As Austerity Anger Swells, the Greek Government Struggles

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Kostas Tsironis / AP

Greek riot-police officers walk in a cloud of tear gas during clashes with protesters in Athens on June 15, 2011

Updates Appended: June 16, 2011

Even after the scuffles between police and anarchists erupted into clouds of tear gas on June 15, Giorgos Liolios did not leave Syntagma Square. For more than a year, Liolios, a 37-year-old Athenian struggling to keep his small bakery afloat, was part of the silent majority that gave Prime Minister George Papandreou the benefit of the doubt. But after a year of austerity left him nearly broke, his brother unemployed and the debt-ridden country no better off, he drove to Athens from his suburb to stand alongside thousands of angry Greeks who for weeks had transformed Syntagma into a mini–Tahrir Square, complete with drum circles, tents and Cretan rebel songs.

"Everyone in that building should be ashamed," he says, pointing to the Parliament building, which is now surrounded by protesters waving banners depicting Papandreou as Judas and a donkey. "They want us to sacrifice, but we need to see why we're sacrificing. As Greeks, we just want to live with enough money to get by, to have a little dignity. We can't do that anymore. We can't take it anymore. Why can't George Papandreou understand that?"

It's now clear that Papandreou got the message. On June 16, which also happened to be the American-born premier's 59th birthday, he presided over an emergency meeting of the parliamentary group of his ruling party, PASOK, which he leads and his father, Andreas, founded, after two deputies defected and a day after state-run NET TV reported that he had considered resigning. But afterward, in a televised speech to PASOK deputies, Papandreou vowed to stay in office and work to lead Greece out of its debt crisis.

"We do not have the luxury to run away" from our responsibilities, he said, to applause from the PASOK deputies. "I have to fight. All of us here have to fight."

It was a show of party unity after a fractious day the day before, when Papandreou huddled with advisers and talked to Antonis Samaras, leader of the main opposition party New Democracy, about forming a coalition government that would pursue austerity policy. In a short televised speech that night, he said he would form a new Cabinet and ask Parliament for a vote of no confidence. Samaras responded with his own televised speech and said that the country and markets no longer had faith in the Socialists.

Pressure on Papandreou has been building for weeks. On June 13, Standard & Poor's downgraded Greece's credit rating, handing it the lowest rating in the world and noting the country is "increasingly likely" to face debt restructuring. With his poll ratings in free fall and his deputies defecting from the party, Papandreou seems to be running out of options. Some analysts wondered if he would even last the day as premier.

"This government is almost dead," says Kostas Ifantis, a political-science professor at the University of Athens. "I cannot see how they can push forward with the very, very painful measures the country needs. It was hard 10 months ago, but it's even harder now."

There's little indication that a new government will pave the way to stability — even if the new Cabinet consists of fresh faces rather than longtime Greek politicians, whom most Greeks view as hopelessly corrupt and insular. "Markets are not going to respond well to this political turbulence," says Theodore Pelagidis, a professor of economic analysis at the University of Piraeus. "Right now, what is seriously lacking in this country is political leadership, and neither major party can offer it. There is no way out of this crisis without a healthy political system, which this country does not have."

Papandreou's new resolve means snap elections will be put off — for now. If his government continues to struggle, elections may be the only option down the road, analysts say. "In addition to an economic crisis in Greece, we now have a legitimacy crisis," says law professor Aristides Hatzis, who runs, a blog that diligently charts every twist and turn of the debt crisis. "George Papandreou was elected on a mandate of expanding government, and he has had to shrink it. People are demonstrating every day outside Parliament, and some people are even attacking Parliament. Elections are the only way to regain legitimacy."

But even if elections take place, the country still faces a leadership vacuum. Support for both PASOK and New Democracy has reached new lows, which suggests neither party would have a majority in early elections. Defectors from those groups have joined smaller parties, such as the sclerotic Communist Party of Greece (KKE) and the nationalist, often incendiary Popular Orthodox Rally (LAOS), diluting the power of the main parties even more.

Back in Syntagma Square, Giorgos Liolios shakes his head as young demonstrators throw rocks at riot police, who respond with still more tear gas. He smeared his face with liquid Maalox earlier in the morning to close his pores, but that doesn't stop his eyes from stinging. Through all the haze and turmoil, it's difficult for him to see any clear champion for the millions of Greeks struggling to get by. Business at his small bakery is down 50% from last year. His taxes have gone up. Even the spaghetti he buys at the supermarket has doubled in price. "I'm not an anarchist. I'm not a fascist. I'm not a punk," he says, wiping his face. "I'm a Greek. Just a regular person trying to have a regular life. I'm willing to make sacrifices for my country, but not if it leaves me for dead."

The original version of this story has been updated to reflect new developments.