Exiting EU supervision

The government’s efforts to bring the Greek economy’s budget deficit, now under close supervision by the European Commission, under the eurozone limit are beset by obstacles. Meeting EU demands, however, is the only way to end the painful EU supervision that subjects Greece to constant monitoring and irksome recommendations about its economic policy program – which are not without social consequences. After objections from European and Monetary Affairs Commissioner Joaquin Almunia, the government’s progress report submitted yesterday showed that revenue forecasts from the securitization of overdue tax debts for 2006 amounted to 1 billion euros – down from the original estimates of 2 billion. That means that the conservative administration will need to take additional measures to make up for the extra amount. The measures translate into spending cuts, sale of state property, and more privatizations. The truth is that the government is trying to wed its promises of «mild adjustment» with the Commission’s calls for economic austerity measures. The end result has been an endless tug of war with Brussels, with the Greek administration tiptoeing between real measures and accounting tricks – a practice that has been popular with member states for years. The government’s acrobatics touch upon a crucial issue and call for a fundamental political decision: The New Democracy administration must take the difficult and unpopular path of fiscal reform so that the country can escape supervision from Brussels as soon as possible. If the government shuns in-depth economic restructuring for the sake of awkward accounting tricks, fulfillment of the official criteria will only be ephemeral – and the resumption of EU supervision will above all harm society’s lower-income groups. For it is the less well-off in society that suffer the most from knee-jerk economic measures that are only aimed at meeting requisite criteria. By contrast, the burden is more fairly distributed in the case of structural changes. A policy that aims to remedy the real structural deficits does more to serve the long-term well-being of the people, including the lower-income strata, even if it demands greater sacrifices in the short run.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.