confrontation has to be with the public sector unions.”

According to televised exit polls, New Democracy has taken about 45.5 percent of the vote, and PASOK 40.2 percent. Early speculation has ND in place to take about 170 seats in parliament, and PASOK 120 or less.

Many Greeks are shrugging their shoulders, however, because there is a perception that the two parties do not represent anything truly different. Both are led by scions of seemingly eternal national political dynasties:

“…Papandreou, 51, and Karamanlis, 47, are the scions of prominent political families and their duel is the latest chapter in a long rivalry. Papandreou’s grandfather and namesake was a centrist who beat Karamanlis’s uncle and namesake in elections in 1963. Papandreou’s father, Andreas, founded PASOK in 1974 and ran against the elder Constantine Karamanlis’s New Democracy, sweeping to power in 1981. PASOK has ruled almost uninterruptedly since then, apart from a break from 1990-93, which was ND’s last taste of power. The younger Karamanlis was elected leader in March 1997 and lost a close election to Simitis in 2000.

Simitis, who succeeded Andreas Papandreou as prime minister and PASOK’s second leader in 1996, resigned in favor of the younger Papandreou when polls showed PASOK heading for defeat. Papandreou last night referred to his father, to Simitis and to many deceased PASOK cadres in an effort to raise the passions of the crowd before he launched into a speech aimed at stressing his desire to renew the party.”

However, analogous leadership is not the only reason why Greeks are nonplussed with the result. As an EU country, Greece’s foreign policy and economic policy are to a large degree pre-determined by Brussels. Like its European peers, Greece is often left to simply implement the tasks devised for it at headquarters.

Of course, there are some idiosyncratic issues to be dealt with, for example Cyprus. This longtime bone of contention between Turkey and Greece remains unresolved. Turkey has until May, when Greek Cyprus is set to join the European Union, to agree to a power-sharing plan created by UN Secretary General Kofi Annan- or else the disputed northern third of the island will be left out in the cold, estranged from the south’s EU fortunes.

Presiding over a Cyprus settlement was of course a goal of great symbolic value, and outgoing Prime Minister Simitis tried hard to make it happen on several occasions. Last year, it seemed for a time that agreement was within reach, but the legendarily obstinate northern Turkish leader Rauf Denktash would not allow his side to go along with the Annan plan- despite the fact that many Greek Cypriots are angry that the UN plan gives far more to the Turkish side than they will get in return.

It is an irony of history that Karamanlis will preside over Cyprus’ EU accession; his uncle in 1974 took over power from the military junta whose disastrous intervention provoked the Turkish military response, and the impasse that exists to this day.

Aside from Cyprus, the major deadline is the Olympics, set to begin in less than 5 months. After spending years heckling the government for the slow pace of preparations, Nea Demokratia will have its hand full now. “…The time is up for criticism,” Karamanlis appropriately enough told Reuters last week. “…Our responsibility the day after we take power is to make sure we guarantee that the preparation flows on as it’s been programmed …and stage the best possible Olympics.”

It’s natural, of course, that time expires for criticism when the opposition becomes the incumbent. Yet ND criticism could not fall wholly on the government, considering that one if its own, Gianna Angelopoulos, is the head of the Athens Olympic Committee. The governmental shake-up will not affect her post (although other critics think it should). But could other mid and upper level officials be fired? Karamanlis before the elections promised not to. Still, even in the best case scenario, there is a lot to be done for a team that has yet to complete the main Olympic Stadium. IOC Chairman Jacques Rogge stated that now he will be “perfectly happy” to have a stadium without a roof- just so long as something gets built.

While Simitis won’t be on hand to ring in the games that he and his government spent so many years working towards, neither will Papandreou officiate over the Cyprus EU accession- though he has been credited with almost single-handedly improving Greek-Turkish ties.

In regards to security, perhaps, new government shake-ups will have the most serious effect, considering that elaborate and detailed preparations for Olympic security have been going on for several years. With major new international security operations set to get underwaywithin days, now is not the time to mix things up overly much.

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