By RACHEL DONADIO and NIKI KITSANTONIS, New York Times
ATHENS — Since he was elected a year ago, Prime Minister George Papandreou has struggled to satisfy two difficult and seemingly mutually exclusive constituencies: international financial markets and Greeks.
On Sunday, he claimed a victory on both counts, based on projections of a strong showing by his Socialist party in regional elections widely seen as a referendum on the government’s austerity measures.
With only ten percent of the votes counted — and despite record-high abstentions estimated at 40 percent — Mr. Papandreou gave a triumphant televised address.
“Tomorrow we will continue to work toward the crucial goal of safeguarding the future of our country, a future that will allow us to control our own fate, a future free of any kind of supervision or stewardship,” he said. “I am not saying that things will be easy, but there are no magic solutions either,” he added.
He said he would not call early elections, which he had threatened to do if his party lost, averting potentially tumultuous political and economic instability if he did. And he made it clear that his administration would continue with the reforms, which Greece adopted in May in exchange for a $150 billion emergency loan from the European Union and the International Monetary Fund.
But the government, and the austerity measures, are not out of the woods.
Many Greeks are furious about the reforms, which have raised taxes, lowered salaries and left them with a pervasive feeling that they are caught in the cogs of larger economic forces. Their anger has spilled over into waves of street protests, including one in May in which three people died.
Last week, a series of letter bombs sent to European leaders by young guerillas compounded the government’s troubles, renewing fears of a return of domestic terrorism.
Above all, many Greeks do not think they should have to pay for what they consider the government’s mistakes.
“We didn’t eat the money,” said Evi Simopoulou, a 29-year-old computer programmer in Athens. “They ate the money.”
Indeed, as the international-minded Mr. Papandreou struggles to convince the world that he has what it takes to push through reforms to keep Greece competitive and the Euro strong, there is one main obstacle in his path: Greeks.
“It’s easier to satisfy the Greek public by slowing down on the bitter medicine that the Greek economy needs, but it will be much more difficult to satisfy the foreign markets,” said Theodore Couloumbis, the vice president of the Hellenic Foundation for European and Foreign Policy in Athens. “Because if he tries to satisfy the Greek public, potential voters, then he’s going to lose the international markets.”
The elections on Sunday, while nominally about selecting leaders for new regional and municipal administrative districts, were the first political test of the austerity measures.
But by early Monday, official projections based on 10 percent of the vote, showed Socialist candidates ahead in seven of 13 districts, and three of those were extremely close. It was a far cry from Mr. Papandreou’s victory in the general election last year, which he won by a wide margin.
The interior ministry estimated abstentions at around 40 percent. Many Greeks said they did not see the point of voting if the country’s fate was in the hands of the European Union and the I.M.F.
“We owe so much, how are we ever going to manage to pay it back?” said a retired state pension fund manager, who gave her name only as Ekaterini. “The government is telling us they’re doing things, but they have to do more to convince me that these measures are going to have an outcome.”
Both the center-right New Democracy opposition party and some harder left parties campaigned against the austerity measures, although neither has offered a credible alternative.
The main advocate for the reforms has been Mr. Papandreou, who is essentially trying to overhaul a welfare state and a political culture that his party helped create, largely under the leadership of his father, Andreas Papandreou, who served as prime minister three times between 1981 and 1996 and was the founder of the Socialist party, Pasok.
While critics blame the Socialists for building up a patronage system that has hindered Greece’s ability to stay competitive, others say the fact that Mr. Papandreou is a Socialist has given him more leverage over labor unions and other vested interests to carry out painful reforms.
“At least this government has taken steps to deal with problems and start changing this society,” said Ilias Kastoriadis, a 35-year-old bank clerk. “It took the rescue money, so it had to take the measures, there was no real choice.”
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