By Marco Vicenzino, head of Global Strategy Project, a geo-political risk and international business advisory firm
Unfortunately, the crisis’ full impact is yet to be felt, particularly its social consequences. Providing as soft of a landing as possible is crucial. A pragmatic course must be taken that avoids populist appeal and emphasizes greater technocratic expertise. Even achieving the most basic consensus on the lowest common denominator would mark progress for now. Public expectations for immediate actions and results must be restrained. Policy must be explained through clear and realistic rhetoric. Necessity determines firm action. The alternative is continuous foot-dragging and years of muddling through perilous uncertainty.
What is least needed right now is rash brinksmanship in the midst of deep global uncertainty. Shaking the eurozone's foundations as the world economy teeters on the brink of collapse amounts to reckless disregard for the European Union and international stability. They must not be held hostage to internecine Greek squabbles nor irresponsibility in other European member-states, particularly in the Mediterranean basin. Spain’s upcoming elections must produce an effective government willing to tackle difficulties head on, especially Europe’s highest unemployment at over 20 percent. In Italy, Prime Minister Berlusconi’s time is up. A technocratic replacement is desperately needed. Whereas some form of Greek default is not unexpected, Europe will likely implode should Italy collapse and potentially reel the global economy into the unpredictable depths of a vicious downward cycle.
Despite barely surviving a crucial confidence vote in Parliament, George Papandreou’s eventual departure as prime minister was inevitable. After rattling global markets by spontaneously announcing, and then suddenly scrapping, a risky referendum on Greece's future in Europe, Papandreou’s sense of timing could not have been worse. It further contributed to Greece’s spiraling loss of credibility and irreversibly damaged his own legitimacy. It was largely the result of dithering, posturing, ineptitude and a lack of vision across the political spectrum. Any referendum – if ever viable – should have been called months ago.
Papandreou's referendum fiasco underscored his failure to effectively deal with the crisis. European allies have struggled to provide a lifeline to keep Greece afloat through crucial economic and political capital. Papandreou’s erratic behavior considerably squandered it and left European leaders exposed. This was further underlined by his failure to consult them, or his own cabinet members, about the referendum. Fortunately, it was abandoned due to their combined pressure. At least for now, Greece remains on a European track.
Mr. Papandreou may justify his actions as the only way to save Greece, but it was also a careless act of political desperation designed to preserve his own survival and whatever remains of the dynastic Papandreou brand name. Unlike his father — former Prime Minister Andreas Papandreou— who cut his teeth in the trenches of Greek politics, George Papandreou arguably remains an American who thinks like a Swede and speaks Greek. Ultimately, he inherited the family political fiefdom that includes the staff and servants, many of which still serve in the current Greek parliament.
However, Mr. Papandreou is not solely responsible. Blame must be apportioned. The legacy of economic mismanagement he inherited from his father and successors haunts any new government. In Greece, the problem is not partisan but systemic. It is undermined by a culture of acute patronage, and accompanying ills. Even replacing Papandreou will not change Greece’s colossal problems overnight. At best, a new face could only buy limited time and provide some semblance of a new beginning.
No European grand plans, schemes, or financial packages alone will yield dividends. Neither will a systemic overhaul solely suffice. Unless there is fundamental transformation in the public psyche over time, little will change. The underlying relationship between citizen and state must be reassessed. Longer hours, less public spending, reduced privileges are among a few of the requirements which need revisiting. Ultimately, the realities of a new age of austerity must sink in.
Marco Vicenzino heads Global Strategy Project, a geo-political risk and international business advisory firm.