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Giorgos Papakonstantinou

Giorgos Papakonstantinou is as much European as he is Greek. For a long time, he was what Greek people call a "Greek from the outside" - he studied in London, then in New York for a few years as a postgraduate and went back to London, where he got his doctorate. He then spent 10 years working for the Organisation for Economic Co-operation and Development (OECD) in Paris, before heading back for Greece in 1998 and engaging in politics. A member of the Panhellenic Socialist Movement (PASOK), he served as an advisor for different ministers and commissions, before being elected in 2007 to the national parliament and in 2009 to the European parliament. His courageous behaviour in the recent Greek and European crisis makes him our latest Top European.

In October 2009, Giorgos Papakonstantinou was appointed Finance Minister in the new Greek government of George Papandreou. It was obvious at that point that Greek people were not happy with the state of their country, or with their politics - they had just voted massively against the previous leading party - and the consequences of the financial crisis were looming on their country. But the most difficult part was still to come.

The crisis

As a matter of fact, the Greeks had every reason to be unhappy with their situation. Greece's problems had been going on for all too long, and their economic consequences were not to be overlooked. At the time of their entry into the Eurozone in 2001, they only pretended to comply with the economic criteria of the E.U., and it later became known that their deficit had never, in fact, been under the 3% official limit... and when this high yearly deficit, causing huge amounts of debt, was hit by the global financial crisis, the entire financial credibility of Greece became questionable. At that point, some voices proclaimed the failure and downfall of the Eurozone, and asked for a quick exit - Giorgos Papakonstantinou, however, advocated staying in a system that was admittedly not perfect, but which he thought could get better with time and a more rational form of integration.

First of all, though, we should try to understand why Greek debt suddenly became such a problem for the whole European economy. Every country in our time is indebted enough to depend a lot on its present and future creditors. Problems arise when a loss of credibility leads a country to see all further loans getting a lot more expensive, or even refused, making the whole situation even more difficult. This is what happened to Greece and now to Ireland more recently, after it decided to shoulder its private banking sectors' debts. The immediate perspective for a country is that it will finally be forced into bailout, which in turn would ruin its credibility for decades, and with it its chances of economic growth - and ultimately the living standards of its citizens. In the case of Greece, being part of the Eurozone is on one hand an opportunity, because it gives the country reliable and helpful partners with common interests - but in that case, just as in everyday life, close and trusting partners can become a very heavy burden if they realise that they have been lied to all along, and that they could personally suffer from your mistakes... Which is why Greece needed leaders who would make it a trustworthy partner, in order to find a non-destructive way out of the crisis for Europe.

Papakonstantinou's remedy

So as finance minister, it was Giorgos Papakonstantinou's job to face the very risky situation and restore a sustainable economic system in Greece. He chose not only to answer the immediate crisis, but to impose deep reforms on the whole failing system. When he announced a national deficit of 12,7% at the beginning of 2010, he broke with a long tradition of lying in Greek statistics, although he knew he risked making the whole market panic, not to mention the anger of his political partners, like Germany. In an interview with Newsweek in April 2010, Papakonstantinou insisted on "changes of mentality, changes in our political culture".

Papakonstantinou's constant will to acknowledge and fight against corruption and against the systemic causes of Greece's weakness certainly helped keep the country from falling over the edge.

But transparency and longterm systemic changes were not going to be enough at that point. Past decisions forced him into the impossible task of maintaining a very difficult and almost artificial economic integration, and of protecting his people. While Greece received a life-saving loan from its European partners, it was not and could not be, under current European guidelines, exempted from any later refunding obligation. Subsequently, under Papakonstantinou's finances, Greece had to be subjected to a drastic budget treatment: unpopular measures included a decrease of 15% on some public salaries and 10% on pensions and a surge of indirect as well as direct taxes. This shocking medicine got lots of public workers onto the streets, and Greece even had to face infamous riots in the summer of 2010 - the whole government had a very hard time keeping the state together, and Greece was nearly sold for bailout and/or civil implosion by some pessimistic analysts. Against the general feeling of injustice shared by a great number of Greeks, though, Papakonstantinou's constant will to acknowledge and fight against corruption and against the systemic causes of Greece's weakness certainly helped keep the country from falling over the edge.

It is a sign of the times that our Top European of this month is not bursting with ideas about the founding of a new economy. Instead, he is dependable and strong enough to find a way out of crisis-centred politics, towards maybe someday empowering the EU to build anew and shape sustainable economies for the future. But as of now, it is not yet even possible to take stock of the reforms put in place by Giorgos Papakonstantinou and still at work in Greece. Fighting corruption, for example, is not a task to be accomplished in a single year. Nor is it the first time that a Greek government has promised drastic change. Even bringing the budget up to reasonable standards should take until 2013. But Giorgos Papakonstantinou seems to be doing a much better job than his predecessors: Greece has stayed in the Eurozone and managed to avoid bailout as well as social downfall. Papakonstantinou's own assessment of European reactions to a one-sided shock is not all that negative: "the reaction was long in coming," he said in an interview with the French newspaper Libération, "and had it come earlier, it would have cost less, but it came all the same, and this crisis should serve as a lesson to build a more efficient economic governance for Europe tomorrow." So this is the next challenge for our Top European, to turn the present crisis into an opportunity to build a different form of integration in Europe - a form of integration which would make more political and economic sense.

Cover illustration: Laura Hempel

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