A way forward for Greece
The leaders of the eurozone reached an agreement yesterday on Greece.
The leaders of the eurozone reached an agreement yesterday on Greece. It is an agreement on both method and content. It defines the preconditions for launching negotiations on a new financial assistance programme for the country. The usual approach has thus been reversed: first, there needs to be concrete and tangible evidence of Athens’ commitment to reform its economy and public administration. Only after that can negotiations start on a new programme in the order of around EUR 80 billion.
“Is this a good deal? » I have been asked many times since yesterday. My answer is yes, as it opens a way out of the impasse of recent weeks and as it keeps Greece in the eurozone. By reconciling the principles of responsibility and solidarity, the Member States have found a demanding but workable compromise. There are no winners or losers. Member States must now work to implement it, starting with the discussions in their national parliaments.
The agreement expresses the will of eurozone Member States to keep Greece in the single currency: that is its first merit.
The agreement expresses the will of eurozone Member States to keep Greece in the single currency: that is its first merit. It puts the country on a path away from the threat of Grexit and towards normalisation. Most importantly, it preserves the integrity of the eurozone. That is something that I, the European Commission and the Greeks themselves have wanted ardently since the beginning. So it is positive that the agreement safeguards the irreversibility of the eurozone, and avoids a chaotic and painful departure of one of its members.
This agreement is very demanding for Greece.
This agreement is very demanding for Greece. Further financial support will be conditional on the adoption and effective implementation of a set of measures in the very short term. By 15 July, the Hellenic Parliament is asked to support initiatives to guarantee the independence of ELSTAT, Greece’s statistical institute; streamline the highly fragmented VAT system; and enhance the sustainability of the pension system. By 22 July, it is asked to vote on a new Code of Civil procedures, to improve the management of litigation and disputes between companies. The preparatory work on these issues has been ongoing for several months, but completing the legislative procedures in 48 hours demands a substantial political and administrative commitment. Yet this is seen as a necessary guarantee of Greece’s commitment and seriousness to reform.
We need a return to solidarity, with the burden fairly shared.
This timetable is tight, but it is a necessary antidote to the mistrust that has developed between Athens and its eurozone partners. These past six months of stop-go negotiations have been a period of growing distrust on the part of many European governments vis-à-vis the Greek government. And in several countries, national parliaments need to agree to providing new assistance for Greece. They want explanations for why after two financial assistance programmes, five years of close monitoring, and over EUR 300 billion in assistance, we are again asking for European solidarity for Greece. Some of these countries have themselves made very significant efforts to get their economies back on track. Some are less wealthy than Greece. All want to be able to know whether this time it’s different. That is understandable. We need a return to solidarity, with the burden fairly shared.
The agreement also sets Athens on a path of extremely precise reforms, and includes safeguards to prevent the country from deviating from that path.
The agreement also sets Athens on a path of extremely precise reforms, and includes safeguards to prevent the country from deviating from that path. Some of these reforms are broadly supported, including in Greece, to upgrade the State and the economy — for instance, by depoliticising the administration in order to fight corruption and clientelism. This was a promise of Syriza during the electoral campaign which led it to power. Other reforms go beyond the proposals presented by Greece last Thursday.
I hope we give Greece a chance to prove its good faith, and that the future programme allows the country to raise its head economically and politically.
Some say the terms of the agreement are unacceptable for Greece, even describing them as a gun to the head. Some believe that they are too demanding for a country whose population has suffered greatly for five years, and whose economy entered into recession again this year. I understand that position. And I also care first and foremost about the Greek people. The future programme will have to strike a balance between economic necessity and political reality. If excessive mistrust led us to ask the impossible of Greece would be damaging for all. I hope we give Greece a chance to prove its good faith, and that the future programme allows the country to raise its head economically and politically.
Still, we lost six months. During which the situation in Greece has deeply deteriorated. The human, political and economic cost of the agreement increased dramatically. This makes me sad and leaves a bitter taste in my mouth. For it is the Greek people who, once again, will bear the costs.
We must now look to the future, because a lot remains to be done.
We must now look to the future, because a lot remains to be done. Greece will have to reform — for good, for real, finally. And the prospect of European financial assistance, coupled with the European Commission’s plan for jobs and growth in Greece – which will mobilise up to EUR 35 billion in funding – will help the country on this path, however long and difficult it may be. The European Commission will stand alongside the Greek people to assist them through this important phase.