Strained by a long-lasting economic crisis, Greece aims to use its presidency of the EU to regain European partners’ trust and credibility, as the country is slowly creeping along the path to recovery.


Greece assumes EU rotating presidency

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In a city blocked by police and security forces, the Greek government readied itself today (8 January) to launch its fifth presidency of the EU at an official ceremony in the Athens Concert Hall, in the presence of the college of EU commissioners.

“We are aware of our institutional obligations and we are ready to show those who doubt it that troubled Greece can still exercise its presidency,” Greek Deputy Prime Minister Evangelos Venizelos, who is responsible for foreign affairs, told reporters in Athens.

Venizelos insisted that Greece was not thinking of its domestic priorities, but of those of the European Union, as the current EU legislature comes to a close in April. The EU elections, in May, are expected to bring a new political balance, and a rise in euroscepticism, presenting the 28-country bloc with a new set of challenges.

Nonetheless, Athens seems to want to do whatever it takes to show that Greece is on the path to recovery, reminiscent of what Ireland did last year when it held the presidency of the EU.

Vanished Grexit

Latest figures do in fact show that the country is adapting and laying the foundations for getting out of the sovereign debt crisis. “A huge deficit has been eliminated in just four years,” Yannis Stournaras, the finance minister, said during a press conference.

According to figures released by the Greek government, the public deficit declined sharply from 15.6% of GDP in 2009 to a projected 2.2% of GDP in 2013, producing for the first time after almost a decade a primary surplus of 1.2%.

“Greece’s fiscal consolidation was the largest ever recorded by a developed country and, remarkably, it was achieved despite a sharp decline in output,” Stournaras said.

Even though the EU statistics office, Eurostat, was yet to verify the surplus figures, the Greek minister said the results were clear, that Athens has achieved its targets for 2013. He added that the country would be able to consolidate these results in 2014 so that the benefits trickle down to the real economy.

According to the Bank of Greece Interim Report on Monetary Policy, published last December, the Greek economy is not only on track for stabilisation, but also at “the end of the recession and the start of recovery”

The Greek government intends to reach an agreement with its foreign creditors during its presidency on debt relief and on how to cover a funding gap for 2014-2015, estimated at around €11 billion.

Stournaras said the discussion on possible debt relief for Greece, which includes a reduction in interest rates and an extension on the maturities of Greece’s loans, could start as soon as April, after they finalise the current review by the Troika and the banks stress test results.

However, the minister shied away from pre-empt the need for a new loan. “It is very early to talk about the need for a new loan", he said, adding: "There might be more effective ways.”

The government is betting on the work achieved so far and point at a growth rate for 2014 at 0.5-0.6%. Structural reforms, albeit slow, are starting also to take root and deliver results. Labour market reforms - a reduction by 22% of the minimum wage, average salaries in the public sectors reduced by 23% and pensions income by 21% - are producing results in terms of fiscal consolidation, but less so in terms of new jobs.

The latest figures show a jobless rate of 27.4%, with youth unemployment standing at 59.6%. Critics say Greeks do not perceive the change yet and the upcoming municipal elections, which will take place at the same time of the EU elections in May, might show the crisis is not over.

"I would like to pay tribute to the Greek people for the courage and dignity they have shown. Greek history and literature is a tale of heroes and prowesses, many of them of a divine or semi-divine nature. But these days, what we see is a tale of human heroes. The real heroes are the Greek people," said European Commission President, José Manuel Barroso.

The big absent

A sense of the political and social divide will be felt tonight at the opening ceremony, which will not be attended by Alexis Tsipras, the leader of the main opposition leftist party Syriza.

According to party sources, Tsipras's absence from the Athens Concert Hall ceremony symbolised the party's disagreement with the coalition government's priorities during the Greek presidency.

Meanwhile, security was expected to be high throughout Wednesday with heavy police presence and traffic restrictions across much of the city centre. The police imposed an 18-hour ban on protests in central Athens, starting at 6 a.m. this morning.