An idealistic Greek patriarch putting the euro in jeopardy

On Monday,he stunned his government colleagues,fellow European leaders and financial markets by announcing a referendum on Greece’s future. The question to be put to voters was unclear: it might have been about the latest 130bn euros international rescue plan for Greece,or it might have been about Greece’s membership of the eurozone and the broader European Union. Either way,he appeared to be playing with fire and putting the euro in jeopardy.

In the event,it did not matter. On Thursday,he revealed that he had changed his mind and there would be no referendum after all.

What exactly was going through Papandreou’s mind this week is unclear even to friends and advisers in his ruling Pasok socialist party. According to one school of thought,he was trying to manoeuvre the conservative opposition New Democracy party into supporting the 130bn euro rescue and its associated austerity measures. This achieved,he would have cross-party support for the plan,would be in firmer control of his government and able to honour his commitments to Greece’s international lenders.

According to a second theory,Papandreou’s primary aim was to foil what he saw as a sinister attempt by Greece’s most powerful business oligarchs and their media supporters to force him out of office. With their extensive interests in real estate,shipping,energy and the press,the oligarchs constitute a formidable force to which no prime minister — let alone a socialist — can afford to turn a blind eye.

In all likelihood Papandreou did not have a clearly defined master plan. “He’s a very good intuitive politician but he isn’t organised enough to carry out a plot,” says one person close to him. “George is not frivolous about his responsibilities but he is frivolous about how he goes about executing them.”

For his political enemies,Papandreou’s twists and turns betrayed a desperation to retain power at all costs. But naked ambition is not the first description that trips off the tongues of friends who have followed his political career since he was elected to Greece’s parliament in 1981. “He’s told me repeatedly that he is ready to resign but only once he’s carried out certain irreversible changes,such as cutting back corruption,” one adviser says.

This assessment points to a high-minded idealism that goes hand in hand with other,less attractive qualities. “He’s overly suspicious of people and he’s an exceptionally poor manager. He’s a brilliant tactician but he has a mediocre intelligence,” observes one politician.

The complexities of his personality may owe a great deal to his family background. Born in Minnesota in the US in 1952,he had a strained relationship with his father,Andreas,because of what he felt was the latter’s mistreatment of Margaret,his American mother. He lived in exile when a military junta ruled Greece from 1967 to 1974 and he studied in Sweden,Canada and the UK. To this day he makes grammatical mistakes when speaking Greek.

The Papandreous are one of Greece’s great political dynasties. His grandfather,also named George,and his father both served as prime minister after the second world war. But with Andreas,a crafty populist who founded Pasok and turned it into a patronage machine that bears no little responsibility for Greece’s present ills,Papandreou did not truly share a political philosophy.

Papandreou is not a socialist ideologue but a Scandinavian-type liberal with a keen interest in environmentalism,human rights and civic participation in public life. He has a fascination with technological gadgetry,even if as premier he finds it a challenge to manage his private office efficiently.

His record as a government minister before he assumed the premiership in October 2009 was impressive. As education minister,he promoted opportunities for the Muslim minority of the Greek region of Thrace. As foreign minister,he seized the opportunity presented by a terrible Turkish earthquake in 1999 to forge a rapprochement between his country and its centuries-old foe. In the Balkan context,this was an epochal moment equivalent to the 1972 visit to China of Richard Nixon.

This seemed to bode well when he won Greece’s 2009 election with a parliamentary majority. But it is questionable whether he grasped the full dimensions of the public finances disaster that he inherited from the conservative government. “No one is going to accuse George of being financially literate,” says one friend.

Papandreou earned credit from his European peers at an EU summit in December 2009 where he confessed that corruption infested Greece from top to bottom. Five months later,he secured a 110bn-euro International Monetary Fund rescue —the first extended to any eurozone country.

Over the past 18 months his stock has dwindled. In return for their loans,Greece’s creditors demanded a vigorous assault on tax evasion,an end to rampant public sector patronage,privatisation of state entities and structural reforms to improve Greek competitiveness. Not much of this has come to fruition.

Pasok traditionalists blame him for rising unemployment,falling living standards and what they see as a betrayal of socialism and the surrender of national self-control to the EU and IMF. Arguably,Greece’s debts were so onerous and the rottenness of the Greek state so advanced that no prime minister could have done much better. But now,more than ever,the prospect facing Papandreou is that his country ends up in a place made famous by another Dylan song – “Desolation Row”.

© 2011 The Financial Times Limited