Greece’s reforms: Just in time?

Date: 20/09/03

Can Greece's prime minister, Costas Simitis, hold on to power?

MOST Greek politicians still believe a burst of pre-election spending is the best way to win over wavering voters. In spite of his modernising European leanings, Costas Simitis, the prime minister, is no exception. What is new is his timing.

A general election is not due until April next year, but Mr Simitis's Pan-Hellenic Socialist Movement, better known as Pasok, is already campaigning as if it were imminent. First Mr Simitis announced a welfare package costing €2.3 billion ($2.6 billion) to appeal to grumpy pensioners, farmers and women who have difficulty finding jobs. Then, on September 10th, he launched a “convergence charter”. Making a rare appearance live on television, he brandished a glossy handbook packed with details of Pasok's plans to raise Greek incomes from their present 70% of the European Union's average to 80% by 2008.

The charter has something for everyone: lower taxes for businesses and high earners, less spending on defence (now that Greece is on friendlier terms with its old enemy, Turkey) and more on education, pensions, training and job creation. Such plans would probably cost some €7.7 billion to carry out. Cutting unemployment from 8.9% to 6% is a priority, says Mr Simitis. His government will even subsidise rents for families willing to move to places where there are more jobs.

The plan optimistically banks on the economy's continuing to grow by around 4% a year, even when next August's Olympic games are over and the current stream of hand-outs from Brussels slows to a trickle, as funds are diverted to poorer new EU members from central Europe. Moreover, inward investment remains small (Libya got more last year), largely because of red tape and officials wanting bribes.

Pollsters say about 20% of Greek voters are floaters who make up their minds only a few weeks before polling day. Still, Mr Simitis's early start may pay off. The first poll published after the unveiling of his convergence charter suggested it had gone down well. Pasok was trailing New Democracy, the right-of-centre opposition, by just under seven percentage points, against almost ten early this year.

Pasok has other ways to win people back. Michalis Chrysohoides, its new secretary-general, is trying to give the party a fresh look. Its die-hard Marxists and its nationalist faction are being shunted aside in favour of younger candidates with a softer, social-democratic image. Mr Simitis will appear more often on television, cutting ribbons around Athens as sports venues for the Olympics and more sections of a motorway are opened.

Will it work? After holding power for 19 of the past 22 years, Pasok may be due for a spell in opposition. Many of its old guard are unpopular, but Mr Simitis is still considered a safe pair of hands. Voters may be wary of switching just before the Olympics, which are seen as a test of Greece's credentials as a serious player in Europe.

Costas Karamanlis, the New Democracy leader, and his team are better than they used to be at picking holes in Pasok's grandiose schemes. But the latest announcements have thrown them into disarray. Six months ago they were expecting Pasok to fall, as one adviser put it, like a ripe fruit from the tree. Now Mr Simitis has offered a few plums of his own.

Can Greece's prime minister, Costas Simitis, hold onto power?