By Stathis KalyvasHas he gone insane? This question summarises the global reaction to Greek Prime Minister George Papandreou’s decision to put his government through the twin tests of a parliamentary vote of confidence on Friday and a popular referendum in January, over the debt deal painstakingly hatched by the eurozone leaders last week. A decision that threw financial markets into disarray, and was reportedly taken almost spontaneously with little consultation within his own party, let alone with his eurozone partners, does appear senseless: it undermines the latest and most extensive effort to shore-up the eurozone and brings Greece closer to a disorderly default and a disgraceful exit from the euro. What was Mr Papandreou thinking?
From the moment he sought external support to avoid outright default, Mr Papandreou never hid his displeasure at having to implement the kind of painful reforms required by it. After all, the two main Greek political parties, Pasok and New Democracy, are huge political machines that turned the exchange of public sector jobs and favours for votes into an art. Downsizing and reforming the public sector amounts to political suicide. Mr Papandreou couldn’t avoid implementing painful austerity measures, but made a conscious decision to postpone structural reforms. Having never owned that programme, he never really sold it to the population. Political and social paralysis ensued.
Faced with yet another difficult vote over the new debt deal and with mounting popular protests against austerity measures, Mr Papandreou was left with three options. The first was slow death: persist on his current path of political paralysis, dwindling popularity, and collapsing governing capacity. The second was immediate death: call for early elections that, all surveys indicate, would have resulted in an unprecedented rout for his party. The third was gambling for resurrection: call for a referendum that would give his government a new lease on life and salvage his political career. Seen from this perspective, his decision does make political sense.
Most analysts translate his unpopularity into a referendum defeat. They also point to public opinion surveys showing that a large majority of Greek public opinion is opposed to austerity measures. By now, everyone is aware of the protests and riots that have become a near daily occurrence in Athens. But a defeat is far from warranted. Faced with a starkly worded choice of austerity within the euro versus bankruptcy outside of it, a majority of the Greek electorate may well turn out to support the debt deal. Such a victory could amount to an infusion of political legitimacy for Mr Papandreou. His decision may be a gamble, but it is not politically senseless.
And yet, it is not a sensible decision either. For one thing, his gamble has resulted in mounting turmoil in his own party. A backbencher revolt could put an end to the Socialist Party’s already thin parliamentary majority, leading to early elections and rendering the referendum a moot issue. Even if the government survives this vote of confidence, it is unclear how it will be able to govern until the referendum takes place, given the combined effects of economic uncertainty and political instability. It is also very hard to imagine that the eurozone governments will accept paralysis until the Greek government gets its act together. Finally, even if the referendum takes place and the debt deal is approved, it is hard to see how Mr Papandreou will implement a reform programme he has refused to, until now.
In gambling for his own resurrection, he will fail to achieve the political survival he is seeking. It is possible, however, that his sacrifice will break the present political paralysis in Greece, eventually leading to the kind of catharsis that Greeks are yearning for. After all, there was always a problem with the idea that Greece would be taken out of the mess by the same politicians who led the country into it. If this turns out to be the case, Mr Papandreou’s gamble could well prove to be the kind of shock that resurrects Greece’s efforts to set itself on a different path and jolts the eurozone into a more vigorous effort to formulate a comprehensive solution to a crisis it has failed to rein in so far.
The writer is the Arnold Wolfers Professor of Political Science at Yale
