Six weeks after settling a third bailout package, Brussels’ attention to Greece has waned, even as Sunday’s vote looms. Everyone hopes that a new government will implement the aid program without any more conflicts.
For about half a year, meetings of eurozone finance ministers took place under the spell of the “G-word.” Yet Greece was no longer on the agenda for their informal meetings last weekend. Only a few individual EU officials made passing remarks about their dissatisfaction with the country’s current standstill. Other officials, who are closer to the action, have given more credit to the interim government in Athens. Apparently, it has carried out a great deal of work on an administrative level.
But logically, the interim government cannot pass any new laws, and high hopes have been held for the future government’s adherence to the reform agreements. It is said that people should not take the political noise in the election campaigns to heart, as many expect that the next government will work along EU lines. This also holds true for the conservative candidate Meimarakis – after all, Nea Dimokratia has always considered itself to be a European party.
In his inflammatory speech on the state of the European Union, the head of the EU Commission, Jean-Claude Juncker, once again reminded people of the heated debate on Greece. He said, “Much time and trust were lost. Bridges were burned.” In the meantime, Brussels no longer cares about the crisis of yesteryear. The migration drama now draws its full attention.
Avoid program changes at all costs
Even born optimist and friend of Greece, Pierre Moscovici, has told Brussels that no matter who wins the Greek election, the reform program in Athens enjoys broad support. The EU Monetary Affairs Commission is among those who prefer to see Alexis Tsipras as prime minister. If the head of Syriza returns to office as prime minister, then it is expected that he will keep the EU agreements his party made. If he does not win, many expect him to completely reverse his role and make life difficult for a government coalition made up of conservatives and center-left parties.
Nonetheless, “the program is the program,” asserts Zsolt Darvas from the economic research institute Bruegel in Brussels. Substantial modifications can no longer be made. He finds it much important that a new government coalition has a large enough parliamentary majority in order to avoid constant friction or questioning.
Lost ground can still be made up
Dervas finds the delays caused by the elections innocuous. Actually, the first review of progress is not due until the end of October this year. Euro group chief Jeroen Dijsselbloem, in his position as the Netherlands’ Minister of Finance, once again told everyone in The Hague earlier this month: the next installment of financial aid will be paid only if Greece sticks to the reform and austerity program.
But even if the first review before the next credit installment is submitted late, Athens could still survive financially. The creditors’ measures for debt relief, along with the extension of loan terms, maturities and interest payments that the troika has promised, would still apply in November.
Greek banks will have to recapitalize under time pressure. Ten billion euros have already been provided by the European Stability Mechanism (ESM) for the implementation of the necessary measures. The money must be spent by the end of the year, as the EU will come into a new legal situation starting the first of January. But even that task is manageable, says Darvas, because he claims the European Central Bank (ECB) documented the Greek bank situation in detail in 2014 – so only an update with the 2015 figures is necessary.
Cautious optimism
Researchers at the Bruegel Institute are showing caution in their optimism about Greece’s future: the year 2015 saw the creation of jobs and growth in all areas of the economy, while 2015 will go down as a year of total breakdown. But in 2016, the country could return to its growth phase, provided that a large part of the old structural reforms will have been processed. Spain and Portugal stand as examples where similar programs have been successfully implemented.
The first visit of the new leader of the EU taskforce to the Greek capital caused a stir. There were a few malicious headlines about being “under Brussels’ control” and a “protectorate of the troika.” Dutch economist Maarten Verwey, Deputy Director-General for Economic and Financial Affairs, European Commission, has succeeded the German Horst Reichenbach as leader of a task force for Greece.
However, the new monitoring unit is now called “The Structural Reform Support Service,” an organization that has essentially been set up to support structural reform measures in all EU countries with the help of Brussels. Despite the euphemistic nature of the term, it is obvious that in Greek matters, the EU feels that trust is a good thing; but control is better.
