Socialists trounce conservatives in Greek election

Socialists trounce conse

By JERUSALEM POST STAFF
Greece's Socialist leader George Papandreou trounced the governing conservatives in a landslide election victory after a campaign focused on dramatically different visions of how to dig the country out of its worst economic crisis in years. Papandreou, a 57-year-old former foreign minister whose father and grandfather were both prime ministers, had insisted that Prime Minister Costas Karamanlis' plans for austerity to face the international financial crisis were wrong. Instead, he offered a more optimistic solution, saying he would inject up to euro3 billion ($4.4 billion) to reinvigorate Greece's economy. After a campaign fought almost exclusively on economic issues - and after widespread anger over repeated scandals had already whittled away support for Karamanlis' conservative government - voters were persuaded. Results from 98.92 percent of votes counted Monday showed Papandreou's Panhellenic Socialist Movement, or PASOK, storming to victory with 43.94 percent, with Karamanlis' New Democracy trailing with 33.49 percent - the party's worst electoral showing ever. The result gives PASOK a solid majority, 160 seats in the 300-member parliament, bringing it back to power after five years of conservative governance. Papandreou's victory, along with a recent election win by socialists in Portugal, bucks a European trend that has seen a conservative surge in the continent's powerhouse economies, including most recently in Germany, where Chancellor Angela Merkel won re-election last week. U.S. President Barack Obama was among the first international leaders to congratulate Papandreou, telephoning him Sunday night, the White House said in an annoucement. Humbled by his stinging defeat, Karamanlis, 53, resigned as party leader and said a new chief was needed for the party founded by his late uncle Constantine Karamanlis 35 years ago. Papandreou now must deal with a faltering economy that is expected to contract in 2009 after years of strong growth, while the budget deficit will probably exceed 6 percent of economic output. Despite his plans for a stimulus package, the new Socialist government will likely have to borrow heavily just to service the ballooning debt - set to exceed 100 percent of GDP this year - and keep paying public sector wages and pensions. Papandreou has pledged to limit borrowing by reducing government waste and going after tax dodgers. "Greeks and the electorate do not have any illusions that a magic change will take place tomorrow morning on the economy," said political analyst Anthony Livanios. "They know it's a difficult economic crisis ahead, and they will look for a credible handling and a credible solution" from the new government. In his first speech after being elected, Papandreou warned Greeks they faced tough times. "Nothing is going to be easy. It will take a lot of hard work. I will always be upfront with the Greek people so we can solve the country's problems together," he said. "Today, we are setting Greece on a new course ... a course of recovery, progress and creativity. ... I know the potential of the country very well, a potential being drowned by corruption, favoritism, lawlessness and waste." Greece's budget deficit is well over the European Union ceiling of 3 percent of economic output, and the economy minister recently conceded it could reach 8 percent this year. Some analysts fear it could be as high as 10 percent. The public debt, already second only to Italy's in the euro zone, is set to surpass 100 percent of GDP while unemployment rose to 8.6 percent in June. Livanios, the analyst, said Papandreou's idea of stimulating the economy as a way out of the crisis could work. "It remains to be seen now how effectively PASOK's plan will be applied. But I do believe there's a credible plan that focuses on reinvigorating the small entrepreneur, on putting a better order in the taxation system," he said. Greece's taxation system is notoriously complex and tax evasion is rampant. Karamanlis announced the early election just halfway through his second four-year term in an ultimately failed gamble to win a new mandate to tackle Greece's economic woes. But he had already been trailing in opinion polls when he called the election last month, sparking criticism from within his own party. Karamanlis appeared to have been paving the way for his own departure, said political analyst and publisher of the City Press and Free Sunday newspapers, Giorgos Kyrtsos. "I had estimated that Karamanlis had a personal exit strategy ... he didn't want to suffer the personal, psychological, political attrition associated with the handling of a crisis ... and he organized his departure," Kyrtsos said. Karamanlis stormed to power in 2004 to become the youngest prime minister in modern Greek history after more than a decade of socialist rule. He was re-elected in 2007, but quickly saw his popularity eroded by several financial scandals, including a land-swap deal with a Greek Orthodox monastery that cost the state more than euro100 million ($145 million) and forced two of his close aides to resign.