An end to the Greek myth

Andreas Papandreou's regime was built on corruption. Now the reckoning begins, says Andrew Gumbel

No doubt there will be plenty of Greeks saddened by yesterday's news that Andreas Papandreou has finally resigned as prime minister. After all, he has been the towering personality of Greek politics over the past 15 years, stamping the nation's psyche with his quirky and autocratic style of leadership. The fascination he has exerted extends well beyond the confines of Pasok, the socialist movement he founded in 1974, and indeed has created a political climate that even his opponents have sought to emulate.

But as the Papandreou era ends, the reckoning will inevitably begin. Whoever succeeds the legendary Andreas will find the reality of modern Greece very different from the picture built up by more than a decade of defiant populist rhetoric. True, he has kept his country on the map of world affairs, but at a considerable price. Greece is distrusted and disliked abroad for its obstinate foreign policy and penchant for picking fights with its neighbours. Its political culture is steeped in corruption and clientelism, and its economy is backward and undisciplined.

Greece never had much of an industrial base, relying largely on shipping and tourism for its foreign trade revenue, but unlike other European nations in a similar position 10 years ago, such as Portugal and Spain, it has failed to make up for its deficiencies. Largely this has been the doing of Mr Papandreou, who has run Greece more like a private fiefdom than a country, handing out favours and state funds but failing to improve public services or build a modern industrial base. A formerly agricultural society has flocked to poorly built and polluted cities, only to subsist off a system that is rapidly running out of money. "The myth of Papandreou will disappear. In modern Greece there is no place for myths any more," predicts Dimitris Haralambis, a political science professor at Athens University. "Greece has no strategy, just power. We've become a Third World bazaar."

In the Papandreou version of social and economic progress, the bulk of economic power lies in the hands of around two dozen families, who by turns control or are controlled by the politicians. Much of the economy is thereby reliant on the state for patronage, contracts, tax breaks or subsidies, while enterprises unable to break into this clientistic system have simply disappeared into the black economy, which accounts for as much as half of Greece's wealth.

The political class, meanwhile, has remained firmly in the grasp of the ruling party, and the ruling party in the hands of its leader. A telling symptom of the near-feudal power structure is that Papandreou's wife, Dimitra, has been head of his private office, his son George is education minister, and his wife's cousin George Liani is sports minister. Friends and relatives of the influential are routinely appointed to civil service jobs, regardless of their qualifications, with the result that many key governmental tasks, such as financial management of public works projects, are skimmed over or ignored altogether.

This nepotistic power structure managed to flourish during the Eighties, when Greece was still a frontline state in the Cold War and Europe's economies were all booming. In the past two years, however, even Mr Papandreou has been unable to conceal the awkward truth: that the country is primitive, desperately short of money and reliant almost entirely on the European Union for its future. Thus Greece has been meekly - and quite successfully - following a strict austerity programme to cut public spending, bring inflation under control and initiate a privatisation programme. In return, the EU has ploughed in funds to finance such basics as proper roads, a metro system for Athens and a modern airport.

Such dependence on the outside world is not something that the Papandreou system has swallowed easily. Many of the EU development projects are yet to get off the ground because the government has taken too long apportioning the various contracts. Some deals, such as the airport project at Spata, outside Athens, or the Rio-Antirio bridge across the Hellespont, have been renegotiated from scratch since Pasok returned to power. Two months ago, the public works minister, Costas Laliotis, admitted that two trillion drachmas (more than pounds 5bn) in development funds were yet to be disbursed and risked being lost altogether if Greece did not hurry up.

The privatisation programme has also progressed at a snail's pace, partly because of unrealistic expectations of the price that could be fetched by state corporations such as OTE, the telecommunications company, and partly because of Greece's peculiar structural problems. When the Skaramanga shipyard came up for sale last September, it turned out that there was no property deed for at least half the terrain it covered because it had been built over a landfill. A deal to sell the yard to an international consortium thus fell through.

Even Greece's foreign policy has only reluctantly become more conciliatory. Last September, the country signed an accord to end its dispute over the name of the former Yugoslav republic of Macedonia on its northern border, but only after three years of sabre-rattling that seriously risked destabilising the underbelly of the Balkans. It has barely concealed its pro-Serbian sympathies in the Bosnian conflict, and only latterly offered to contribute to the international peace-keeping effort.

Within the EU, Greece is perceived as looking out only for its own interests, and showing ill-humour about it into the bargain. Mr Papandreou did not help matters when he skipped an EU ambassadors' lunch in Athens on grounds of ill health, only to pop up at a lunch for Arab ambassadors a short time afterwards. Right up to the end, his maverick, anti-Western streak has never really disappeared.

Such problems will not evaporatewith his resignation. Even if his successor is a serious moderniser, such as Costas Simitis, the main anti-Papandreou dissident within Pasok, attempts at reform are likely to meet fierce resistance from the clientelistic structure established over the past 15 years, and from the pro-Papandreou lobby still in control of the ruling party machine.

There is also a danger that an excessively austere economic programme could spark serious social unrest in a country as unevenly developed as Greece. At the moment, many ordinary people survive thanks to either the state sector or the black economy. If the former is cut back and the latter savaged by strict tax evasion laws, the results could be very painful indeed. Nine months ago, farmers, small shopkeepers and some state workers staged a series of lightning strikes in protest at new tax legislation. Last November, Athens was rocked by the biggest university riot in 20 years and a five-day orgy of violence at the Korydallos prison. These are worrying portents for the future, and the new Greek prime minister will have a delicate balancing act to perform. He is unlikely to feel much gratitude for the confused, corrupt and volatile legacy that Mr Papandreou has bestowed upon him.