Greek Prime Minister George Papandreou read triumph in the results of the regional elections Sunday, Nov. 7, that put his center-left PASOK Party's candidates ahead in several regional races, including the powerful position of Attica governor. "The Greek people have reaffirmed they want change," Papandreou said on state-run NET TV on election night.
His ebullience was a far cry from last week, when the quiet but stubborn Premier threatened to dissolve Parliament and call for new elections if PASOK fared badly. The vote of confidence was tepid at best, since only about 60% of 10 million eligible voters cast ballots, a relatively low turnout for Greece. But it kept the country on its planned austerity course, at least for now. To keep his support from crumbling in the coming months, Papandreou must show both worried Greeks and skeptical international markets that the bitter reforms will save the country from bankruptcy and move it toward a more solvent future.
"A lot of people are bleeding, if you will, from these measures, and a lot more people will bleed," says Kostas Ifantis, a political-science professor at the University of Athens. "We have never experienced anything like this before as a country, so there's no road map, and people want to see that these sacrifices will mean real reforms."
Papandreou assumed power just 13 months ago, but within weeks of his taking office, it was revealed that the country was more than €300 billion in debt. The news sent shock waves through international markets, and investors predicted that Greece would default. In May, the government passed sweeping, severe austerity measures, a condition of the €110 billion ($154 billion) in loans Greece got from the European Union and the International Monetary Fund. The measures drastically cut spending, especially in the public sector, and hiked taxes, while the government promised to crack down on endemic and widespread tax evasion and to liberalize one of Europe's most closed economies.
Papandreou supporters like postal worker Voula Papatsosou, 57, say they welcome the changes, which they feel will modernize a country long stymied by corruption and cronyism. "We need to stick together right now and stick by the Prime Minister," said Papatsosou on Nov. 5, standing outside a weathered athletic club in the working-class suburb of Patissia as Papandreou led a PASOK campaign rally inside. "We don't really have any other choice."
Even Sunday's regional election was a cost-cutting effort. In the hope of saving €1.5 billion over three years, Papandreou reorganized local government under the Kallikratis plan, named after one of the architects of the Parthenon. Under the new plan, 1,034 municipalities were consolidated into 325, while 57 prefectures were merged into 13 regions. Runoffs for regional candidates who didn't win an outright majority will be held Nov. 14.
Though the austerity measures have pleased international investors, they have also shrunk the Greek economy. Small businesses are closing, and unemployment has topped 12%. Numerous public-opinion polls show that Greeks feel hopeless and grim about their future and their leaders. A recent poll by the television station MEGA gauged the government's approval rate at 23%, its lowest to date.
The malaise is especially hard to shake in already suffering areas like Perama, a port city near Piraeus, where workers like Triphonos Kaounas, a 59-year-old welder, have watched the contracting national economy strangle the struggling ship-repair industry. Kaounas says he has barely worked since November 2008 and has to borrow money from his 28-year-old daughter, who is worried about losing her job as well. "I feel like our politicians have stolen from us and have failed us," he said on a recent afternoon while waiting in a job line. "I don't have money to retire, and I don't know what to do."
Finance Minister George Papaconstantinou says the economy could shrink another 3% in 2011, meaning another tough year for Greeks. "This is the most difficult phase of the austerity program right now," says Yiannis Stournaras, director of the Center for Economic and Industrial Research, an Athens-based think tank. "People are seeing all of the bad things but none of the good. It will take until at least 2012 before we start seeing improvements like job growth."
In what has become a common sign of disaffection throughout Europe, Greeks elected their first-ever far-right extremist. By the end of Monday, Nikolaos Michaloliakos, leader of the neofascist Chrysi Avgi (Golden Dawn) political organization, looked set to win a seat on the local council in Athens. The party appears to have fed off public anger against illegal immigrants in central Athens, a sentiment that has been rising partly because of the troubled economy. "Chrysi Avgi is still marginal, but it is not a welcome development," says Ifantis. "When things in a society are not going well, there is room for demagogues."
Despite all the anger and cynicism, Greeks still gave a pass to Papandreou and his government, because "most people believe there's no credible alternative now," Ifantis says. "The government has at least one year to speed up its reform program and convince people it's going somewhere."
But there are challenges ahead. Hopes are fading that Greece will make its deficit target of 7.8% of gross domestic product this year. Next week, the European Commission is expected to revise 2009 GDP figures from 13.6% to 15%. "The government must show results," says George Pagoulatos, an economics professor at the University of Athens. "It's something both the markets and the Greeks themselves want to see out of the country." Without those results, Sunday's tentative vote of confidence will be only a temporary reprieve from what could be a long and difficult 2011.