Greek Government Changes Don’t Solve Greek Problem

Prime Minister George Papandreou said he would try to create a coalition government which would include the major opposition party. His offer may be turned down, and there is a chance a vote of confidence will push him out of office. All of this happened as thousand riot in Greek streets to protest austerity measures.

A change in the composition of the Greek government will not solve the nation’s financial problems which the country, the EU, IMF, and ECB have only days to address. Better for Papandreou to remain in office, if he can, and fight for a bailout package. He is the only one who can accomplish it quickly because he has been in office as the disaster grew and has now peaked. A total change at the top of the Greek government would only put new, and less experienced politicians into power.

It has been conceded by most parties involved in another potential Greek bailout that the nation’s economy will take years or even decades to reach a point of renewed growth. The other aspect of the emergency that is beyond debate is that the resistance of Greek citizens to austerity that lowers wages and increases taxes will continue. The will of Greek voters will continue to hinder a resolution to a problem that may drive their economy into a deep depression.

The force of all these powerful and mostly negative forces set against a settlement on Greek debt leave Papandreou nearly alone. He may be able to set the conditions of a bailout only to see them voted down in parliament. He could also push a program through to its end and be voted out of office, and perhaps will become a political outcast. But, he and his chief aides are all that is left as a bridge between his country and those who may provide the nation with capital.

Greece is likely to default, according to ratings agencies, bond insurance values, and most economists who follow the EU financial crisis. The loss of Papandreou as chief negotiator would be final factor to doom the southern European nation. His legacy may be that he was the last one to stand and fight for a solution that was positive for Greece whether the outcome is positive for Greece or not.

Douglas A. McIntyre