Testing the waters

Greek voters go to the polls on Sunday in local elections widely seen as crash test for Prime Minister Papandreou and his austerity program, and the vote is set to be the most polarized Greek election in years.

Papandreou has said he may seek a fresh mandate for his government and call early elections if voters do not back Socialist candidates. But with the Greek economy shrinking and unemployment at 12 percent, many voters are expected to abstain and turn their backs on the political system.

According to electoral law an absolute majority of 50 percent plus one vote is required for a candidate to be elected mayor or regional governor on the first round of elections. This means many municipalities and regions will likely have to hold a second round on November 14.

Populist anger on the right

Antonis Samaras, head of the main conservative opposition, also faces a key leadership test. He refused to back the bailout and now leads the resistance against the austerity program imposed by the European Union and the International Monetary Fund.

But voters should not be fooled by the populist rhetoric that Greece could bypass the reform program, according to Dionysis Gousetis, a political analyst in Athens.

"Conservative leader Samaras promises to reduce the deficit to near-zero, operating with incorrect statistics," he told Deutsche Welle. "As for the left parties, they simply say we should cheat our creditors. They don't see the bailout package as a result of our debt crisis, they find it to be the other way round: The crisis comes as a result of the bailout package, they say. But this is simply not true."

Challenges from within

Polls show Papandreou is more popular than Samaras, but they also point to a defeat for many government-backed candidates in the local vote. Gousetis said he believes Papandreou has no choice but to raise the stakes for his own party.

"Both the right and left opposition have described this vote as a referendum on the government's austerity program," he said. "The prime minister was forced to take the challenge and attack his opponents. He just had to react, for he knew that growing opposition to the bailout deal might cost him his job."

Opposition is growing even within the governing Socialist Party. Deputy Prime Minister Theodoros Pangalos recently implied that debt restructuring for Greece - which may be the only alternative to default - is not completely off the table. Jannis Michas, a close ally of Papandreou who is running for mayor in the city of Piraeus, took this idea and called for restructuring of the city's debt.

New reality for Greece

Maria Xirotyri, a Greek-Australian businesswoman who runs her own consulting business in Athens, said people in Greece need to adjust to a new reality. She said the current troubles are due to previous governments making the wrong decisions, and that today she is trying to make the best out of a bad situation.

"We have reduced our prices and we have created better paying conditions for our customers," she said. "So in terms of the company we are okay. Generally though, the feeling is one of anxiety and worrying and disappointment."

For the government, there is not much reason to be optimistic. Right after regional elections, a group of international experts will visit Athens with a view to the 2011 budget.

At the same time, the EU statistics agency Eurostat may once again revise Greece's deficit figures. Many believe that by the end of the year the government may have to introduce additional austerity measures to meet targets.

Author: Jannis Papadimitriou, Athens (acb)

Editor: Sean Sinico