Prime Minister George Papandreou of Greece Undone by Economics

By LANDON THOMAS Jr. Published: November 7, 2011

Kostas Tsironis/Bloomberg News

Prime Minister George A. Papandreou entered office in 2009 only to discover that the Greek deficit he had inherited was twice the size the previous government had claimed.

ATHENS — George Andreas Papandreou, elected prime minister of Greece in 2009, is a son and grandson of popular former prime ministers. But two years later, with Greece on the verge of default and a possible exit from the euro, not even the Papandreou name could save him.

Andreas G. Papandreou Foundation, via Associated Press George A. Papandreou with his father and grandfather, both also prime ministers.

His commitment to step down as prime minister is not only a devastating blow to one of the more enduring political dynasties in Europe. It may also force a major overhaul of the old-style Socialist Pasok party that was created by Mr. Papandreou’s father and which served as a major roadblock to many of the younger Papandreou’s proposed economic and political changes.

“I think that Mr. Papandreou wanted to reform, but his party failed him,” said Yiannis Boutaris, the mayor of Salonika and one of the few politicians to achieve success outside the nepotism so prevalent in the Greek party monoliths. “He could be forgiven many mistakes because of his name, but the last one — calling the referendum — that could not be forgiven.”

That may be a generous assessment. There are many Papandreou critics who claim he shirked an opportunity to grab history by the lapel and shake out all the elements of an entrenched Greek state that, through decades of wasteful borrowing and spending, had brought the nation to the verge of bankruptcy.

By most accounts, Mr. Papandreou, 59, lacked the relentless political drive that marked his father and grandfather.

His youth was peripatetic, the product of his father’s own time in political exile. He was born in Minnesota and spent formative years in Berkeley, Calif.; Canada; and Sweden.

He supported 1960s- and 1970s-era movements like environmentalism and the legalization of drugs, causes that harked back to his guitar-playing days enmeshed in the counterculture at Amherst College in rural Massachusetts. His roommate there, Antonis Samaras, is now the leader of the New Democracy opposition party and agreed to join a coalition government only after Mr. Papandreou stepped down.

It was not until the early 1980s, when Mr. Papandreou joined his father’s Pasok party as a member of Parliament, that he began to develop his own political identity.

Elected in October 2009 after five years of New Democracy rule marked by corruption scandals, violent riots and a growing sense of economic uncertainty, Mr. Papandreou was little prepared for the profound shock that the Greek deficit he had inherited was twice the size the previous government had claimed.

By December 2009, the failure to keep Greek borrowing in check had exploded into an international issue that would tear at the fabric that held the euro zone together.

Trained as a sociologist, Mr. Papandreou had to quickly get up to speed on such arcane matters as credit default swaps and the difference between voluntary and mandatory defaults. And while he understood, at least theoretically, how urgent it was for Greece to cut its bloated public work force, actually doing so proved almost impossible for a man who owed his political position to his party’s deep connections with the powerful unions for civil servants.

The son of an American mother, he is described as a meticulous and exact man who favors regular jogs, technical gadgets and never-ending lists of options and things to do. He is more fluent in English than Greek — a fact that has drawn scorn in the hypercritical Athens news media.

And from the beginning of his term he has reached out to vast number of advisers in the United States and Europe — including Labour politicians in Britain, former economy ministers in Turkey, the Nobel Prize-winning economist Joseph Stiglitz, who is American, and any number of academics who captured, at least temporarily, his intellectual fancy.

But his critics say that while he was on the receiving end of numerous proposals, he was never really able to develop his own true voice. He could never, they say, make the case to his austerity-ravaged people that he truly spoke for them.

He could not rise to the level of a Churchill in 1939, said Yanis Varoufakis, an Athens-based political economist who years ago was an adviser to Mr. Papandreou. “At a moment like this you need leadership.”

To be sure, Mr. Papandreou devoted his full energies to trying to find a solution to Greece’s debt crisis, all while under the crushing weight, his friends and family members say, of being the third Papandreou to lead Greece.

But he could not reach his people the way his father, Andreas — who spent his years in the United States as a vocal dissident of the Greek military regime — was able to.

“Andreas came from the outside — he spoke directly to the people,” said Nick Papandreou, the prime minister’s brother. “George has been in Greek politics for 30 years. The way he expresses himself is cushioned by this.”

But, his brother adds, the elder Mr. Papandreou, driven more by ideology rather than pragmatism, might not have been so determined to carry out the painful changes that George was convinced were necessary to bring Greece out of the past.

Indeed, during the tense negotiations with his European partners, Mr. Papandreou showed himself to be a relentless bureaucratic tactician, seeking every last advantage to get the money he so desperately needed from Europe.

Early in the talks, for example, he opened up a back channel to Dominique Strauss-Kahn, then the president of the International Monetary Fund. “Why don’t we turn to the I.M.F.?” Mr. Papandreou told intimates. “They, too, will impose austerity — but at least we will get the money.”

Mr. Papandreou’s final ploy — the threat that Greece might leave the euro — proved to be his undoing.

George Papaconstantinou, Mr. Papandreou’s finance minister until he was forced out last June, says the prime minister should be judged against the situation he inherited, which left him little room for maneuvering.

As for any overriding lesson Mr. Papandreou may have learned over the past two years, Mr. Papaconstantinou offered a one-word answer: “Economics.”

Prime Minister George Papandreou of Greece Undone by Economics - NYTimes.com