As a child, the Minnesota-born Prime Minister of Greece, George Papandreou, traversed the U.S. in a station wagon with his family, bunking in roadside motels, living like a typical American. As a young man in Greece, he used his martial arts knowhow to subdue two men who had smashed an ice cream cone in an elderly man's face. As an adult, the Bob Dylan fan wooed his wife, Ada, with Greek love songs in a late-night window serenade.
These three experiences show the personal traits Papandreou is using to coax Greeks into changing how they live and achieving financial stability. Already, the scion of the Papandreou political dynasty has instituted wage cuts, agreed to hike the retirement age, and declared war on the ingrained corruption and tax dodging that have hobbled the economy. If any of it is to stick, Papandreou will need his common-man sensibility to understand the pain average Greeks are feeling, his instinct for doing the right thing to keep austerity in place, and his gift for seduction to persuade those around the world who doubt his country's seriousness.
"We saved Greece from default," Papandreou said in an interview in New York on June 20, where he was heading a meeting of the Socialist International, an organization of social democratic, socialist, and labor parties. "If we don't change Greece, we'll be back here at the edge of the precipice again some years down the road. And I think that's something people really understand."
In October, Greece disclosed that its budget deficit was likely to be more than four times the limit allowed under rules set up to protect the euro. In May, Papandreou clinched a rescue package totaling €110 billion ($135 billion) in loans from the European Union and the International Monetary Fund. His actions thus far have inspired some confidence around the world that all is not lost for his country. Papandreou "gives people the feeling and the trust that they can invest in helping Greece because there is somebody trustworthy," says Yossi Beilin, former Justice and Economy Minister for Israel and president of Beilink Business Foreign Affairs, who has known Papandreou for about 20 years. "He is a guy who would like to solve problems and compromises and find solutions, without compromising himself."
On June 11 in a Viennese palace decorated with frescoes depicting the deeds of Hercules, Papandreou surprised a roomful of skeptical bankers with a speech that seemed to accomplish the impossible—changing some minds about the future of Greece. Over a dinner of wild char, filet of beef, and Welschriesling wine, Papandreou promised more than 400 bankers, lawyers, and regulators that he would bring Greece through its debt crisis even if it cost him his job. When he was finished, the group rose for a standing ovation. Deutsche Bank's (DB) chief executive officer, Josef Ackermann, who last month said he doubted Greece would be able to pay back what it owes, told the room that Papandreou had convinced him otherwise.
Papandreou says losing his job for making unpopular decisions would be a small sacrifice compared with the trials endured by his father and grandfather, both Greek Prime Ministers, to keep the Mediterranean country free for democracy. His view fits a sense of public responsibility that advisers, family, and longtime friends say led Papandreou reluctantly into politics. "My father was in jail twice in his life for fighting a dictatorship, my grandfather six times, and exiled a number of times," Papandreou says. "He was almost executed basically fighting for democracy. So, you know, this has been part of the tradition."
In 1967, when he was a teenager, Papandreou was threatened at gunpoint when the Greek army seized power and came to the family house looking for his father, Andreas. Papandreou's maternal grandfather, a tough World War I veteran from Chicago, refused to let them in, Papandreou says.
"There were these guys with guns, and he said, 'Get out of here,'" Papandreou recalls. "And he closed the door on them, as a good soldier would. So they broke the door down."
George, armed with a shotgun, raced with his father up to the veranda on the roof. Realizing they were surrounded, he cached the weapon, and his father hid. Then one soldier came through the veranda door and held a machine gun to 14-year-old George's throat, asking the whereabouts of the father.
The senior Papandreou emerged from hiding and surrendered. He was beaten with guns and rifle butts, recalls Papandreou's brother, Nick, 53, a former World Bank economist turned writer who lives in Athens. "That was the moment that turned George from an extrovert to an introvert," Nick says. "It took George a long time to get over the trauma. He was more quiet after that. He seemed to think of the world differently."
Firepower reemerged, this time metaphorically, when Papandreou hectored the EU to provide support for Greece. He called in March for a "gun on the table"—meaning tangible measures from the EU—to halt bond speculators who were pushing up the country's borrowing costs. On Apr. 23 he used a televised address to call for the activation of a financial lifeline of as much as €45 billion, an unprecedented test of the euro's stability and European political cohesion.
Speaking from the remote island of Kastellorizo, population 430, Papandreou called on Greeks to make it a national priority to turn around the country. Standing before a bright blue sea, he evoked Odysseus, who battled monsters and vindictive gods to return to his island of Ithaca. Greece, he said, was "on a new odyssey."
Tough talk and rhetorical flourishes only count for so much. More than half of Greeks surveyed in June say they believe the country could go bankrupt, according to a poll by MRB for Mega TV. "There's a saying that politicians are made by events," says Stefanos Manos, a former Economy Minister. "The events have forced Papandreou's hand, to do things I am dead certain he would never have done on his own."
