Three weeks of peaceful street protests; a couple of Panhellenic Socialist Movement (PASOK) members of parliament resigning this week; a few more PASOK members of parliament challenging the leadership qualities of Greek Prime Minister George Papandreou; rampant unemployment; violent clashes with the police; and one of the worst financial crises in modern Greek history culminated today in...a cabinet reshuffle.
Prime Minister Papandreou is facing the most intense criticism since his election in October of 2009, both from his party and from Greek society. What on Wednesday night looked like a grand coalition government with the main opposition party, Nea Demokratia, was transformed on Thursday into an intra-party “reshuffling for elections.”
The new government was sworn in on June 17 and will be up for a confidence vote on June 21. The opposition parties are not impressed with the reshuffle. Most citizens reacted by saying “same old, same old.”
Not much is expected from this new government. Why is that? To begin with, Papandreou's effort to regain the confidence of the Greek public began with the ambitious idea of a coalition government including many technocrats but ended up with a mild cabinet reshuffling satisfying the narrow interests of the ruling political party rather than effectively tackling the mounting problems.
For example, his efforts to recruit Lucas Papademos, an experienced economist that has served as vice president of the European Central Bank, as a Minister of Finance did not bear fruit. This is just one example of the failure of Papandreou to bring technocrats into the government. Instead, Evangelos Venizelos, a professor of constitutional law and until today defense minister, took up the burden.
Moreover, Theodoros Pangalos remained deputy prime minister despite the fact that he has been the target of most of the chants of the street protesters for the past three weeks. Most ministers were not changed and three important ministers were demoted but not fired—the Ministers of Finance, Interior, and Justice. However, there is a more positive way to read the news. Papandreou managed to build a team that agrees with him, to improve the internal cohesion of the party, and to share the burden with the rest of PASOK.
One step was to remove Katseli, who was probably a victim of her disagreements with the Troika (European Central Bank, IMF, European Commission), from the Ministry of Labor and Social Security. To appease the political base of PASOK and silence a wave of internal criticism that has been mounting within his party he removed from the government some of his close friends that had been intensely criticized and included some of his personal critics in the government. Last but not least, by promoting Venizelos—his party rival and contestant for the leadership of the party just a few years ago—to deputy Prime Minister. Adding a second deputy Prime Minister position for Venizelos, Papandreou significantly changed the dynamic within PASOK.
Party cohesion is a arguably a precondition for the government to pass the new bundle of austerity measures required to secure more loans from the EU/IMF. Despite these cooptation tactics, however, the new government has already found its critics from within the party. A few minutes after the new government was sworn in, PASOK MP Voudouris argued that the reshuffle was unsatisfactory. Regardless, as a result of this reshuffle, the whole political party is seen as an “accomplice” of Prime Minister Papandreou in this effort.
There are also important changes in the functioning of the government. The Prime Minister re-created a “Government Committee”—something that has been a demand of many party members—where the most important policies are normally decided. The irony is that it is both oversized, with ten Ministers participating, and lacks the key Ministers of Foreign Affairs and Defense.
These changes aim to enhance Papandreou’s ability to delegate responsibility and for the government to coordinate more efficiently. Another important fact is that Pangalos will not be part of the “Government Committee” — something that might appease some of his many critics.
Turning to the Ministry of Finance—the hot potato of this affair—most people believe that Venizelos may be better in the negotiations than the previous Minister of Finance, Papaconstantinou. Venizelos is an experienced politician and charismatic speaker. He has served as minister of culture, justice, transportation, and development. Nevertheless, he is not an economist and thus he will have to rely on the advice of others.
Finally, two promising new faces in the government are Stavros Lambrinidis, (BA from Amherst, JD from Yale), the new Minister of Foreign Affairs, and LSE Professor Elias Mossialos, the new government spokesman and Minister of State.
In the meantime, this Sunday the Eurogroup is meeting in Brussels to decide on the next installment from the EU/IMF bailout package. It seems that the developments in Greece have also alarmed Sarkozy and Merkel to the point that they rushed to declare that they will provide further assistance to Greece and that the private sector can also participate in this scheme on voluntary basis — a highly contested point so far.
Nevertheless, with few exceptions, the changes have not impressed the Greek people—who are still waiting for social justice, more just redistribution, and have grown impatient with political parties— and it is unlikely that they will restore the confidence of our foreign creditors.
If this new government fails to regain the confidence of the people then we will have early elections. And one thing is certain. From these elections a one party government will not emerge.