Greece’s election: Sprinting start?

Date: 13/03/04

Greece's victorious conservatives have no time for mistakes

AFTER spending most of his career in opposition, Costas Karamanlis may have hoped for a breathing-space to learn the new job that he won this week. At 47, Mr Karamanlis will be Greece's youngest-ever prime minister; like most of his cabinet, he has never held even a junior government office. But he will have to plunge in at the deep end; within a few weeks, fateful decisions over Cyprus - the thorniest issue in Greek foreign policy for at least three decades - must be taken. On top of that, preparations for the Athens Olympics in August are lagging behind schedule.

The centre-right New Democracy party's unexpectedly big win in the March 7th election has given Mr Karamanlis a useful boost at the start of his four-year term. Most polls predicted that ND would defeat the Pan-Hellenic Socialist Movement (Pasok) by only a narrow margin, even though the Socialists had held power for 19 of the past 22 years. But in fact ND did better than forecast, capturing 45.4% of the vote to 40.5% for Pasok. The result gave ND a comfortable majority, with 165 of the 300 parliamentary seats to Pasok's 117.

Defeat at the polls gives George Papandreou, the former foreign minister who remains the country's most popular politician, an opportunity to reinvent Pasok in opposition. But while the socialists lick their wounds, Mr Karamanlis must focus on the United Nations-backed effort to reunite Cyprus before May 1st, the date fixed for the island to join the European Union.

Greek- and Turkish-Cypriot leaders seem unlikely to reach a deal by the March 22nd deadline set by Kofi Annan, the UN's secretary-general; so Greece and Turkey will be asked to break the deadlock. Mr Papandreou was keen to broker a deal that would have allowed both bits of the island, not just the Greek-Cypriot south, to join the EU. But Mr Karamanlis's advisers want to avoid being rushed into an accord that could be unworkable.

Mr Karamanlis has picked as his foreign minister Petros Molyviatis, a 75-year-old retired diplomat, who advised his uncle, then prime minister, in the 1970s. Mr Molyviatis is suspicious of Turkey. Although Mr Karamanlis is keen to help Turkey along the road to EU membership, he must contend with elderly Greek-Cypriot leaders who doubt if they can rub along with their Turkish neighbours in a federal state. According to polls, over half of Greek Cypriots may reject the UN reunification plan at their referendum on April 20th. Turkish Cypriots, anxious to enjoy the benefits of EU membership, are more likely to vote “yes”. What the Greeks, in Athens and Nicosia, must calculate is how high a price their side would pay for rejecting what the world sees as the best chance for a deal.

Mr Karamanlis's other immediate headache is the return of the Olympics to their native soil. Greece is expecting its NATO partners to help prevent a terrorist attack during the games. But security preparations, including the installation of a high-tech surveillance system for over 100 Olympic venues, are behind schedule. New transport systems to take spectators to the stadiums are delayed and embarrasingly, the elaborate glass and metal roof designed by Santiago Calatrava, a Spanish architect, may not be ready for the main athletics stadium in time. To speed things up, Mr Karamanlis will head the culture and sports ministry himself. He will have support from Athoc, the games organising body, headed by a former ND deputy, Gianna Angelopoulos-Daskalaki. Mr Papandreou's promise to be a helpful opposition leader should ease Mr Karamanlis's first few months in office. In return George Alogoskoufis, the new, pro-market finance minister, will hold off on reforms that Pasok-run trade unions oppose, such as full privatisation of Greece's telecoms and electricity companies. With the €4.6 billion ($5.7 billion) Olympics budget already hit by huge cost overruns, and contractors preparing to exact a high price for finishing projects, Mr Alogoskoufis may postpone revealing the state of public finances until the games are over. Superficially, economics should be low on the new government's list of worries, with GDP growing by a thumping 4.5% this year on the back of the Olympics and public works. But from 2007 onwards, Greece's share of EU handouts will fall sharply. So there is only a brief window of opportunity to make the country more competitive by trimming a corrupt, dysfunctional bureaucracy and making it easier to create real jobs. Given that many Greeks thrive off that bureaucracy, Mr Karamanlis must be brave as well as a quick learner.