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How Is Samaras Doing? So Far, the Euro Zone Likes Him. Will the Honeymoon Last?

August 27 2012 at 2:29 PM

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How Is Samaras Doing? So Far, the Euro Zone Likes the New Greek Leader
There is a lot of hardship ahead but so far Merkel and the Germans like what they hear from the Greek Prime Minister. Will the honeymoon last?
By Joanna Kakissis / Athens | @joannakakissis | August 27, 2012 | +
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Just two months after his party eked out a victory in contentious Greek elections, Prime Minister Antonis Samaras is wooing another tough crowd: euro-zone leaders.

Last week was a good start. On Wednesday, he got the backing of Eurogroup chief Jean-Claude Juncker, when Juncker visited Athens and declared that he was totally opposed to Greece leaving the euro, the European Unions common currency. On Friday, Samaras also received the support of German Chancellor Angela Merkel, whose country is the biggest contributor to the bailout loans to Greece. I want Greece to stay in the euro zone and thats what Im working for, Merkel told reporters in Berlin, rebuking anti-Greece lawmakers in her own governing coalition. And on Saturday, French President Francois Hollande said he saluted Greeks for weathering painful austerity cuts over the last two-and-a-half years.

(MORE: Antonis Samaras: The Aristocrat Who Now Leads Austerity-Ridden Greece)

However, the Europeans newfound love for Greece has little to do with Samaras himself, who infuriated euro-zone leaders for two years when he virulently opposed austerity measures during the Socialist PASOK government led by former premier George Papandreou. The euro-zone brass simply views Samaras as the countrys last chance leader, says Janis Emmanoulidis, a senior analyst at the European Policy Centre in Brussels. Samaras has long been seen as an obstructionist but the Europeans believe there isnt another option, Emmanoulidis says.

European leaders were openly relieved in June when Syriza, led by telegenic young engineer Alexis Tsipras, narrowly lost to Samaras New Democracy party. European leaders have continued to distance themselves from Tsipras. Juncker refused to meet with him on Wednesday, prompting one Syriza parliamentary deputy, Dimitris Papadimoulis, to call the snub an insult to democracy. Though Tsipras insists he wants Greece to remain in the common currency, euro-zone leaders and Samaras himself labeled Tsipras anti-euro because of Syrizas threats to tear up the memorandum of agreement between international lenders and Greece. Der Spiegel even listed Tsipras as one of the 10 most dangerous politicians in Europe.

European leaders believe Samaras will be far easier to negotiate with than Tsipras, whom they feared as an even bigger obstructionist, Emmanoulidis says. But theres fear that if Samaras doesnt come through, Greece wont make it.

Samaras, a 61-year-old Harvard-trained economist from a patrician family, has his work cut out for him. After savaging Papandreou, his former roommate at Amherst College, for pushing through austerity measures, Samaras must now do the same thing. The government plans cuts in pensions, healthcare spending and public sector jobs and must also revive an ambitious plan to privatize state assets for revenue to pay off Greeces massive debts. Both the privatization plan and the public sector reform has angered unions and Syriza supporters, who say they plan to fight back with more anti-austerity protests this fall. This opposition could weaken resolve in the two other parties in the governing coalition, PASOK and the Democratic Left, and make it challenging to pass the measures through a hostile parliament.

(MORE: Greeces Election Results: Déjà Vu All Over Again?)

To avoid even harsher austerity measures, Samaras is hoping euro-zone lenders give Greece two extra years until the end of 2016 to meet deficit targets set by international lenders. Austerity has so weakened the Greek economy, he says, that it needs time to recover. The economy is in its fifth year of recession, unemployment is at more than 23%, and Greeks are trying to pay rising bills on drastically reduced incomes. My husband and I can always eat what we grow in our garden, but what will happen if the bills keep growing and our pensions keep getting cut? says Eftichia Karoutsos, a 77-year-old retired school custodian on the Aegean island of Ikaria. What will happen if we run out of money to pay?

Samaras told the German tabloid Bild last week that asking for extra time to meet the targets does not mean Greece wants extra money. We stand by our commitments, he told the newspaper. But we have to stimulate the economy because that will shrink the deficit. All we want is a little breathing space to get the economy growing and increase state revenues.

The man who might make that happen is Finance Minister Yannis Stournaras, a respected Oxford-trained economist known in Brussels for his discipline and consistency. Stournaras has long criticized Greece as the last Soviet-style economy and has pushed for privatization of state assets for years. Stournaras has got the credibility with European leaders, especially finance ministers and officials in Brussels, that many others in Greece are lacking, says Platon Tinios, an economist at the University of Piraeus.

One euro-zone leader, Austrian Chancellor Werner Faymann, has said he will support giving Greece extra time, as long as the government follows through on promised reforms such as privatization and the restructuring of the public sector.

(MORE: Greek Elections: A Referendum on the Euro?)

Merkel, Juncker and Hollande say wont commit to extra time for deficit targets until they see a report on Greece next month by debt inspectors representing the countrys lenders.

If the report is dismal, it could deter euro-zone leaders from showing any leniency on austerity and also revive talk of a Greek euro-zone exit.

Samaras says that European leaders who speculate constantly about Greece leaving the euro zone are repelling investors and preventing the economy from recovering. In an interview with German television, Merkel also warned members of her own governing coalition to tone down anti-Greece rhetoric because theyre putting the euro zone at risk.

Theres concern that if the Europeans continue to play hardball and demand more austerity, it could incite another wave of unrest in Greece, where a polarized society blames its political establishment for bankrupting the country and then selling it out to international lenders. Tinios, the economist, says Samaras and his coalition will likely soldier on even in the face of protests. Another election this year would be suicidal, Tinios says. Both the Samaras government and the Europeans know that. And neither wants to go down as the ones who pulled the plug on Greece.

Read more:http://world.time.com/2012/08/27/how-is-samaras-doing-so-far-the-euro-zone-likes-the-new-greek-leader/#ixzz24kjdwuaa


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