Samaras’s Undoing Came Fast After Praise From Merkel – Businessweek

A year ago, Antonis Samaras was on top of his game: the economy was exiting a six-year recession, borrowing costs were falling and Greece had just assumed the European Union’s rotating presidency.

Now, the 63-year-old prime minister will leave office with Greece’s future in the euro as uncertain as when he came to power in June 2012. His New Democracy party lost Sunday’s election to Syriza, which harnessed public anger about wage cuts and tax increases that Samaras imposed to restore trust in Greece’s shaky finances and its commitment to the currency.

“Samaras is insistent and showed political courage, but he’s not a statesman,” said Thanos Veremis, a professor emeritus of political history at Athens University. “He filled his government with uninspiring people. He missed his chances.”

The change in fortunes over a matter of months reflects external and domestic forces that limited his room for maneuver. For Samaras the risk-taker, political miscalculations combined with economic reality to seal his fate.

Up until late May, Samaras was riding high. As he took over the EU’s presidency, he told dozens of correspondents visiting Athens that his ruling coalition with the socialist Pasok party was “stable.” He also said that the toughest budget decisions needed for Greece to keep aid flowing under the country’s international rescue had already been made.

Merkel Praise

Confidence within his government grew in April, when Greece sold bonds for the first time in four years and the European Commission confirmed the nation’s budget surplus before interest payments for 2013, a year ahead of schedule.

The sale of debt prompted German Chancellor Angela Merkel, on a visit to Athens, to hail Greece’s “step toward normalcy.” The surplus made Greece eligible to trigger a euro-area pledge in 2012 to consider “further measures and assistance” to ease Greece’s debt mountain.

Then things started to sour. On May 25, Syriza won elections to the European Parliament, prompting Samaras to shuffle his cabinet by appointing several obscure New Democracy figures who gave the government a more populist bent.

This raised doubts in Greece about his willingness to tackle the underlying causes of the country’s economic feebleness and unemployment still above 25 percent.

“There were populist changes in the government after the European elections,” said Ioannis Papageorgiou, 83, an Athens resident who operates two eyeglass stores in the city. “The changes stopped. They should have continued with the reforms.”

‘Tough Cookie’

At the same time, Samaras dented his relations with Greece’s international creditors by ousting the country’s tax czar, Haris Theoharis.

A British-educated software engineer and a former vice president at Lehman Brothers Holdings Inc., Theoharis was 17 months into a five-year term as Greece’s secretary general for public revenue. He had been praised by European officials for improving the country’s chronically weak tax-collection system.

Theoharis was forced out after pursuing claims against 300 high-net-worth individuals, provoking concerns abroad about the commitment to crack down on deep-rooted tax evasion.

“That was a shocking act,” said Veremis, the academic. “Samaras proved that he didn’t want anybody who was truly independent in the job. Theoharis was a tough cookie.”

The European Commission expressed “serious concern” at the time about the sudden departure of Theoharis.

Rushed Exit

Samaras pledged to forgo scheduled aid in 2015 and 2016 and then failed to gain support from European partners and the International Monetary Fund for a final disbursement of funds last year, prompting Samaras to negotiate a two-month extension until the end of February.

“It was a mistake to say he wanted to exit the program early,” said Chryssi Giannoulaki, a 52-year-old psychiatrist who lives in Athens. “It was rushed.”

When he gained more time to win the final aid payout, Samaras decided to bring forward by two months from February the process for the Greek parliament to choose a new president of the country.

After nominating Stavros Dimas, a New Democracy veteran and former EU environment commissioner, to become Greek head of state, Samaras was unable to garner the supermajority needed in parliament to install Dimas in the post. As a result of that stalemate, Samaras was forced by law to call the Jan. 25 general elections that his New Democracy lost.

“I’m handing over a country that’s part of the EU and the euro,” Samaras said after conceding defeat to Alexis Tsipras’s Syriza. “For the good of this land, I hope that the next government will respect these achievements.”

Party Future

Samaras’s fate as leader of New Democracy is up in the air. His relationship with the party has had its ups and downs.

He abandoned New Democracy two decades ago when he founded his own party to capitalize on a dispute with the former Yugoslav Republic of Macedonia over its name. The issue is sensitive for Greeks because of concerns it implies a claim on a northern region in Greece that’s also called Macedonia.

A defection in the Greek parliament to the new party led in 1993 to the toppling of the New Democracy government in which Samaras had served as foreign minister.

He rejoined New Democracy about a decade later and took over as leader after the party was ousted in 2009 elections by Pasok. Samaras spent the next two years criticizing the European-IMF rescue that Pasok sealed in May 2010.

His outbursts as opposition leader against the rescue prompted criticism from European leaders who were appealing for national unity in Greece. Jose Barroso, then president of the EU commission, told Samaras to quit playing “political games.”

Once he became prime minister, Samaras embraced the bailout and the austerity conditions underpinning it, getting Greek spending under control. As a result, the rescue program has come to frame his policy successes.

In a country now determined to shed that fiscal straitjacket, Samaras may have to re-invent himself yet again to remain prominent in politics.

“Politicians in Greece never die,” said Veremis. “They just go away for a while and reappear, often in a different guise. Samaras epitomizes this.”

To contact the reporter on this story: Jonathan Stearns in Athens at jstearns2@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Rodney Jefferson

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