Greek PM faces tough fight for 3rd mandate

ATHENS, Greece — Greece’s beleaguered prime minister faces a tough fight to win a third mandate in early elections Sunday, with voters widely expected to reject his conservative party in favor of the opposition socialists.

Whoever wins, Greece will have the heir to a long-running political dynasty at its helm once more. Costas Karamanlis and socialist PASOK party leader George Papandreou are both scions of the two rival families that have governed Greece for 32 of the 47 years of democratic governance since 1955, excluding the 1967-74 dictatorship.

Karamanlis called an election just halfway through his second four-year term in a risky bid to shore up support for tough economic measures, saying he needed renewed public support to push through unpopular reforms that are essential for the country’s economy in a time of financial crisis.

With a budget deficit that could reach 8 percent of economic output this year — well over the European Union ceiling of 3 percent — and a public debt set to surpass 100 percent of GDP, the two main parties are advocating drastically contrasting solutions: Papandreou speaks of a stimulus package to jump-start the economy, while Karamanlis promises austerity.

The popularity of the 53-year-old nephew of late conservative Prime Minister Constantine Karamanlis has been severely eroded by a series of financial scandals and exacerbated by a worsening economy as his New Democracy party struggled with a single-seat majority in the 300-member Parliament.

“It was a toxic combination that has taken place over the last 12, 14 months,” said political analyst Anthony Livanios. “It was the economic crisis, No. 1; it was the slim majority in the parliament, No. 2; and No. 3, the scandals that have created a negative impact of his government, of the Karamanlis government to the public opinion.”

Arguably the most damaging of the scandals was a state land-swap deal with a powerful Greek Orthodox monastery, in which investigators found high-value state property was traded for cheaper monastery land at a cost to the state of about euro100 million. The scandal forced the resignation of two ministers, including one of Karamanlis’ closest aides.

The government also came under criticism for its handling of severe riots in December sparked by the fatal police shooting of a teenager and, more recently, a major wildfire that burned the outskirts of the capital this summer.

The last opinion polls published on Sept. 18 before a pre-election ban went into effect showed the Papandreou’s opposition PASOK party ahead with a 6 to 7 point lead. Papandreou, 57, is a former foreign minister whose father and grandfather were both prime ministers.

Karamanlis’ decision to call snap elections “was a very high-risk move,” Livanios said. “But he thought that he had to do that because he wants a strong mandate in order to (implement) an austere economic policy.”

Karamanlis has pledged to slash spending, crack down on tax evasion and freeze salaries, pensions and public sector hiring.

“I know that I am not pleasant at this moment,” Karamanlis said during a televised debate last week. “I know, as I am told, (I am) shouldering a political cost, but I know what the national interest is and believe deeply that this land truly has a much better future as long as we make the right decisions now.”

He said Greece faces “two difficult years, during which we must reduce public spending, effectively tackle tax evasion and pass structural reforms.”

But Papandreou, whose party — founded by his father, Andreas Papandreou — made its worst electoral showing in 30 years in 2007, insists the only way to boost the Greek economy is through a stimulus package. He has promised up to euro3 billion (about $4.4 billion), pledging to increase infrastructure investment and give public sector employees above-inflation pay rises.

“Whoever claims that Greece’s problem will be solved through salary freezes is totally clueless,” Papandreou told tens of thousands of flag-waving supporters at an Athens rally late Thursday.

“I’m not promising to change Greece in 100 days. But we can provide some breathing space. It is time to change from a country that simply consumes to a country that produces for a change.”

However, he could have trouble selling his recovery plan to the European Commission.

Citigroup economist Giada Giani said the EU trend is toward fiscal consolidation, and that “if Greece would deviate from this pattern and go now for a fiscal stimulus it would stand out among its peers in the EU, and it would be very difficult politically to make this shift accepted at the European level.”

Karamanlis has dismissed the plan as irresponsible, saying the socialists’ promises will cost the country more than euro10 billion.

Papandreou also has pledged to put Greece back on the map of international affairs, saying the current government has not been active enough on the diplomatic scene.

“We had become a country with quite a bit of respect and status, and our voice carried weight. So we need to bring that back to Greece,” he said in an interview.

But neither candidate is expected to radically change any major foreign policy issues in Greece, which is both an EU and NATO country.