ATHENS -- Greece's prime minister on Wednesday won backing for a surprise national vote on a European-funded bailout but many say opposition to benefits cuts and foreign oversight may sink the package and prevent Europe from resolving its financial crisis.
"We will not implement any program by force, but only with the consent of the Greek people," Greek Prime Minister George Papandreou said after his Cabinet approved the public referendum. "This is our democratic tradition, and we demand that it is also respected abroad."
Papandreou said he supported the bailout before boarding a flight to France for a meeting of the G-20, an organization representing the world's major economies. Economists say the larger question for world leaders is whether Europe and America, not just Greece, is pursuing the right course.
"Austerity measures have taken the top priority — no one is really considering how to stimulate growth," Carsten Brzeski, chief economist with ING financial group in Brussels, said of the European approach to overspending.
"In the U.S., there is the same necessity but people and policymakers still think you can solve the problem through faster growth and stimulus," he said.
The attitude is, "Let's do the cleaning up later and let's hope that simply by stimulating again our house we can build a bigger house and just leave the dirty stuff downstairs and no one will notice anymore."
When the financial crisis hit in 2008, German Chancellor Angela Merkel advocated the wisdom of the "Swabian housewife," a stereotype of the frugal and prosperous southern German work ethic. The example of living within one's means has become a guiding principle for European economic policy, especially as Germany is responsible for the lion's share of the bailout money going to Greece and other debt-ridden European nations such as Italy, Ireland, Spain and Portugal.
On the other hand, President Obama has advocated borrowing to fund significant amounts of government spending in an attempt to create jobs, and his administration hasn't been shy about lecturing European counterparts on the need to spend money to boost economic growth.
"The Europeans and especially the Germans feel pushed by the Americans," Brzeski said. "But they feel that those living in glass houses shouldn't be throwing stones."
That glass house is a U.S. debt level of close to 95% of GDP, outstripping that of the eurozone taken as whole at just over 85%. In Warsaw last month, Treasury Secretary Timothy Geithner urged European leaders to solve the eurozone crisis quickly before it precipitated a global recession. Many Europeans bridled at his presence, unusual at a European summit.
Ulrike Guérot, who specializes in European affairs at the European Council on Foreign Relations in Berlin, said Europe does not teach America what to do and did not welcome advice from a country that is trying to spend its way out of a recession.
"First you need to get your own house in order," Guérot said.
The last thing that Europe should be doing, say many analysts, is replicating the American approach.
"This kind of approach is what Greece used to do the past 15 years and now we are getting the bill for it," said Matthias Kullas, an economist at the Center for European Policy in Freiburg, Germany. "Instead of making the structural reforms … all the time they were trying to give impulses via debt.
"It covered the problem for 10, 15 years in Greece, but it is not how you get back on track."
Brzeski says that the Germans have felt moments of vindication over the past few years, with significant levels of economic growth. But some argue that Germany's relatively rosy economic outlook compared with the eurozone's failing economies is just why the German hausfrau needs to take American advice and loosen the purse strings a little — especially given its export-oriented economy has prospered by Greek and Spanish spending.
"It would certainly be inappropriate for a country like Greece to go in for fiscal stimulus," said Simon Wren-Lewis, professor of economics at Oxford University in the U.K. "Where you need some stimulus is in Germany, essentially, and you don't really want austerity in France. But the problem at the moment is that you are getting austerity everywhere, so there is no stimulus anywhere in eurozone. Where is growth coming from? It's very unclear."
Still, Brzeski argues that Europe's trade links do not mean that spending in one country can boost growth in another.
"You lower taxes in Germany, fine. That will probably increase spending and consumption in Germany," he said. "But does this mean all of a sudden the Germans will buy more stuff from Spain, Portugal, Ireland or Greece? That they would drink two bottles of olive oil a day? Probably not. They would probably buy a new Mercedes-Benz and high-tech stuff from Asia."
Greeks themselves say they need to get their house in order. But some wonder how.
"Greece had a big middle class, which consisted of government workers, private-company employees and small-business employees," said Timos Melissaris, an economist and private investor in Athens. "Seventy percent of the GDP came from the middle class's consumption but today, they're left with no disposable income. People are surviving off their savings."
Guérot says that different paradigms of austerity vs. stimulus are likely to color the discussion over what's next for Europe and the world economy. That is nothing new.
"What is the world's economic answer to the crisis?" he said. "It will probably raise some trans-Atlantic tensions."
Meanwhile, in Greece, the fracas continues. If Papandreou loses a confidence vote Friday, a general election will be scheduled. A referendum on the bailout would probably take place in January. If it is voted down, Greece could default on its loans and the effect may be felt in banks and markets worldwide.
"This is a psychological war that has started two years ago pressuring us with the never-ending question over whether the country will go bankrupt, or not," said Apostolis Manafas, 56, a retired government worker.
Viki Kostopoulou, 43 and unemployed, said she was surprised Papandreou will let the people have a say on the bailout package and the strings attached to it.
"I was shocked," Kostopoulou said. "We should have had a referendum in 2009, before all the austerity measures. I think I'm going to say 'No,' but they haven't told us what the question will be."