VZCZCXRO4879
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHKW RUEHLA RUEHLN RUEHLZ
RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHIK #0065/01 2611501
ZNR UUUUU ZZH
P R 171501Z SEP 08
FM AMCONSUL THESSALONIKI
TO RUEHC/SECSTATE WASHDC PRIORITY 0371
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHIK/AMCONSUL THESSALONIKI 0413

UNCLAS SECTION 01 OF 03 THESSALONIKI 000065 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/SE 
 
E.O. 12958: N/A 
TAGS: PGOV ECON PREL MK GR
SUBJECT: OPPOSITION LEADER'S SPEECH CALLING FOR TAXING RICH, HELPING 
POOR, FIGHTING CORRUPTION HELPS LIFT PARTY'S POPULARITY 
 
REF: THESSALONIKI 63 
 
THESSALONI 00000065  001.2 OF 003 
 
 
¶1.  (U) SUMMARY:  PASOK leader George Papandreou delivered a 
fiery, campaign-like speech on September 13 at the 73rd annual 
Thessaloniki International Trade Fair, calling for the reversal 
of New Democracy reforms and establishment of a more 
family-friendly, "green", fair and effective "social state." 
The four "pillars" of his government's program would be 
strengthening of family income; reinstatement of the "social 
state"; green development; and building a fair and effective 
state.  On foreign policy, Papandreou declared the GoG inept, 
but reaffirmed his party's basic agreement with ND on the 
Macedonia name issue.  In a September 14 press conference, 
Papandreou said he favored new elections as soon as possible, 
without specifying a timeframe.  Ruling ND criticized the speech 
as vague and unoriginal, but at least one poll suggests the 
public preferred Papandreou's populist prescriptions for change 
to Prime Minister Karamanlis's September 6 speech calling for 
"staying the course."  END SUMMARY 
 
INCREASING FAMILY INCOME 
 
¶2.  (U) In the traditional opposition speech delivered at the 
Thessaloniki International Trade Fair, PASOK President George 
Papandreou blamed the government for the high cost of living and 
other hardships faced by ordinary Greeks.  Mocking Prime 
Minister Karamanlis's September 6 speech (reftel), Papandreou 
claimed Greece's economic woes were not caused by the 
international financial crisis but by government corruption, 
ineptitude and cartels.  "Greece is bankrupt, Greeks are 
becoming poorer and ministers are getting rich."  Papandreou 
said he would raise family income and purchasing power by 
reducing taxes, through a modified tax code that will favor 
lower-income citizens at the expense of higher income groups. 
His tax system would tax large stock exchange profits and Church 
of Greece property transactions.  It would also undo tax reform 
measures (aimed at reducing tax evasion) recently announced by 
the GoG.  In addition, he would order price reductions on 
utility bills and provide a heating oil subsidy for low income 
households.  He would fight cartels and monopolies, including by 
reforming the Greek Competition Commission, reduce citizens' 
debt burden, maintain public education free of cost, increase 
the unemployment benefit and prevent home foreclosures 
 
RE-ESTABLISHING THE "SOCIAL STATE" 
 
¶3.  (U) Papandreou said he would reform the pension and social 
security systems and strengthen education, employment and health 
care.  On pensions, he would start by reversing the current 
government's latest measures, which decreased pension rates and 
increased retirement ages.  He would implement "a fair and 
viable social security system", including by creating a social 
security fund for self-employed professionals, similar to the 
social security fund for wage earners, and by expanding a bonus 
for some 300,000 low-income pensioners.  On education, 
Papandreou promised to increase funding for education to 5% of 
GDP, and to 2% for research.  On employment, he would have the 
state help young people enter the labor market by covering their 
social security contributions for the first four years of 
employment.  He would create one salary scale for the entire 
public sector and more strictly regulate the private sector to 
eliminate uninsured work, unpaid overtime and inadequate health 
and safety provisions.  He would raise the unemployment benefit 
to 70% of the minimum wage. 
 
HOW TO PAY FOR ALL THIS?  TAX BUSINESS AND THE RICH 
 
¶4.  (U) Papandreou said he would pay for his reform program by 
eliminating preferential tax treatment for businesses and the 
wealthy and through a "redistribution" of wealth.  Tax breaks 
for businesses "resulted in a loss of over 4bn for the state", 
he claimed.  Re-instatement of inheritance taxes would generate 
state revenues, as would reduction of the defense budget and 
fighting corruption.  More effective Greek diplomacy and foreign 
policy would generate a "peace dividend" that would decrease 
defense expenditures.  His government would also make the state 
bureaucracy more effective, to decrease expenditures, waste, tax 
evasion and to absorb EU funds more efficiently. 
 
GREEN DEVELOPMENT, INVESTMENT IN PEOPLE 
 
¶5.  (U) Promising a "state with a human face", Papandreou 
advocated development through eco-friendly technologies and 
businesses, including in agriculture, energy, food and tourism. 
His government would establish the Fund for Eco-friendly Forms 
of Energy, aiming at producing 18% of the total national energy 
needs from renewable sources by 2020.  He would promote 
eco-tourism, the "Mediterranean diet" and alternative means of 
transportation.  In order to encourage entrepreneurship in such 
areas, he would persuade banks to provide citizens start-up 
 
THESSALONI 00000065  002.2 OF 003 
 
 
capital.  He would reduce bureaucratic hurdles to starting a 
business and liberalize "closed" professions.  Finally, public 
investment -directed to public companies- will reach 5% of GDP. 
His government would overhaul the current plan for using EU 
funds (the National Strategic Framework, 2007-2013). 
 
