Georgios Papandreou's new party in Greece

Georgios Papandreou, former Greek Prime Minister for PASOK, the Greek social-democratic party, has just announced the formation of a new party to compete in the January 25 elections. (Papandreou sorgt mit Parteigründung für Ärger Rheinische Post 03.01.2015)

Papandreou's forced resignation as Prime Minister in 2011 was one of the most dramatic signs of how far Angela Merkel is willing to go to impose her brutal austerity policies on the eurozone. Papandreou accepted a new round of draconian austerity "reforms." But he insisted on having a referendum to allow the Greek public to vote on them.

While Merkel's ousting him was an outrageous act, that doesn't mean I have a high opinion of him. As I wrote in Greece and the politics of austerity 11/30/2012:

Georgios Papandreou was the social-democratic Prime Minister of Greece for the PASOK party from 2009-2011. By caving in to German Prime Minister Angela "Frau Fritz" Merkel's demands for destructive austerity policies in response to the Greek debt crisis, Papandreou put his party on the fast track to non-existence. PASOK is a junior member of the current conservative-led Greek government. But polls show it now polling around the 5% range. The Syriza coalition has emerged as the main left party now, and polls are showing it as having the largest support of any party at the moment.

So, for putting his country under Frau Fritz' economic jackboot and ruining his own political party, he now gets to appear as statesman-at-large.

And as Kevin Hope writes in Papandreou set to lead ‘wild card’ party Financial Times 01/01/2015:

Few analysts would have predicted a political comeback for Mr Papandreou, given his abrupt departure. He left office in November 2011 after his controversial proposal for a referendum on the country’s European future was rubbished by fellow European leaders, including Germany’s Angela Merkel, who threatened to let Greece drop out of the eurozone.

Greece accepted an international bailout in 2010, six months after Mr Papandreou took office. Yet he shrugged off responsibility for the country’s financial collapse, instead accusing the previous centre-right government of borrowing recklessly to finance its policies, while claiming that Greek interest groups had undermined his own attempts at reform.

Since his resignation, the ex-premier has spent much of his time lecturing on crisis management and the politics of austerity at US and Scandinavian universities and addressing gatherings of fund managers and bankers. [my emphasis]

But Papandreou is part of a social-democratic dynastic family in Greece and will be able to make his presence visible in the election. If it takes even more votes away from the now-tiny PASOK that Papandreou himself ruined, that could be a good thing. Politics doesn't work on the neat right-left spectrum of which pundits are so fond. But if the new party winds up opening up a "political space" for a left-leaning party advocating resistance to austerity policies that could attract PASOK voters fearful of aligning with the "radical-left" SYRIZA, that could help Alexis Tsipras build an anti-austerity coalition if SYRIZA wins the election. It's a new factor in a turbulent situation. And Papandreou presumably harbors no love for Merkel.

Jamie Galbraith wrote just after Papandreou was forced out in 2011 (The crisis in the eurozone Salon 11/10/2012):

Political fragility also explains the fury in France and Germany when George Papandreou [the calmest man in Europe, by the way, having been born and raised in Minnesota] sought to cut the knot of his rebellious ministers, irresponsible opposition and angry public by putting the latest austerity package to a vote. God help the bankers! The move was fatal to Papandreou in short order, and Greece will now be turned over to a junta of creditors’ deputies if such can be found willing to take the job. It won’t be anyone who wants to continue to live in Greece afterward.

Greece and Ireland are being destroyed. Portugal and Spain are in limbo, and the crisis shifts to Italy – truly too big to fail – which is being put into an IMF-dictated receivership as I write. Meanwhile France struggles to delay the (inevitable) downgrade of its AAA rating by cutting every social and investment program. [italics in original]

But the possible implications of the new Papandreou party that I sketched out above is an optimistic case. Kevin Hope describes another possibility:

One opinion poll published last week suggested Mr Papandreou’s group could win 4-5 per cent of the vote, taking a small but critical percentage from the current frontrunner, the hard-left Syriza party. If so, that could hand victory to the centre-right New Democracy party of premier Antonis Samaras.

The prospect of a Syriza victory has rattled investors in recent weeks, with concerns the party would cancel the country’s international bailout and halt payment on its foreign debt.

Mr Papandreou could also take votes from Pasok itself and To Potami (the River), a moderate left party formed last year.