Interview with Ex-Greek Prime Minister 'The EU as an Institution Is Still too Slow'

In a SPIEGEL interview, former Greek Prime Minister Giorgios Papandreou explains for the first time the reasons behind his surprising resignation and the new hope for national unity in Greece. He also advocates the implementation of euro bonds, saying it's time for European solidarity in the financial crisis.


SPIEGEL: Mr. Papandreou, two weeks ago you were forced to resign to make way for Lucas Papademos, a banker. Combined with Spain and Portugal, that means that three of the last remaining leftist governments in Europe have fallen victim to the euro crisis. Could it be that socialists are in fact not very good at handling money and financial problems, as the financial world likes to claim?

Papandreou: We socialists have very clear ideas about what needs to be done in times of crisis. The fact that our voices were not taken seriously enough in the past is one of the reasons why we are still so deeply caught in the crisis.

SPIEGEL: So once again, it is the others who are to blame?

Papandreou: No. Of course we need strict budgetary discipline, and we have to reduce expenditures, but we also need growth strategies. And we cannot lose sight of the markets, either. It is unacceptable that they are the ones driving the countries, day after day, hour by hour, not giving their governments the time that democratic institutions need. This undermines our democratic foundation. That's why we need strict regulation of the markets and more transparency, and why we have to contain the rating agencies. We, as socialists, have demanded this again and again, because we cannot do this alone as a single country. This is a mistake being made by the global political class and, in particular, by conservative Europe.

SPIEGEL: Still, in the crisis voters apparently have more confidence in the conservatives, no matter what political responsibility they might bear. Isn't this a disappointment for you?

Papandreou: We were voted into office in the midst of a crisis. And the outcome of the election was also a vote against the conservatives, who are responsible for the debts and the high deficit. The conservatives overshot the Greek budget by €26 billion ($35 billion) in a single year. If we'd had the current strict supervision by the EU a few years earlier, these problems would not exist in Greece today.

SPIEGEL: Nevertheless, if one is to believe the opinion polls, Greek voters yearn for a new conservative government, and your party faces a potential debacle in new elections.

Papandreou: We'll have to see about that. The Greeks will understand that we have a systemic problem in Europe.

SPIEGEL: How did it feel, for you personally, to travel through Europe as a supplicant and beg for help and support? Did it change you?

Papandreou: This isn't about me. As far as I'm concerned, the important question is whether I can save Greece from a financial catastrophe, and whether I can reform my country. I placed my own ambitions behind the national interests, the interests of my people.

SPIEGEL: It doesn't look that way in a photo that was printed in the European media. It shows you standing in front of (German Chancellor) Angela Merkel, with sagging shoulders, at the G-20 summit in Cannes in early November. Had you already realized at the time that you had failed in your efforts?

Papandreou: No. The crucial battle still lies before us. We are fighting hard and I have the necessary fighting spirit. But for my country, not for myself.

SPIEGEL: You no longer hold any political responsibility. What keeps you going?

Papandreou: The desire for change. But we need time. We have to convince our friends in Europe that they are not investing in the old Greece, but in the new Greece, the Greece of the future. I can help in this regard, because I am proud of what our country can achieve, which is something we have already demonstrated in the past, during the 2004 Olympics, for example. But we have made mistakes, and so have I.

SPIEGEL: What are they?

Papandreou: Our debt is too high and the deficit is too large. We have lived beyond our means. As a member of the euro zone, it was easy for Greece to get cheap credit. And we didn't use this money correctly. Instead, we used it to feed a system that was not competitive. For some critics, all of this wasn't happening quickly enough, and yet we had to make great demands on many Greeks who were directly affected. I have always said that. We are more critical of ourselves than many from outside Greece. But we have also achieved a great deal, if you don't just look at the deficit. The pension system was reformed, as were the schools and universities. We made the public administration transparent, and we reduced costs and dismantled bureaucracy. These are changes that our country hadn't achieved in 30 years.

SPIEGEL: Why did you make the surprising announcement that you intended to hold a referendum on these changes, which led to your downfall?

