Bloomberg News

Samaras Bids to Save Greece After Thwarting Rescue Plans

May 04, 2012

Antonis Samaras, Leader of the New Democracy party. Photographer: Simon Dawson/Bloomberg

Antonis Samaras, Leader of the New Democracy party. Photographer: Simon Dawson/Bloomberg

Antonis Samaras has morphed into Europe’s main hope for a stable government in Greece after having been the biggest irritant.

Head of the New Democracy party topping polls before the May 6 election, Samaras rejected Greece’s first bailout as the nation teetered on the verge of default two years ago. He then resisted spending cuts designed to keep aid flowing and prevent economic collapse. His brinkmanship led European Commission President Jose Barroso to tell Samaras last November to stop playing “political games.”

Since then, the 60-year-old Samaras has met European demands to support budget discipline beyond the life of Greece’s current caretaker administration. In addition, his calls for policies to spur economic growth are being echoed across Europe as it re-evaluates a German-led focus on fiscal austerity amid concerns Spain may be forced to follow Greece, Ireland and Portugal into seeking emergency aid.

“I think pragmatism will prevail,” Janis Emmanouilidis, of the European Policy Centre in Brussels, said in an interview. At the same time, “Samaras may not get the benefit of the doubt. The perception emerged outside Greece that he was obstructing certain policies and putting party and individual interests above national interests.”

Polls show New Democracy may end up as the largest party in an election that isn’t likely to provide a clear winner, forcing New Democracy into a deal with the socialist Pasok party.

Record Unemployment

That would put Samaras in charge of an economy that has shrunk more than 13 percent over the past three years and pushed unemployment to a record high of almost 22 percent. With Greece dependent on bailout funds from the euro area and the International Monetary Fund to stay in the euro, the next government will need to find cuts worth 5.5 percent of gross domestic product in 2013 and 2014.

“We accept fully the goal of reducing the deficit,” Samaras said on April 22 in a speech in Athens. “But to reduce deficit and debt, to be able to exploit state assets and to proceed to structural change, there must be growth, as soon as possible.”

Samaras appealed to Greeks yesterday for enough support to enable New Democracy to govern without having to enter into an alliance with Pasok.

Premier for All Greeks

“Whatever you have voted in the past, it doesn’t matter,” Samaras told thousands of supporters waving Greek flags at his main Athens rally. “I will be a prime minister for all of you. I will fight for each one of you, with all my strength, day and night.”

His new stance contrasts with the intransigent tone struck over the past two years as he railed against the terms imposed by international creditors, prompting rebukes from German Chancellor Angela Merkel and Luxembourg Prime Minister Jean- Claude Juncker.

A champion tennis player in his youth, Samaras abandoned New Democracy almost 20 years ago when he founded a party to capitalize on a dispute with the Former Yugoslav Republic of Macedonia over its name. The issue is sensitive for Greeks because of concerns it implies a claim on the northern region in Greece, also called Macedonia.

Midnight Votes

He rejoined New Democracy about a decade later and took over as leader when it was ousted by Pasok in 2009. Samaras then spent the next two years trying to thwart Prime Minister George Papandreou in a string of knife-edge midnight votes -- as Papandreou’s own Pasok support crumbled -- and Greece tried to meet the terms of the international bailout agreed in May 2010.

Now rivals, both Samaras and Papandreou attended Amherst College in the U.S. in 1970 and 1971, before which, they had been friends at high school in Athens.

As Greece edged toward economic collapse, Samaras eventually agreed to support a technocratic government last year led by Lucas Papademos. The new administration then negotiated a second rescue package alongside the biggest debt restructuring in history.

Now, Samaras may be starting to realize it’s time to ditch his earlier “populist” policies, Elmar Brok, a German member of the European Parliament, said in a phone interview.

“I think Samaras understands that this is a real chance for Greece to come out of the mess,” said Brok. “He is a very intelligent and committed man.”

Deficit Crisis

Samaras may lead his party back into power less than three years afterPapandreou announced that New Democracy misstated the country’s budget deficit while in office, sparking a region- wide debt crisis still ricocheting through European markets.

While New Democracy took the initial blame, Greece’s spending gap, which in 2009 exceeded 15 percent of GDP, was the result of years of spendthrift policies by both parties. The deficit is due to fall to around 7 percent of GDP this year.

“Outside Greece, the trust toward Greek political elites isn’t very high,” Emmanouilidis said.

Samaras would have to restore confidence in a country whose benchmark stock index has lost more than two thirds of its value since October 2009 and whose 10-year bond yield rose above 35 percent in March. After the restructuring, the yield is now at 19.8 percent.

Also educated at Harvard University, Samaras wants to shrink government, lower company tax rates, expand the sale of state assets and target public spending on infrastructure. Europe’s renewed emphasis on growth to complement fiscal austerity will make Samaras’s job easier, EU parliamentarian Brok said.

“It will allow him to show Greeks the light at the end of the tunnel, which is very important,” said Brok. “Structural changes and growth are the new priorities.”

To contact the reporter on this story: Jonathan Stearns in Brussels at jstearns2@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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