Greek Prime Minister George Papandreou had a sweeping victory at the last Greek general election to dislodge two-term centre right Prime Minister Kostas Karamanlis.

Incidentally, Karamanlis was in Malta just a couple of months before when all was still hunky-dory before the market crash. Karamanlis was voted out of office by the Greek people because he was seen as the figurehead of an alienated government that allowed abuse and tax evasion to go unchecked – especially among the higher echelons of society.

In the meantime, Papandreou promised reforms including a crackdown on tax evasion, higher wages, higher social spending and a huge investment in the Green economy.

Meanwhile, the new Greek PM had just taken the hotseat and found out that the two successive (albeit short) Karamanlis governments had been fudging the books for a number of years to hide what turned out to be a monstrous 12.7 per cent of GDP budget deficit.

The new Greek PM was adamant that his electoral promises would be fulfilled – but the bubble burst. Mr Papandreou was told, in no uncertain terms, by various EU heavyweights and a crash of Greece’s bond-system, to take the bull by the horns. Greece was forced into massive austerity measures in a bid to shore up its beleaguered finances and this invoked the wrath of trade unions which took to the street and paralysed the country. Notwithstanding, the Greek government stood firm and retains about 70 per cent support of the general public in implementing austerity measures. These were not enough as Athens found it difficult to finance its debts and this has pushed the country to make further cuts in the hope of financial assistance from the EU. Greece has also not ruled out calling in the International Monetary Fund to address its woes.

Papandreou was then confronted by a potential rebel minister who told him that the austerity measures were going against the core leftist beliefs of the party they represent. He retorted: “Socialist ideology will have to be set aside, at least temporarily”.

Portugal has since implemented a wage freeze as socialist Prime Minister Jose Socrates also seeks to halt the rot. Portugal has a deficit of 9.3 per cent and unemployment of 10.5 per cent.

This all goes to prove that when it comes to government finances, political ideologies go out of the window. One of the most stringently applied EU rules is that of sustainable development being pinned to a three per cent of GDP figure. Anything over that and the European Commission comes down on defaulters like a ton of bricks. Malta has already had a taste of being rapped on the knuckles and been threatened with action through the excessive deficit procedure. This was before the crisis and Malta’s ‘infringement’ was certainly no where near the stratospheric figures of Portugal or Greece’s budget deficit.

But there are also mixed messages. While Europe has come down hard on defaulting countries, EC President Jose Manuel Barroso is now pushing for a rescue package to be put in place in case countries go bankrupt, in an effort to safeguard the stability of the euro – Malta’s currency. Barroso states that there must be solidarity in the European Union. But it really does blur the lines. We have a capitalist system, being administered by a social democrat (Barroso) who has urged socialist governments to implement rightist fiscal policy. What a true contradiction in terms. And it all goes back to Europe’s major flaw. Monetary union can never be truly achieved if there is no political union – however tight-knit we are.