The days ahead
What George Papandreou achieved on his recent travels was to put an international spin on the problems of the Greek economy, which simply grew worse due to the international financial crisis and took on even greater proportions thanks to international media attention. Suddenly, the issue went from being about Greece’s lack of reliability – exacerbated by the PASOK administration over the past few months as well – to fighting off speculators. Basically, Papandreou maximized on widespread concerns about a specific part of the international financial system, concerns shared by the heads of state in Europe and the United States, who see the «markets» functioning in such an inflexible way as to undermine the authority of the international political system in dealing with the coordinated efforts of the speculators. In short, the fact is that the issue was already ripe for discussion and the Greek prime minister was able to reap the benefits. Furthermore, the support he mustered in Berlin, Paris and Washington was without doubt also due to the fact that the government launched an austerity program to cut back on public spending, albeit with some delay, that met European Union criteria. However, none of this means that the markets will stabilize nor that peace will prevail on the domestic front, and these are both battles that Papandreou will have to fight in the very near future, and especially when the Greek government wants to borrow more money. That will be the point when we will see whether German and French banks can buy Greek government bonds at a lower interest rate than what speculators would have demanded. If the European Union steps in at that moment, it will mean that the bloc is beginning to form a defense system against the markets and this will signal an important new chapter in its history. In the meantime, Papandreou needs to take advantage of the time he has right now to deal with issues here at home.