Identifier
Created
Classification
Origin
09ATHENS1661
2009-11-27 10:54:00
CONFIDENTIAL
Embassy Athens
Cable title:  

THE PAPANDREOU GOVERNMENT: OLD VS. NEW

Tags:  PREL PGOV GR 
pdf how-to read a cable
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TO RUEHC/SECSTATE WASHDC IMMEDIATE 1137
INFO EUROPEAN POLITICAL COLLECTIVE
C O N F I D E N T I A L SECTION 01 OF 03 ATHENS 001661 

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AMEMBASSY BELGRADE PASS TO AMEMBASSY PODGORICA
AMEMBASSY HELSINKI PASS TO AMCONSUL ST PETERSBURG
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AMEMBASSY MOSCOW PASS TO AMCONSUL VLADIVOSTOK
AMEMBASSY MOSCOW PASS TO AMCONSUL YEKATERINBURG

E.O. 12958: DECL: 2019/11/27
TAGS: PREL PGOV GR
SUBJECT: THE PAPANDREOU GOVERNMENT: OLD VS. NEW

REF: ATHENS 1653; ATHENS 1583; ATHENS 1581; ATHENS 1547

CLASSIFIED BY: Daniel V. Speckhard, Ambassador; REASON: 1.4(B),(D)

Summary

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C O N F I D E N T I A L SECTION 01 OF 03 ATHENS 001661

SIPDIS
AMEMBASSY ANKARA PASS TO AMCONSUL ADANA
AMEMBASSY ASTANA PASS TO AMCONSUL ALMATY
AMEMBASSY BERLIN PASS TO AMCONSUL DUSSELDORF
AMEMBASSY BERLIN PASS TO AMCONSUL LEIPZIG
AMEMBASSY BELGRADE PASS TO AMEMBASSY PODGORICA
AMEMBASSY HELSINKI PASS TO AMCONSUL ST PETERSBURG
AMEMBASSY ATHENS PASS TO AMCONSUL THESSALONIKI
AMEMBASSY MOSCOW PASS TO AMCONSUL VLADIVOSTOK
AMEMBASSY MOSCOW PASS TO AMCONSUL YEKATERINBURG

E.O. 12958: DECL: 2019/11/27
TAGS: PREL PGOV GR
SUBJECT: THE PAPANDREOU GOVERNMENT: OLD VS. NEW

REF: ATHENS 1653; ATHENS 1583; ATHENS 1581; ATHENS 1547

CLASSIFIED BY: Daniel V. Speckhard, Ambassador; REASON: 1.4(B),(D)

Summary

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1. (C) Seven weeks after it was brought to power in Greek
parliamentary elections, the government of George Papandreou has
come under criticism from the Greek public and international
markets for an erratic start in implementing its sweeping
governmental reform. In many ways this is to have been expected:
the new government came in with virtually no transition period and
immediately enacted unprecedentedly large changes in the
responsibilities of ministries. It will take more time for these
government bodies to get used to their new roles, and for the
public to start seeing signs of the modernization and streamlining
of government that Papandreou promised. The Prime Minister's
personal staff has also not yet finalized its relationship with the
ministries. In addition to the unresolved administrative issues,
there are tensions between two camps within the government that
have not worked out their political relationship to each other: the
old lions of the ruling Pan-Hellenic Socialist Movement (PASOK),
many of whom are holdovers from Papandreou's father's
administration, and the younger officials who lack longstanding
political connections but seem to have the Prime Minister's favor.
In the short run at least, these dynamics have produced uncertainty
on the part of some of our government contacts about the positions
of their own government. In the longer run these problems should
decrease, but the rivalries between the old and new guards, and
between reformists at the top and entrenched interests in both
government and the economy, are likely to be major factors
determining whether Greece does really reform. End Summary.



Hitting the Ground Running?


--------------


2. (SBU) Papandreou came into office with a strong mandate from
PASOK's October 4 election victory, and he has aggressively pursued
a government reform that is, if anything, more ambitious than what
he called for in the campaign. His re-organization of ministries
(ref D) was substantially more sweeping than usual for a new Greek
government, and it ruffled feathers even within PASOK. Now that
bureaucratic reality is beginning to set in, the newspapers --
including those that are usually pro-PASOK -- are full of stories
of government confusion, conflict, and unfulfilled promises.
Polls suggest a majority of Greeks are already dissatisfied with
the government's job performance, although PASOK still trounces New
Democracy, the former ruling party, in head-to-head polls. While
the government has pushed a reform agenda on a number of fronts,
its spokespersons have often given contradictory signals on the
details and implementation has not been thought through. Some
glaring examples include:



-- The government announced it will reform the asylum system
(much-criticized by human rights groups) and permit immigrant
children to obtain Greek citizenship in some cases. Both in public
and private statements, however, government officials made
contradictory or inconclusive statements about which ministry will
have control of the asylum process, who will be eligible for
citizenship, and other key aspects of these reforms.



-- The recent dockworkers strike turned into a public challenge to
the government, despite the fact that the strikers moved under the
leadership of hard-core PASOK unionists (ref C). The government
designated several different point persons to deal with the
strikers, leading to confusion about its message. As with other
issues, PASOK was caught between a rock and a hard place, as it
sought to balance demands from its union constituency and the need
to use this issue as a signal to markets and investors that it was

ATHENS 00001661 002 OF 003


serious about reforms.



