Maarten Verwey, a senior civil servant at the Dutch finance ministry who joined the commission in 2011 and led its Cyprus assistance programme, heads what amounts to an EU taskforce for Greece.
His powers are unprecedented. And if few voters on the streets of Athens have heard his name, many understand that how they casted their ballot in the elections makes little difference to what happens next. Under the draconian conditions of Greece’s third cash-for-reforms rescue package, Athens effectively surrendered control over great swaths of economic and social policymaking to its eurozone lenders.
The memorandum of understanding detailing the three-year, €86bn (£63bn) deal requires the government “to consult and agree with the European Commission, European Central Bank and International Monetary Fund on all relevant actions ... before these are finalised and legally adopted.”
In exchange for the bailout funds, Greece, which needs to repay about €1.3bn in loans this December and another €6bn in 2016, has pledged to radically overhaul its economy and make far-reaching changes to the health, welfare, pensions and taxation systems.
Some 120 pieces of legislation must be passed this year – with future bailout payments dependent on satisfactory quarterly progress reviews. “There will be no further transfer of funds to Greece unless Greece starts changing basic patterns of the way the pension system works, taxation is enforced, and so on,” said Dimitri Sotiropoulos, a political scientist at the University of Athens.
Verwey’s 20-strong staff will essentially write the legislation for almost all areas of government policy, from corporate income tax and labour market policy to the health and welfare system … and prepare interim reports during the evaluation of the economy.
A previous Greek task force was disbanded after the former Syriza government refused flatly to cooperate with it. This time, Verwey would have a direct line of communication with the prime minister’s office, as requested by the commission president, Jean-Claude Juncker.
The government is committed to meeting a series of tough targets, including turning round a projected primary deficit of 1.5% to one of just 0.25% by the end of the financial year, and reaching a 3.5% primary surplus in the medium term. It must improve tax compliance and “public financial management”, as well as raise more money through measures as disparate as abolishing tax breaks for farmers, increasing VAT and centralising health procurement. Changes to pensions are expected to save 1% of GDP by 2016, and benefit reforms 0.5%.
Labour market laws must be overhauled, consumer markets including energy deregulated, and restricted professions such as notaries, actuaries and bailiffs opened up. To “modernise the state and public administration”, the judiciary will be reformed, civil service perks slashed, and the bureaucracy “depoliticised”.
As part of a highly specific and at times frankly odd “toolkit” seen by some as a free-market bonanza for multinational businesses, ownership rules for Greek pharmacies, marketing laws for milk and the regulations governing who can call themselves a baker are also up for reform.
The lenders will have a particularly big say in the rescue of Greece’s ailing banks, with bank boards to be overhauled to ensure members have adequate expertise and international experience.
Despite campaign pledges from both leading parties that, if elected, they will try to cushion the blow, the measures add amount to a daunting legislative programme from which Greece’s prime minister will find it difficult, if not impossible, to deviate.
“This time, we all need to realise that we are serious and for real,” commission president Juncker reminded Athens in September. “We require respect of the arrangements and agreements that have been reached. If they are not respected, the reaction of the European Union and the eurozone will be different.”
By: N. Peter Kramer