A Different Path to Power
Before being elected Prime Minister in 2009, Papandreou ran twice and lost. In a 2007 trouncing at the hands of Kostas Karamanlis, another scion of a political dynasty, Papandreou scored the lowest vote total for his party in a quarter century of Greek elections, and then had to fend off an internal challenge for party leadership. His eventual victory last year brought the Panhellenic Socialist Movement, or PASOK (the party his father, Andreas, founded in 1974) back to power after five years in opposition. "This guy is very resilient, and people tend to underestimate him," Finance Minister George Papaconstantinou, says. "In 2004 when we lost the election and in 2007 when we lost again, very few people were betting on him becoming Prime Minister."
For much of his life, Papandreou was preoccupied not with ruling Greece so much as merely returning to live there. Born in St. Paul, where his father was an economics professor at the University of Minnesota, George Papandreou lived in the U.S., Canada, Sweden, and Greece for much of his early life, attending eight schools in four countries over 12 years. Politics was always a part of his life; in Minnesota, he says his father campaigned for civil rights pioneer Hubert Humphrey.
During his years at Amherst College in Massachusetts, George would hang out with friends after dinner drinking a little ouzo and talking about Watergate and the Vietnam War, according to dorm mate Henry Boom, now director of the tuberculosis research unit at Case Western Reserve University in Cleveland. The two bonded over their shared experience of having an American mother and foreign father, says Boom, whose father is Dutch. He still talks to Papandreou several times a year.
With a father who earned a PhD in economics from Harvard University, Papandreou chose to study sociology. Compared with economics, he says, it "brings a little less hubris, let's say, about what you can do and what you can't do." He earned degrees from Amherst, Stockholm University, and a master's degree from the London School of Economics. "I think it was also a normal reaction, you know, I might do something different," Papandreou says. "Although in the end, I followed politics."
Papandreou's time in Sweden attuned him to northern European ideas of social dialogue and consensus that shaped his management style and political philosophy. "He's one of these people who actually believes in the process of dialogue," says Papaconstantinou. "Not just as a means to an end, but that it's an educational process, which sometimes is very tiring."
In Sweden, and then in Canada, Papandreou also got a firsthand look at functioning, if costly, welfare states. "I think vilifying the welfare system—and that's one thing I would say here in the U.S.—as the culprit for sovereign debt is wrong," Papandreou says. "There are countries that are very competitive with very strong welfare systems, the Nordic countries or Canada, Australia, just to give a few. They don't have generally the problem of sovereign debt."
Two of the Nordic countries Papandreou lauds do pay the highest taxes among 30 of the member countries of the Organization for Economic Cooperation & Development. Total tax revenue in Sweden accounts for an estimated 47.1 percent of economic output, while Denmark's is 48.3 percent, according to the OECD; in the U.S., it's 26.9 percent and in Greece, 31.3 percent.
First elected to Greece's Parliament in 1981, at age 29, George agreed to run only after his brother convinced him he had a real chance to change the country. Papandreou served in the education and culture posts under his father and as junior foreign minister. In 1999 he was promoted to Foreign Minister after his predecessor was forced to resign over a botched attempt to harbor Abdullah Ocalan, the Kurdish rebel leader that Turkey blamed for the deaths of more than 30,000 people.
As Foreign Minister, Papandreou turned around relations with Turkey. He built close personal ties with his Turkish counterpart, Ismail Cem, and when an earthquake struck Turkey in 1999, Papandreou was quick to send rescue teams. When an earthquake struck Greece three weeks later, Turkey reciprocated.
As a result of his upbringing, Papandreou is fluent in English and Swedish—and is occasionally ridiculed at home for lapses in Greek grammar. On May 6, when he was again derided for clumsy speech during a debate over the European rescue package for Greece, Papandreou fired back: "I am a Greek of the diaspora not because I chose it but because my father found himself exiled twice." It was a rare outburst for a man who friends describe as calm and cool. "He is always soft-spoken, pensive, has a gift for listening to others," says Richard Parker, an economist at Harvard University's Kennedy School of Government who talks with Papandreou several times a week as an informal adviser.
As a product of the 1960s, Papandreou has affinity for certain hippie values that also invite mockery from members of the press. "He seems to believe that no man is evil, every man is good, provided you help him to see the good," says Stefanos Kassimatis, a political columnist at the Greek daily newspaper Kathimerini. "'Love will find a way.' Spare us, please."
Papandreou's winning campaign last year seemed to take its cue from U.S. politics. "Roll up our sleeves" was a motif of his campaign, while one of his slogans was "Together, we can," an obvious nod to Barack Obama's "Yes we can." "I can see why people compare the two, the quiet determination and substance they have is very comparable," says Kemal Dervis, a Minister for Economic Affairs for Turkey when Papandreou was Greece's Foreign Minister.
The question today is whether all aspects of the man put him in a position to make good on his commitment in Vienna. Papandreou agrees with those who say this crisis will define his country. "It's a moment where people looked at the edge of the cliff and said, 'You know, something's wrong here,'" he says.
At the end of Papandreou's speech in Vienna, Dimitris Paraskevas, an Athens lawyer, stood up and said the vast majority of people in the audience didn't believe Greece would pay its debt. Before responding, Papandreou scanned the frescoed ceiling, looking, he later said, for baby Hercules wrestling snakes. Then he answered calmly. "We will honor our contracts with the financial community," he said, "and yes, we will pay our debt."
With Simon Clark