FAIR AND EFFECTIVE STATE 
 
¶6.  (U) In order to restore confidence in the state, Papandreou 
said his government would pursue confidence building measures 
between the state and citizens.  There would be greater 
transparency, independence of the judicial system, the media and 
the monitoring role of parliament.  Public enterprises would be 
made more competitive but remain public, not sold off to foreign 
monopolies.  The state would be based on meritocracy, not 
nepotism.  There would be more official monitoring and 
evaluation schools and hospitals.  He would reform the state 
administration, including through decentralization, but not 
through the current government plan, which would cause chaos. 
 
GOVERNMENT UNABLE TO HANDLE FOREIGN POLICY 
 
¶7.  (U) The changing balance of power, with China, India and 
Russia challenging the United States, demanded an effective 
foreign policy, Papandreou asserted.  Recent events in Georgia 
underscored this.  The current government is "unable to handle" 
key foreign policy issues.  He noted that there has recently 
been a "ray of hope" in the "open wound" of Cyprus.  While on 
the Macedonia name issue, the government allowed UN-mediated 
negotiations to stray from their mandate and cross red lines. 
The government must reject the latest Nimitz package and re-open 
negotiations based on clear red lines.  There can be no dual 
name, only one name, with a geographic determinant, for all 
uses.  At the same time, he said, PASOK would not play the 
nationalist card. 
 
PRESS CONFERENCE:  ND GOVERNMENT "FINISHED" 
 
¶8.  (U) During a press conference on September 13 that lasted 
almost three hours, Papandreou claimed the Karamanlis government 
was "finished", adding that the resignation by Merchant Marine 
Minister Voulgarakis under a cloud of scandal did not change the 
fact that responsibility "lies with the Prime Minister and the 
government."  Papandreou ruled out the possibility of 
cooperation between his party and ND, except on Greece's 
approach to the Macedonia name issue, on which PASOK had imposed 
its will.  Asked about possible cooperation with the Coalition 
of the Left (Synaspismos), Papandreou said PASOK's first goal 
was to establish a self-sufficient government that would rule 
via a wide consensus.  He added that PASOK had submitted 
proposals to Synaspismos that remain valid.  PASOK prefers 
general elections as soon as possible, but not as a means for 
New Democracy to "write off" current scandals.  Regarding the 
scandal over property exchanges between the state and the Mount 
Athos monastery of Vatopedi, Papandreou said PASOK had no 
involvement in this case.  He repeated his proposal that Church 
profits from property sales be subject to taxes, and noted that 
he favored clear separation of church and state. 
 
POLITICAL PARTIES CRITICIZE VAGUE SPEECH, CHURCH REJECTS 
TAXATION PROPOSAL 
 
¶9.  (U) Government spokesman Theodoros Roussopoulos stated "Mr. 
Papandreou has announced that he would present a comprehensive 
program and substantiated proposals.  What Greek citizens heard 
were vague exclamations and conflicting promises.  The president 
of PASOK again succeeded in invalidating himself."  ND secretary 
Lefteris Zagoritis said "Mr. Papandreou did not impress anyone. 
With his statements he failed to define targets and policies. 
His address was full of generalities and ambiguity.  A Coalition 
of the Left (Synaspismos) statement called the speech a 
"frenetic and conflicting, and in conclusion, failed effort by 
Mr. Papandreou to enhance a social profile for his party...In 
two consecutive weekends in Thessaloniki Mr. Karamanlis and Mr. 
Papandreou ensured the end of the two-party system."  Commenting 
on Papandreou's press conference, Popular Orthodox Rally (LA.OS) 
said Papandreou had offered "answers in slow motion, without 
substantive proposals; oft-repeated and rusted positions that 
are unable to meet today's needs."  Thessaloniki Metropolitan 
Anthimos angrily rejected Papandreou's call for taxation of 
Church property sales, warning of unspecified yet dire 
consequences. 
 
¶10.  (SBU) ATMOSPHERICS:  In contrast to PM Karamanlis's sober, 
"stay the course" speech on September 6, Papandreou used 
aggressive, crowd-pleasing rhetoric that repeatedly elicited 
boisterous applause from the large partisan audience.  The tone 
of the speech and the audience's repeated chanting of "Giorgos! 
Giorgos!" before, during and afterwards created a campaign-like 
 
THESSALONI 00000065  003.2 OF 003 
 
 
atmosphere.  Some journalists pointed out that Papandreou's 
press conference was remarkable not only for its duration but 
the number of journalists and questions and the apparent renewed 
interest in the PASOK leader's views. 
 
¶11.  (SBU) COMMENT:  Papandreou's populist messages struck a 
chord with Greeks frustrated over the high cost of living and 
perceived government corruption and ineffectiveness.  While the 
speech left many questions unanswered (e.g. how would a PASOK 
government pay for its generous tax and social service reforms) 
it appears to have given the party a small boost in popularity: 
a nation-wide poll published September 16 showed PASOK leading 
ND for the first time in years, by 28.8% to 26.6%.  Papandreou 
appears to have won the annual battle of speeches with PM 
Karamanlis, but it remains to be seen if the 2.2% rise in 
popularity is an upward trend or a temporary spike.  There is 
increasing noise but as yet no clear call from either party for 
early elections, and Papandreou's claim that the government is 
"finished" is premature at best. 
YEE