For some, its presence in Athens is a clear indication that Greece?s eurozone partners want to run the country themselves; for others it is a confirmation that the European Union wants to offer practical help. Whatever your view on the EU Task Force for Greece, though, there are a couple of things that are undeniable: the team from Brussels is aiming to facilitate the disbursement of about 15 billion euros in EU structural funds over the next two years that would help Greek jobs and businesses, and it is helping provide expertise in areas of Greek public administration that suffer from chronic problems, such as tax collection and the judicial system.
The Task Force officially assumed its role in Greece on September 1 and recently published the first quarterly report on its work. It is made up of about 25 people in Brussels led by the European Bank for Reconstruction and Development (EBRD) vice president Horst Reichenbach and of 12 people in Athens. The Athens ?antenna? is headed by Georgette Lalis, a Greek who has been a civil servant with the European Commission since 1981. She has held several executive positions but her last job in Brussels was as director of international affairs for energy. Between 2001 and 2004, she was CEO of the land registry (Ktimatologio SA).
Speaking to Kathimerini English Edition, Lalis distanced the role of the Task Force from that of the troika and identified a wide range of projects that it is cooperating on with Greek authorities, including a change to EU rules to provide Greek businesses with a working capital injection of 500 million euros.
There seems to be a lot of confusion regarding the role of the EU Task Force in Greece. So, perhaps this is the best place to start: what are the Task Force?s goals and what tools does it have to achieve them?
First I will tell you what the EU Task Force is not: it is not the troika, nor is it part of the troika. The EU Task Force is a service of the European Commission. Although we are not part of the troika, our job is in a way linked to what the troika does, in the sense that the troika discusses with the Greek authorities and determines the obligations that they have to deliver to get the loan instalments. We come in and help the Greek authorities in implementing these obligations. We are also mandated by our president and the Greek prime minister to work on assisting Greece to make better use of EU structural funds, which have nothing to do with the troika either. We are a completely different service but in a way complementary to what they do.
Do you understand why some Greeks might view the Task Force?s presence in Greece with suspicion? How would you respond to those who fear that you and your colleagues are here to impose orders from Brussels or somewhere else and that this implies a loss of sovereignty for Greece?
The main stakeholders with whom we work the ministries, the different public organizations but also the private sector know that none of this is true. Colleagues in the public administration and at the ministries know that we do not impose anything on them, we respect their wishes and it is for them to make the decisions. We are very much aware that if you impose a decision that is not accepted, it will never work. We want all the resources that Greece and the European Commission put in this effort to bear fruit.
Perhaps one of the mistakes that the troika made in Greece was to cut off most of its avenues of communication with the Greek public, for instance by suspending its news conferences. Does the Task Force have a different communication strategy one that might provide better transparency and accountability?
It?s a difficult question to answer because the EU and the European Commission do not have a policy of actively interfering in member states? territories and policies. It is for the member states mainly to communicate EU policy and through our representation offices we enhance this communication. The Task Force is a very specific case because we operate on Greek territory and we might have to reflect better on what we are doing not with the traditional ways we know in Brussels, such as press releases, documents that might not be understood by lay people. We are thinking about how to better communicate. We are not yet there but it?s part of the process of us understanding. On the accountability issue, it?s different because we will issue quarterly reports where everything we do will be included. People can know if we have been successful or not.
One of the key areas the Task Force is addressing is Greece?s poor absorption of cohesion funds. Of 20.4 billion euros that was available to Greece between 2007 and 2013 via the European Regional Development Fund, the European Social Fund and the Cohesion Fund, less than a third has been absorbed. How do you plan to improve this and what kind of projects is the money going to be invested in?
Greece had three elections since 2007 each time you have these changes, governments or local governments want to review the way the funds are spent so they can adjust them to their own pre-election policy commitments. There have been no elections in 2010 and 2011 so the Greek authorities have made the final revision to the allocation of the money. We are only two years before the end of the current financial perspective and the money has to be used very quickly. We are running with the Greek authorities a review of 100 major growth and development projects and as soon as the list is finalized, we will see what technical assistance is needed for each of the projects to ensure quick absorption of funds. We are confident that once we have this list, absorption will come.