-- The government abolished a popular "cash for clunkers" program
developed by the previous government but without a legislative
remedy in place. While the new government said the change was a
budget-saving measure, the move stranded an estimated 73,000 car
owners who had already surrendered their vehicles based on a
government promise to provide EUR 500 to 2,000 in incentives.




3. (C) The media has had a field day with these stories, which can
be spun to suggest that the new team is in over its head. As time
passes and the new appointees become more familiar with their
ministries (and vice versa),missteps of this sort may decrease.
For the time being, however, we have encountered a number of
working-level government officials in the course of normal business
who have clearly not gotten instructions on the government's policy
toward a number of issues, small and large. This is true even
(perhaps especially) in the Ministry of Foreign Affairs, where
Papandreou personally occupies the minister's chair.



The Role of the Prime Minister's Office

-------------- ---


4. (C) Papandreou has assembled a personal staff of mostly young,
capable people led by the old guard stalwart Professor Harry
Pamboukis, who has attempted to resolve disputes between ministries
and to clarify lines of command, in the process making himself an
increasingly unpopular person among the cabinet. Below him, senior
Greek diplomat Dimitrios Paraskevopoulos, former Ambassador to
Moscow and Paris, serves as the PM's diplomatic advisor. He
impressed us as a frank, serious yet amiable interloctutor during a
November 16 meeting with Assistant Secretary of Defense Vershbow.
Based on their experience and skills, these staffers would seem
well-positioned to play an NSC-like role in interagency
coordination, something that has never really existed in Greece.
While they may eventually fill this role, their presence is
currently not felt at the ministries to any significant extent, and
they will have to build these lines of communication from scratch.
More importantly, the PM will need to make it clear that Ministries
will need to coordinate and not go it alone. He sent a strong
signal of his seriousness by naming PASOK heavy Theodoros Pangalos
as his Deputy Prime Minister. His job is understood to be
enforcing ministerial coordination.



Underlying Fissures

--------------


5. (SBU) As several Greek commentators have pointed out, a major
cause of Papandreou's difficulties is the ingrained culture of
perks, handouts, and free benefits that have long characterized the
Greek state. Papandreou's promises of "open government," based to
a significant extent on the Internet, and "complete transparency"
have been met with skepticism, even by members of the cabinet.
Before transparent government can be achieved, these skeptics
argue, the notorious Greek bureaucracy needs to be tamed.




6. (C) Papandreou has staffed his government with almost equal
numbers of PASOK veterans and newcomers, something he reportedly
did intentionally to augment an experienced core with talented new
blood. Despite the fact that he is a scion of PASOK's leading
family, the American-born Papandreou is generally believed to
prefer young outsiders - people he views as modern technocrats -
over the traditional Greek politicians who worked for his father.
These two groups co-exist uneasily in the new government, and even
within ministries. At Defense, for example, there is ill-concealed
jockeying for authority between Minister Venizelos - who led an
unsuccessful old-line effort to unseat Papandreou as PASOK leader

ATHENS 00001661 003 OF 003


in 2007 - and Alternate Minister Beglitis, who is closer to
Papandreou. The same dynamic exists in the Ministry of Education,
with Deputy Minister Panaretos publicly contradicting his boss,
Minister Diamantopoulou. Economy Minister Louka Katseli, a PASOK
veteran, is reportedly unhappy that she has been upstaged as the
leading economic policy maker by Finance Minister George
Papakonstantinou, who is one of Papandreou's new, young confidants
(ref B). Environment Minister Tina Birbili, a former Papandreou
speechwriter emblematic of the new breed, has come under criticism
for her inexperienced handling of "cash for clunkers" and other
issues. Similarly, Papandreou's choice for PASOK Secretary
General, the little-known Sokratis Xynides, was elected by the
party committee October 23 by a surprisingly small margin. The
vote was seen as a warning to Papandreou from the old-line PASOK
cadres, and it seems to have left Xynides in no position to assert
party discipline, the traditional role of the position.




7. (SBU) The pressures from the "deep" PASOK system - historically
based on nepotism and political clientelism for the party's network
of friends - run directly counter to Papandreou's platform of open
government, and satisfying both sets of demands will be a difficult
balancing act. Commentators have noticed that Papandreou and
Papakonstantinou have recently adopted more populist economic
rhetoric, criticizing "plutocrats" and "those who plunder the
people's wealth," leading to speculation that the government's
not-yet-announced tax plan may be designed to benefit core PASOK
constituencies at the expense of economic growth. On the other
hand, such rhetoric could be a means to try to deflate what is
expected to be strong opposition to upcoming, painful reforms (ref
A) and to make the entire process more palatable to the public and
the old guard.



Comment

--------------


8. (C) Greeks voted eagerly for a political shift on October 4.
The Greek government system is, however, even more resistant to
change than most democracies, and Papandreou is starting to
encounter difficulties taking on the many challenges facing Greece
while overhauling the government structure at the same time. We
anticipate that some of these difficulties will soon be overcome
and forgotten, as Papandreou's policy guidance filters down and is
absorbed by the ministries. But the bigger question of whether
Papandreou's domestic reform agenda will be able to overcome the
resistance of traditional power centers - including in his own
party - will likely remain open for some time. The answer will be
key to determining Papandreou's legacy for Greece.
Speckhard