Angst on the Aegean: crises can force even the most dysfunctional governments to change--and Greek prime minister George Papandreou aims to prove it.

• Author: Clark, Bruce
• Position: 2010M-A00

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Last December, when the leaders of the European Union gathered for their year-end meeting, the mood was tense. As always, proceedings began with a simple working dinner around a big oval table in one of the ugly modern structures in downtown Brussels where Europe's affairs are administered. These meetings are supposed to be sociable, and it would be bad form for one European leader to make an open, personal attack on another. But the issue on everybody's mind was the folly of a single EU member, Greece. The country's new Socialist government had recently announced that the 2009 Greek budget deficit would not be 6 percent, as estimated by the previous conservative government, but 12.7 percent. That's four times the acceptable limit for budget deficits under the rules of the common European currency, or euro zone, which Greece joined in 2002 after a hard struggle to convince its partners of its eligibility. The announcement rocked world financial markets, which feared Greece might default on its debts. That in turn led to talk in the markets that the whole euro zone might be at risk. For a union that counts the creation of a currency as its greatest feat, this was hard to forgive. But the bigwigs gathered in Brussels seemed uncertain about how to deliver this message to the new Greek prime minister, George Papandreou.

In the end, it was Papandreou who relieved the tension. Far from waiting for the flak, Papandreou told his fellow European leaders that, in effect, they didn't know the half of it. Yes, Greece's budget deficit had ballooned out of control. But in truth, the prime minister said, things were worse. It was not simply a matter of getting the numbers back in order; the fact was that his country suffered from systemic corruption. Whether the sums were large or small, every cent that flowed through the Greek state was as likely to "reinforce bureaucracy" as it was to serve the public.

His listeners were impressed by this disarming frankness. It did nothing immediate to solve Greece's financial problems, but it did send a message that Papandreou aims to do more than just get Greece and the EU out of this immediate crisis, daunting as that task will be. Rather, according to some of his closest aides, he wants to use the crisis as leverage to reform Greece's whole political economy.

So his efforts are worth watching, and not only because that may help determine the future of the euro zone, one of the great political and economic experiments of modern times. They are also a test of whether it is possible for a country mired in debilitating corruption (and there are many that are more corrupt and worrisome to the United States--think Mexico or, at the far end of the scale, Afghanistan) to change its spots and its stars. Or, put another way: are traits like corruption baked into a country's national character, or are they mutable habits that can, via democratic means, change?

In seeking to answer that question positively, Papandreou is not just trying to break the habits of an entire society. He is also, in some ways, taking on the legacy of his family. The grandson and namesake of a liberal prime minister, he is also the son of Andreas Papandreou, the fiery founder of Greece's socialist PASOK party. During three terms as prime minister in the 1980s and early '90s, Andreas took a historically swollen and patronage-ridden public sector and made it far more so. Subsequent governments, liberal and conservative, have made scant headway in paring the state back, and corruption in the political system and bureaucracy has, if anything, gotten worse.

Yet the current prime minister is a very different man than his father. While Andreas was a wily demagogue who played on nationalist grievances, George in many ways is a politician of the cool, rational north, with a keen eye for the failings of the exuberant, impulsive south. Born in 1952 in Minnesota (where Andreas had a university job), his childhood memories include fleeing from Greece in 1967 when military officers took power and arrested his father. The family found refuge initially in Sweden (whose language George still speaks) and later in Toronto. He studied at Amherst and the London School of Economics--and, much later, at Stockholm University and Harvard. His interests mark him out as a liberal in the American or Scandinavian sense, not an authoritarian leftist. They include...