Is there an indication of what kind of projects will receive funding?
There is a variety of projects, including ?Business Friendly Greece,? which is a big and difficult project because it involves all aspects of the public sector, but it is a key enabler for investments to come to Greece. We have the completion of five highways, e-prescription, the use of interconnected IT tools in the state, the land registry I don?t want to forget anything but there are a lot of major projects.
Will the EU contribution to these projects be at 85 percent or 95 percent?
From January onwards, all the money that will be committed to Greece will be at 95 percent. We need to wait for the formal decision in December.
In the Task Force?s first quarterly report, there was mention of developing cohesion policy programs to provide funding to small and medium-sized enterprises, which are the driving force of the Greek economy and are finding it almost impossible to access finance at the moment.
What kind of amounts are we talking about and how might SMEs access this money?
We are talking about 500 million euros, which can be used to enhance the competitiveness of SMEs, also by supplying working capital. This is something new that Horst Reichenbach has promoted with the European Commission because the rule is that structural funds cannot be used as working capital. But the Task Force has managed to convince colleagues in Brussels and Regional Policy Commissioner Johannes Hahn was very much involved in this process that the liquidity problems of the Greek market are so dramatic that even viable companies will disappear. We are examining how this will work in practice: will it go through the banks? Will it go directly to the companies? We have another project, which is to use 1.5 billion to create a risk-sharing guarantee mechanism so the European Investment Bank and other financial institutions can lend money to Greece for big projects. Greece will use EU money as a guarantee to leverage money from outside.
There is also mention in the report of ?high-impact? projects. Among them is the completion of five major highway schemes. Given that the crisis means people are using their cars less and road tolls are an extra financial burden, some people might wonder why this money is being invested in highways rather than hospitals or schools, for example. What criteria are used to decide where the money is invested?
The way you phrase the question makes it very difficult for me to say that five highways are more important than health or education. It?s extremely difficult to make this distinction. But I can explain why the five highways are important without comparing them to something else. After 30 years of Greece belonging to the EU and receiving structural funding, we still do not have a complete and finalized infrastructure network in this country. At some stage this has to finish. The state of the road between Athens and Patra, for example, is not acceptable given that money has poured into the country for so many years. Another reason is that you need this infrastructure network to attract investment. You cannot attract investment if nobody can export their goods in a normal and cost-efficient way. The third reason we want to see these projects go forward is that they will provide employment for the next couple of years, which will be the most difficult for the Greek labor force. The Transport Ministry has calculated that about 10,000 people will have employment if these projects progress. It is so important to have employment and to have social security contributions in the system. So, we think that for the moment, these are good projects.
The Task Force is not just here to oversee how money is invested, but also how it is collected. The IMF has been providing assistance to Greece on tax administration since last year but now it seems that a number of EU countries want to pass on their know-how to Greece. What kind of help are they offering and how will they actually pass on their expertise?
Tax collection is the test case. The whole world is expecting Greece to improve its tax collection system by next year. There is a lot of interest from member states as well as the IMF to participate in this endeavor. We are working very closely with the branch of the IMF that provides technical assistance and have created a working team with them and representatives of member states. We are acting as the federator of this interest. In concrete terms, we organize visits to taxation offices, we organize workshops, we offer to train staff, we offer to exchange staff so Greek tax collectors will go to the UK and Germany, for example, and see how they do it there. The aim is to create an office to deal with major taxpayers, where tax collectors will be dedicated to checking those taxpayers that have the biggest contribution to the revenue system. We are also working on taxation audits and how officials should perform these programs.
The Task Force report identified 60 billion in unpaid taxes but also says that only a fraction of this some 8 billion can be collected soon. Are any of the steps you are taking designed to have an immediate, rather than long-term, impact on the collection of revenues?
One of the reasons that the 60 billion euros are there is the legal system. We are working with the Justice Ministry on accelerating the decision-making process for the big tax cases that are pending. The more time you take to issue a verdict, the less you can collect in tax because companies disappear, they go bankrupt and the money disappears. Everything around the judicial system is a priority. Also, the office for major taxpayers should be operational very soon. Greek tax authorities use two management systems: Taxis and Elenxis. Apparently, Elenxis is a very efficient risk management system that suggests which taxpayers should be checked because they might be evading. We are working with Greek authorities so they can make better use of Elenxis.
