Greece's Prime Minister George Papandreou speaks during a meeting with Greek President Karolos Papoulias, at the presidential house in Athens on Saturday, Nov. 5, 2011.KOSTAS TSIRONIS/AP
Greek Prime Minister George Papandreou has agreed to surrender his job as part of backroom talks to form a new political coalition that will shepherd his country through a painful debt bailout.
That was the only agreement to emerge from a weekend of political wrangling in Athens, however, as the economy slides toward collapse. Greeks are transferring their money abroad, closing businesses, and expressing doubt about their future.
Agnes Psathas, 50, a marketing consultant, took her three-year-old twins to a birthday party in an upscale neighbourhood of Athens on Sunday, and noticed that the parents were already talking about how to get their preschoolers educated abroad, so their careers will not depend on the dismal Greek economy.
"That's how crazy it's getting," Ms. Psathas said. "People are worried their kids' lives will be destroyed if they stay in the country."
The wider implications of a Greek meltdown are expected to dominate a meeting of European finance ministers on Monday, amid fears that the bleeding could spread to Italy and the rest of southern Europe. The ministers had hoped the Greek leadership crisis would be resolved before the meeting, pushing Greek politicians to form a so-called "national unity" government that would include all major factions; such a broadly based transitional cabinet could have absorbed some of the political pain involved in the new austerity measures, and might have decreased the likelihood that financial reforms would be reversed after the next elections.
But it's been hard to get Greek politicians to associate themselves with an interim administration that will likely get forced to make deeply unpopular moves. Talk radio in Athens was full of angry rants on Sunday night about the closed-door discussions that could commit the country to decades of belt-tightening in exchange for debt relief.
"For Greece, tonight will last 30 years," one caller said. Another denounced all of the politicians involved in the process as "traitors."
A third caller dedicated a song to the new government, a union ballad from the 1930s that includes the lines: "Don't listen to their lies / poor folks ain't got a chance / unless they organize."
That disenchantment has also been reflected in the flight of capital from the country in recent weeks. The New York Times, citing banking sources in Athens, estimated that €10-billion to €20-billion were whisked away to safer countries in September and October, escalating a trend that saw €46-billion in deposits leave Greek banks since January 2010.
The wealthy have reportedly been paying cash for homes in London, while those with more modest incomes are stuffing euro notes into safe-deposit boxes.
Such actions are a hedge against Greece going bankrupt, failing to get an $11-billion instalment from a bailout plan agreed earlier this year, now withheld temporarily, before the government runs short of cash on Dec. 15.
Mr. Papandreou is expected to continue talks on Monday with the main opposition party to form a new cabinet headed by somebody other than himself. If they can agree on an entire cabinet on Monday, the group of new ministers could be sworn in the following day. That would give Greece a functioning government by Friday, after a mandatory three days of parliamentary debate culminates in a confidence vote.
The two sides tentatively agreed to hold new elections on Feb. 19.
Such a new government may not include all political factions, as hoped, but with the coalition of the two biggest parties could easily get the 180 votes necessary to pass the financial reforms through the 300-seat parliament.
Several hurdles would remain, according to a briefing note distributed to Greek ministers on Sunday: among other things, introducing a new budget by Nov. 20; getting a new bailout plan approved by the International Monetary Fund on Nov. 21; obtaining $30-billion to recapitalize Greek banks before the start of January.
Perhaps more fundamentally, Greece also needs to restore confidence in its brand. Ms. Psathas, the marketing consultant, says her experience in the executive suites of major companies – BMW, Compaq, and Hewlett-Packard, among others – has made her sensitive to the financial implications of a bad reputation.
"I had a client who cancelled his trip here last week because he was afraid," Ms. Psathas said, laughing. "I mean, really. This is not a war zone."
Another client from an international firm worked hard to win a major contract from a Greek electrical utility, she said, only to be informed by his bosses that the company was not willing to take the risk of doing business with an unstable country. She sighed heavily, and continued: "All of this spotlight on Greece has made us seem lazy, like the pigs of Europe."
Born in Windsor, Ont., the Greek-Canadian worked in several countries before starting a consultancy in Greece in 2002. The past decade has seen some improvements that often get overlooked in the crisis, she said; a trip to the airport sometimes took three hours before a flurry of construction before the 2004 Athens Olympics improved the city's infrastructure, including a rail link to modern terminals.
"We have a creative task now, to tell a new story about ourselves," she said.