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As Elections Approach, Greece Teeters On Austerity Question


Greece is six days from electing a new Parliament with the EU-imposed austerity regime for the country at stake. Greece owes Europe about $100 billion, a debt it appears hard-pressed to pay off. And a leftwing party, Syriza, is leading in the polls, promising an end to the unpopular austerity program which was a condition for keeping the country financially afloat. Well, joining us today is former Prime Minister George Papandreou who negotiated that deal with Europe and who just this month formed a new party, The Movement of Democratic Socialists. George Papandreou who grew up in the U.S. and Canada joins us from Athens. Welcome to the program once again.

GEORGE PAPANDREOU: Thank you very much, Robert.

SIEGEL: And we should say according to the polls in Greece, both your old party, the Socialists, and your new party are polling pretty low in single digits. Why at age 62 start all over again with a new party?

PAPANDREOU: Well, even though we've gone through major sacrifices and the country now has a primary surplus - we've cut our deficit - we have major changes in the country to be a viable one. I believe that that was where the real issues were - deep reforms and bringing more transparency a more just tax system, justice system, a whole political reorganization of the political system and fighting waste and graft. These are the issues which I fought for. Just because were talking more about austerity than reform, we lost this dynamic for reform. So I wanted my voice and my movement's voice to be heard. That's where I think the prospect of a viable and prosperous Greece is.

SIEGEL: But are you saying that in terms of fiscal policy, that the European austerity program is now working or has worked and has succeeded?

PAPANDREOU: I think there was one major flaw with the - at least one major flaw with the fiscal policy. An emphasis from the European Union was on austerity rather than on reform. We were able to succeed actually with huge sacrifice by the Greek people. We now have the fastest adjustment amongst OECD countries. We have a primary surplus from a deficit that was 15.6 percent of GDP. So we have made major strides, but we've paid for that because the dynamic of changes which we started in 2009 has slowed down. Vested interests still hold the country back. Actually, that is the reason why we were in dire straits in 2009 and 2010. So I want to get down to the root causes of this crisis rather than looking only in the symptoms. The deficit was a symptom. It wasn't the root cause. And that's why I've decided to build up this movement.

SIEGEL: In 2011, having inherited the Greek economic crisis, you had to resign as prime minister because of your proposal to put the European Union's austerity plan for Greece up for a referendum. The Germans and the other Europeans were furious about that. Do you now regret that idea or in hindsight, does it strike you as having been a wise one?

PAPANDREOU: I think we lost a great opportunity not going through the referendum in Greece. The program would have been owned by the Greek people if they had said yes, and I believe they would have. But in any case, it would have been their decision - the Greek people's decision. I also now am proposing that whatever deal we strike for this last phase, if you like, of this bailout policy or an adjustment policy - the negotiation with the European Union - our European Union partners that we actually say yes, we will make major changes in order to have, from your side, much lessening of the burden of the debt which is very, very heavy on the shoulders of the Greek people and no more austerity, but simply responsible fiscal policy. And we should put that agreement to a referendum now.

SIEGEL: What does an end to the austerity regime realistically mean at this stage in Greece? Does it mean restoring public sector jobs? Does it mean giving raises to people who haven't had raises or restoring pensions? What exactly would happen?

PAPANDREOU: What would happen would be that the surplus we are now accruing would not go into paying back the debt, but would be able to be plowed into the economy by building - let's say the necessary infrastructure to help reorganize our tourist industry, which is of course a thriving industry but can be much more competitive to help the poor in Greece, certainly, because they have major problems. We have a lot of people under the poverty line. I think we need to streamline - further streamline the Greek state, make it a much more efficient, much more accountable, much more transparent and that was what I started.

SIEGEL: Does streamline mean still more cuts to the public sector in terms of jobs?

PAPANDREOU: No it doesn't mean - I don't believe that's where the problem is. I'll give you an example. When we put in electronic prescriptions for medical - in the medical sector, we cut the costs of medicine by 30 percent to the pension system. That's - two years of that was as much as we now get by all the property tax we've put on our citizens. So certain cuts - or not cuts but streamlines and reorganizing, and that's where we'll find the right money to plow into the Greek economy. But we need to have our European friends and partners help us in lightening this burden.

SIEGEL: You mentioned changing the - really reforming Greek politics and the relationship between Greek governance and the economy. You're a former Prime Minister, your father was Prime Minister, your grandfather and namesake was Prime Minister. Can you sympathize with those Greeks who say that if we're going to go for root causes, perhaps we should have an entirely new group of people - an entirely new group of faces and ideas running Greek government?

PAPANDREOU: I'm all for bringing in new people, and I actually brought in new people in my government, too. But don't forget, when you talk about the Papandreou family, we were always fighting for reform, and we paid for it. My grandfather fought for democracy in Greece and went to jail six times in his life and exile. My father fought for democracy and reform in Greece and he was exiled and jailed twice in his life. I fought for reform and I had heavy winds against me, particularly when I decided that I needed to pass the reforms through a referendum. The establishment certainly didn't like what I was trying to do. So we're on the side of fighting for reform and changes in Greece, and I believe that fight, we still need to continue. And we should use this opportunity - this crisis now to fight for these reforms and make sure that in fact, we do establish a functioning democracy.

SIEGEL: Former Greek Prime Minister George Papandreou in Athens. Thank you very much for talking with us today.

PAPANDREOU: Thank you very much, Robert. Transcript provided by NPR, Copyright NPR.