Less is More

Greece has a new government. Yesterday, Archbishop Ieronymos swore in a strong-looking centre-left cabinet headed by Prime Minister George Papandreou. The new cabinet has seven fewer members than its centre-right predecessor and includes a fairly large selection of inexperienced ministers. Indeed, of the 37 cabinet members, 24 have no ministerial experience. The cabinet also includes the most women of any Greek government since 1974.

The new cabinet looks strikingly different to that of previous prime minister Costas Karamanlis. The main change is the splitting up of the economy and finance portfolios. Economy Minister Louka Katseli has the right credentials for her job: she holds a PhD from Princeton University and previously taught at Yale University, and has experience in advising senior Greek officials on the economy. Furthermore, Papandreou has created a deputy prime minister post again, for the first time since the late 1980s when his father, Andreas Papandreou, was prime minister. The holder of this post, Theodoros Pangalos, is a senior member of the ruling Panhellenic Socialist Movement (PASOK) and is known for his outspokenness. His task will be to co-ordinate the work of the Economic and Social Council (OKE) and the main decision-maker on state defence affairs, the Government Council for Foreign Affairs and Defense (KYSEA). Another difference is that George Papandreou will be both prime minister and foreign affairs minister; he has experience in the latter role, having helped bring about a thaw in relations between Greek and Turkish senior officials during his time as foreign minister from 1999 to 2004. Law professor Dimitris Droutsas—who was born in Cyprus—is set to assist Papandreou with his responsibilities in the foreign affairs arena.

Fine-tuning is the key to the stability of this cabinet. Although all its members hail from the same party, they come from different backgrounds and have starkly differing levels of experience in government affairs. Most of them are closely linked to Papandreou and are thus fully aware of the recent state of Greek politics. Nevertheless, they may find their first year in office tough. The ousted New Democracy (ND) party will certainly try to discredit the cabinet at any opportunity, drawing on its knowledge of the state of economic and political affairs as the previous government party. Furthermore, not all members of the new cabinet are firm supporters of Papandreou. New Defence Minister Evangelos Venizelos stood against Papandreou at the 2007 PASOK leadership election. At that time, Papandreou's star seemed to be waning as he had yet again failed to lead the party to an election victory. By keeping Venizelos near to him, Papandreou will be able to keep a close eye on him and draw on his influence with a section of PASOK to keep the party base on side. Labour Minister Andreas Loverdos is close to Venizelos and thus again symbolises Papandreou's attempt to reach out to the different strands of PASOK. There are enough staunch Papandreou supporters left in the cabinet to make the new prime minister feel at ease though. Arguably the two main ministers, Katseli and Finance Minister George Papaconstantinou, have both proven their credentials in Papandreou's eyes. Katseli previously served under Andreas Papandreou from 1993 to 1996 as economics adviser, and was previously PASOK spokeswoman on economic affairs, while Papaconstantinou has been Papandreou's economic adviser since 2004. Health Minister Mariliza Xenogiannakopoulou is also a firm supporter of the prime minister, as is Environment Minister Tina Birbili.

Outlook and Implications

Greece is embarking on a curious experiment, with a left-wing government trying to finally realise the main promises of its right-wing predecessor. Papandreou has offered some mouth-watering policies for PASOK supporters while trying to keep European Union (EU) officials and centre-right business lobbyists on board. The cabinet will try to continue where the ND left off by curbing corruption, improving the business climate, reforming the burdensome social security system, boosting employment and economic growth, increasing foreign investment into the country, and luring more tourists back to Greece, while it will also look to improve income distribution through tax reforms. PASOK will take a different approach to achieving these goals than its predecessor though, and is eyeing an expansion of public spending and a revision of planned privatisations. Nevertheless, its ability to apply these plans will be limited by the dire state of the public accounts.

Papandreou now has to make good on his campaign promises. In his favour, he can count on a strong 10-seat majority in parliament, but not much else.

Global Insight (Reino Unido)