Papandreou: The idea didn't come out of thin air. We had already been discussing the possibility of a referendum for the previous six months. I wanted to have greater social acceptance and support for the necessary reforms. If the parties can't do this together, you simply have to ask the people directly. At any rate, my proposal changed the political situation completely.

SPIEGEL: Because you had to step down.

Papandreou: No, because the opposition is finally showing a willingness to join us in fighting the crisis. We now share political responsibility. We do so as members of the EU. And now the opposition has finally accepted this. Now 80 percent of voters support the necessary political changes, which sends a strong message.

SPIEGEL: A government of national unity was long overdue. Why was it so difficult to bring about this new solidarity?

Papandreou: That's a good question. We simply lack the political tradition of coalitions. I had already announced, prior to my 2009 election victory, that even if we achieved an absolute majority I would seek coalition partners, especially among the leftists and the Greens, but also among the conservatives. I wanted a change in the political climate, but no one was willing to go along with it.

SPIEGEL: Does this new spirit truly exist? For days the leader of the conservative party, Antonis Samaras, refused to agree in writing to the European austerity and reform requirements. Only back-bench conservatives are in the new government and most of the cabinet has remained unchanged.

Papandreou: You shouldn't underestimate the coalition. The vice president of the conservatives heads the important Foreign Ministry and the Defense Ministry, and the Finance Ministry, at the heart of the crisis, is staffed with members of the (conservative) Nea Dimokratia party. There are, of course, ideological differences, but I hope that we will find our way to greater cooperation.

SPIEGEL: The opposition rejected all of your administration's key austerity measures. Why are you suddenly so optimistic, after the experiences of the last two years?

Papandreou: I want to be optimistic. After all, we did form a coalition that would have been impossible only a few months ago.

SPIEGEL: Two years ago, you fought the crisis alone and repeatedly pledged not to give up. Why this sudden change of heart about three weeks ago?

Papandreou: I didn't give up. I'm still very active in supporting this policy, just not as prime minister anymore. I believe that with my decision, I increased the possibility of implementing the necessary reforms.

SPIEGEL: Is the new Papademos government truly capable of independent political action, given that it's dependent on the majority held by your socialist PASOK party?

Papandreou: We have shared responsibilities. That hasn't changed, and it's crucial. We have to restore the healthcare system and make it accessible online, so that it becomes more transparent for citizens. We must continue to renew our fight against tax fraud every day. We've been very successful in that regard in recent weeks. We caught a few of those who, by having money, power or the media on their side, were successfully defrauding the system. This sends a strong message to people that it isn't just ordinary citizens who must bear the burdens.

SPIEGEL: Really? Many laws seem like a gesture of goodwill on the part of the government, but the implementation has been lacking.

Papandreou: At any rate, we've been more successful that we were some time ago. And you shouldn't underestimate the things we have already achieved. We have also confiscated illegal property and, in the last week alone, arrested 10 highly influential individuals.

SPIEGEL: Only 10. But there is a list of more than 3,800 tax evaders, each of whom owes the Greek government more than €1 million. And you also have a list of about 15,000 tax evaders who each owe more than €100,000. And yet tax revenues are hardly increasing at all.

Papandreou: The problem in Greece is not this government's lack of political will. We have an archaic tax system. We are practically still keeping ledgers, and sometimes records consist of little more than bits of paper. It's imperative that this be changed and that everything be digitized. We have to start all over again, and we need time for that.

SPIEGEL: Time is what the tax evaders have had until now, the ones who could rely on the courts. Files were lost and deadlines were missed, lawsuits were allowed to drag on, and many cases even came under the statute of limitations.

Papandreou: We've changed this now. We are in the process of doing things that we have never done before. No one is above the law anymore, but that too takes time. The powerful and the influential are resisting the reforms. And they have a great deal of power. This can't be done with the push of a button. This sort of patronage was also normal for many politicians in Greece.

SPIEGEL: Did you take a tough enough approach against lobbyists, and particularly against the omnipotent labor unions, which have been fighting for their privileges for months and are paralyzing the country with general strikes?

