The wrong choices at the wrong time
Evangelos Venizelos was being honest when he confessed a few days ago that by accepting the finance ministry portfolio he was possibly sacrificing his ?political prospects.? Venizelos?s future in politics is of interest only to those closest to him, not even PASOK, which only God knows how it will pull itself back together once it leaves power. What is important about Venizelos?s statement is that the finance minister appears uncertain about the success of the fiscal reform program he is tasked to implement.
Venizelos believes that his predecessor Giorgos Papaconstantinou managed the country?s financial problems in a way that was far too technocratic, and he suggested as much. In April and May 2010, Greece, which was at its weakest financially, still enjoyed the advantage in bailout negotiations because the possibility of it declaring bankruptcy — and all the unpredictable and terrible things this could entail for the stability of the eurozone — could have allowed it to negotiate better borrowing terms from the get-go, while the Memorandum could also have been designed in a way that was more functional and less hostile to growth. Instead, Papaconstantinou entered negotiations with the mindset of a true European technocrat and as such also agreed to the second Memorandum.
Venizelos took all this on, but what he failed to realize was that the opportunity for negotiating the ?Greek problem? was gone for good. Greece has already accepted clauses that are extremely binding and the European authorities, as well as the international support mechanisms, have already begun shaping a framework to deal with the problems of the eurozone, or, at least, the problems of the eurozone?s ?south.?
In his first appearance in front of his colleagues in Brussels, Venizelos spoke in political terms. He was perceived as an alien presence and when he realized this, he adopted a different tone. Now he has reverted to a ?political? way of doing things and had the unfortunate inspiration to sign a bilateral agreement with Finland over the provision of collateral. His initiative caused chaos across the eurozone, and now German Chancellor Angela Merkel is trying to restore order.
So far, the behavior of George Papandreou?s government in handling the economic crisis has been too little, too late. The wrong tactics have been used at inappropriate times. It has not yet understood that it accepted the responsibility to function as an implementation mechanism for the decisions made by its lenders.
