Karamanlis: A window of opportunity about to be missed

It is commonplace that 2004 has been a landmark year for Greece. One major political change and one successful Olympics later, the feel-good factor appears to subside, and things seem to be settling down to some new kind of normality.

Kostas Karamanlis‘s New Democracy won the election on the back of a long campaign, in which it strove to be all things to all people. One year after his election victory the prime minister is coming near the point of having to make choices that will disappoint some of his voters – or making no choices at all, which would lead to the loss of an historic opportunity.

Karamanlis has always shied away from giving his party a clear ideological identity. Despite his well-documented liberal pedigree, he carefully avoided drawing up a road map for the country that would be based on a coherent set of policies, notably for the economy; instead, he concentrated on making an electable party out of New Democracy by putting its internal affairs in order and improving its image as a credible alternative to Kostas Simitis’s PASOK.

Karamanlis found himself with a huge political capital in his hands and with a pressing question: would he invest that capital or just spend it?

When the Simitis package completely ran out of steam, after first running out of an agenda, the New Democracy makeover allowed Karamanlis to cruise to a comfortable election victory and, arguably, become Europe’s most powerful prime minister.

He found himself with a huge political capital in his hands and with a pressing question: would he invest that capital or just spend it? His first year in power suggests he has opted for the latter.

He made a clear choice of consensus politics over conviction politics. He formed a cabinet of compromise rather than one with a mission. All sorts of differing tendencies within his party are represented around the oval cabinet table depriving the Karamanlis administration of a clear direction; most characteristically, in a fresh attempt to be everything to everyone, the so-called social ministries were given to traditional right-wing statists with economic portfolios going to liberals.

Hence, not surprisingly, clear and vigorous policies to tackle the country’s main problem, economic growth, have been substituted for by middle-of-the-road practices, which would be very appropriate to iron out small problems and fine-tune successful policies, but will never be able to forward the drastic structural changes needed and provide the power engine that the Greek economy has lacked for decades.

The major fiscal review and a set of bills aiming to curb corruption, along with the recent drive to purge the justice system and the church of corrupt officials, are meeting long-standing demands of Greek society. However, given the government’s perceived lack of vision and its timid stance (not only on economic growth but also on the Cyprus issue, the major foreign policy challenge the government has had to face), these initiatives, if they are not combined with aggressive policies, could easily turn Karamanlis from statesman to moralist preacher.

Greece is in need of some very painful reforms: among them, restructuring its social security system and freeing up business from state shackles in order to release the economy’s dynamic forces and stimulate growth.

One can suspect that Karamanlis would have Papandreou’s, at least tacit, support for some of the necessary reforms.

Karamanlis has an opportunity to counter the resistance emanating from pockets of patron-clientelist statism and implement at least some of these reforms: his government has been given a long grace period by the electorate, his own popularity remains strong, and the main opposition PASOK party continues to be wrong-footed as George Papandreou’s new agenda has yet to be invented, let alone be put into place.

New Democracy’s dominant position was underlined by the successful way in which it handled the hot potato of electing a new president, while a major poll in late February proved the government’s continuing popularity (the small drop is probably only the result of a return to normality following last year’s election and the “Olympic hangover”).

Moreover, one can suspect that Karamanlis would have Papandreou’s, at least tacit, support for some of the necessary reforms.

No Greek government in the last quarter of a century has had the luxury of such a promising window of opportunity to drive reform and modernisation. But such a juncture calls for conviction politics…