Papandreou: My God, the particular interests in Greece are certainly huge. I favor cooperation with the unions…

SPIEGEL: Because you're dependent on them. The strong unions are almost all in the hands of your fellow party members. That's why your former finance minister has also said you can't fight yourselves.

Papandreou: This isn't a situation of the good guys on one side and the bad guys on the other. I say we all have to change. This is a radical change, because we have to learn to think differently, and that includes the unions. But it doesn't just apply to Greece. In Europe, too, we have to stop dividing the member states into good and bad. If that were our problem, the solution would be easy: Toss out the bad ones and keep the good ones.

SPIEGEL: If it were that easy, Greece would be out by now.

Papandreou: Of course, you can tell a sick person to kill himself. But you can also try to help the sick person, because the virus is widespread. Who violated the Stability Pact first? It was France and Germany. There isn't just a lack of fiscal discipline in Greece. But the EU simply lacks the instruments for successful implementation. Don't misunderstand me: I do claim responsibility. But the others are also responsible.

SPIEGEL: Have Angela Merkel and (French President) Nicolas Sarkozy fail as crisis managers?

Papandreou: They too are constrained by circumstances. Besides, we are all fishing in muddy waters. A crisis like this is unprecedented. Nevertheless, we have find compromises in this difficult time. Unfortunately, at the moment we are no longer just negotiating with one another, as European politicians, but primarily with the markets.

SPIEGEL: They have dictated the strategies for some time now. The primacy of the political class seems to have been suspended.

Papandreou: That's true, unfortunately. If we decide at 2 a.m. that we have to make a decision because the stock market in Japan is about to open, it's an acknowledgement of the superior power of the markets. The EU as an institution has moved more quickly in the last few months than in the past, and yet we are still too slow.

SPIEGEL: Do we need euro bonds as an additional bailout instrument?

Papandreou: We are in crisis mode and we have to make this decision. Euro bonds are needed. That's important. I understand German fears of a so-called communitization of debt, but we have to stand together now. In doing so, we would send the markets a definitive signal on the stability of the euro, and then they would finally calm down. The consequence, however, would be a European finance ministry.

SPIEGEL: When will there be new elections in Greece?

Papandreou: We shouldn't rush things. The new government needs time to consolidate. And it also needs time to do its job.

SPIEGEL: But your new partner has made cooperation dependent on holding elections by February at the latest.

Papandreou: Greece needs calm for now. An election campaign in the near future would become a burden. We have a government of historic significance. We cannot squander this opportunity.

Interview conducted by Manfred Ertel and Julia Amalia Heyer

Translated from the German by Christopher Sultan

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Vercinget333 12/01/2011
1. Interview meta-analysis
Good chance to analyze this interview. On one hand we have seen the usual German arguments against a country like Greece. Fiscal evasion. Too much corrupt burocracy. Doubts of any possible positive turn as if it was written in the greek ADN. The blessings of the cheap credit from french and german bankers to make nothing useful. On the other hand an enough self-critic but evasive Mr. Papandreu lost among what they really think as best for Greece and the only possible short-term solutions to take with the subsequent strong small letter attached. Let's critic the german postion hold by the interviewers. There is not the minor feeling about any crisis which is hold in some countries and spreading globally with enough facts rising rational (and irrational) warnings. Bigger capital evasion not matter in which way is another consecuence of a recession-stagnation. If we want to fight it then it cannot be in crisis time. Too many neccesary resources putting in danger the budget deficit. There are anough advice in macroeconomy theories about the matter. Crisis, fear, hoarding routed to safe havens, capital and fiscal evasion always improving. Finally nil investment and smaller tax revenues while the private consume is under lows sinking the aggregate demand. Only a positive net exports figure can help and the winners will try to be always the winners. Structural answers for the medium term are put in danger because the current crisis times scenario. And more time living such fate more the coyuntural problems prone to be finally structural. Let's critic now the Greek side. I think it really needs less critic because its has put much of them on the table. No matter that the monetary policy made nothing to solve the greek financial bubble. No matter that cheap credit was sent the Greece because the EU an specially some countries didin't want control on national budgets. A culture must change and it can change if there is not any genetic anomalous expression in Greek genes.
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