Has the Task Force played any role in the negotiations between Greek and Swiss authorities over taxing deposits in Swiss banks?
We are working with Greek authorities to give them legal support in order to ensure that the agreement they are negotiating complies with EU law. There is an EU directive on the taxation of interest on savings but on everything else income, taxes, etc. the Greek authorities can negotiate. We are assisting in the legal part of this negotiation.
You mentioned the delays in the legal system and the effect they have on tax collection. In what ways is the Task Force working with Greek authorities to speed up the dispensation of justice in Greece?
The Greek authorities have come with requests for technical assistance in specific fields. The first is that they want to update and modernize the code of civil and penal procedure and for this they want to be helped by Germany and France because the Greek justice system is inspired by the systems of these two countries, which have already modernized their codes. Then, they want to introduce e-justice IT tools to manage procedures and courts and everything relating to the administrative work. There is a similar project for prisons, which will be very helpful for Greece. There are also plans to create fiscal courts. There is another issue, which is out-of-court settlements. A law has been passed on this but Greece has asked for technical assistance on how to implement it. The Netherlands, the UK and Austria are ready to provide help on this.
There is a paragraph in the Task Force?s report that gives a damning verdict of Greece?s public administration. It describes it as having ?no over-arching strategic vision? of the reforms, ?no accountability for the results? and of there being a ?lack of supervision? and ?very little coordination.? How do you begin fixing a system that appears to be in such a bad state?
That part of the report is a copy of what the OECD report said. You have to know that the Greek government itself requested an audit from the OECD. This was a brave decision by the Greek government and I think it shows they want to change things. We are now working with the authorities of some member states, notably France, to see how we can bring coordination and accountability, and review the structures of the state. All this is happening in the framework of Article 35 of the recent multi-bill, which says that there will be an evaluation of all the structures of the central government and wider public sector as well as an evaluation of all the staff. To carry out an evaluation, you need some principles. On this, there is a request by Administrative Reform Minister Dimitris Reppas to have a ?strategic state? (epiteliko kratos), which is a smaller and more efficient state.
One of the criticisms of the government over the past to years was that a lot of reform-minded legislation was passed but that it was not necessarily passing through the public administration and being implemented. Do you think that the process you are helping with will change that?
I hope so because all this legislation is objective-oriented, the ?how? is not part of the legislation. The ?how? has to be imagined and prepared and written down by the public service itself, which is an unbelievably difficult task. This is where we come in. We are trying to see if we can help in the ?how,? which means the implementation.
Among the recommendations the Task Force has made in a bid to improve the efficiency of the public administration is the establishment of a high-level coordination committee. Both of these are due to begin in the first quarter of 2012. Are you worried that these initiatives or others will be affected by the general elections planned for February?
We need some authority at the highest level of the state to steer the process of change in the public administration because in Greece ministries and ministers are quite independent from each other and what one decides, the other may not follow. So, you need the prime minister to ask his ministers to proceed with what will be agreed among them. This is why the steering committee for the reform of the public administration should be at the level of the prime minister. Even if there are elections at some stage next year, I think we can expect that the new prime minister would also like to steer this process so that he can give a sense of urgency and purpose to all ministers and the staff.
For all the talk about structural funds, tax evasion and administrative reform, the Task Force has identified one element to the process that can?t be assessed in numbers your report refers to Greece needing ?the desire and the courage to change.? The Task Force has been in Greece since September 1 have you detected this desire and courage in your contact with the range of officials and representatives you?ve met?
I?ve certainly detected the desire to change. Most parts of society want change, they want the situation they are living through now to change. If Greece has the courage to go through these changes remains to be seen. At a political level, over the last 18 months there have been many difficult changes that have gone through even though most of them are not yet implemented. The proof is the implementation and not the adoption. I think that as things progress, more and more people will find the courage to go along with change. It?s the only thing that will save the next generation. My generation is almost over but the next generation has to be saved.