Can Greece repair its reputation?

Brussels bureaucrats are not known for their humorous side, nor indeed are German politicians or Eurozone finance chiefs. But anyone wandering through Syntagma Square in Athens these days could be forgiven for thinking that someone in the EU hierarchy clearly has a sense of mischief.

In recent weeks, after five years as a battleground between Greek police and anti-austerity protesters, the square has been undergoing repairs to its marble. The refurb marks not the end of Greece’s austerity years – far from it – but the start of what many might otherwise assume was a drunken New Year’s prank by someone in Brussels’ protocol and scheduling department.

Why else, after all, would debt-ridden, feckless Greece be taking over the presidency of the European Union after five years in which it has nearly brought the whole European project to its knees?

The answer, like most other things in Brussels, is a bureaucratic one: the Presidency of the Council of the European Union is a rotating affair, passing between the members of the 28-nation bloc every six months. But while, technically, the holder does little more than host key EU meetings, the next six months are being seen by Greeks as an important chance to steer Europe to a pro-growth agenda, as it tries to clamber from its crisis.

Others, however, see a Greek presidency as akin to making the bad boy at the back of the class the school monitor. “It’s a delicious paradox,” says Daniel Hannan, the Tory MEP and leading Eurosceptic. “The EU reckons that Greece is incapable of governing itself, and has placed it under the troika [the European Commission, the ECB and IMF]. Yet now Greece is presiding over the EU.”

What may provide amusement for some is likely to be less fun for Europe’s leaders – in particular Angela Merkel, the German chancellor, whose role in dictating the harsh terms of Greece’s £200 billion bail-out has seen her compared to Hitler by many Greeks.

At least 14 key ministerial meetings are expected to be held in Athens in the next six months, meaning yet more irksome trips for German ministers to a country where they frequently attract crowds of hostile protesters. Only last week, the German embassy was raked with Kalashnikov fire by unknown assailants.

Worse still for the visiting dignitaries, even the accommodation may be below Brussels standards. Keen to show that they are serious about austerity measures, Athens has decided to host a “Spartan Presidency”, in which the usual Euro-gravy train will be run nearly dry.

“We will not be handing out ties and foulards,” said Dimitris Kourkoulas, a deputy foreign minister. “We will have notepads and pens to hand out to our guests.”

Armed with a notepad, will the average visiting diplomat see many changes for the better in Greece?

Unemployment, while no longer rising, is still at 28 per cent, despite many of Greece’s best and brightest fleeing abroad in the hope of better prospects. And after five years of austerity, the price paid by ordinary Greeks is wearing thin. This winter, for the first time in decades, heavy smog has returned to Athens as houses unable to pay electricity bills burn rubbish in their fireplaces to keep warm.

To see how far Greece has come, however, one needs to remember how far it lagged behind. Visiting the country during the height of its woes two years ago was rather like travelling back to Britain during the worst times of the Seventies. Strikes and riots took place everywhere, the far Right was resurgent, and Greece’s trade unions, whose bloated payrolls were a major drain on public finances, thought they ran the country.

Among the ordinary Greeks I met two years ago was Kyriacos Yiacoumi, an English tutor who epitomised how the crisis had affected the Greek middle class. His work had all but dried up as fellow Greeks could no longer afford lessons for their children, and he and his wife increasingly bought their clothes second-hand.

He is little better off now; he has not bought new clothes for three years, and earns a living mainly through teaching English to foreign students via Skype, for just a fraction of what he used to charge his Greek pupils. The only good thing, he says, has been a 70 per cent cut in electricity bills, introduced to stop the smog problem.

“Little things like that have helped,” he says. “When the smog fills the atmosphere on cold nights it is the stench of poverty, like Britain in the 1900s. You cannot breathe, it is terrible. Greece is still not off the intensive care list, although I do think things have reached a point where at least they cannot get any worse.”

Will the presidency of the European Union do any good? “Maybe, it will let Greece show that we have coped so far, and hopefully get a bit of sympathy from other nations and win their trust back. We also need the Germans to come here and admit their mistakes, rather than pointing the finger.”

In fact, the lecturing from Germany and the EU troika is unlikely to end. For while the government’s adoption of EU-imposed austerity measures has finally reassured the markets – the cost of government borrowing has dropped from 36 per cent to around eight per cent now – much more needs to be done.

Political squabbling continues to hamper the planned £40 billion privatisation of the Greek government’s vast portfolio of assets, which includes moribund rail networks, under-used airports and probably the only loss-making casinos in the history of gambling.

Some 15,000 “unproductive” civil servants have yet to be sacked, while bureaucracy still hampers would-be job creators in the private sector. An unemployed barber, Spyros Priftis, became a cause célèbre recently after complaining to the troika that it had taken nearly three years to sort out the paperwork for his salon on Corfu.

And although the Greek government has made an historic surplus this year, tax evasion – once considered a patriotic duty as part of resistance to Ottoman rule – appears still to be in the Greek DNA. On Monday, Michalis Liapis, a former transport minister, was given a four-year suspended prison sentence after being caught driving an untaxed luxury jeep. He said he could not afford to pay, despite press reports that he owned some 30 properties and earned 110,000 euros a year.

Perhaps the most telling sign, though, that the forthcoming EU meetings in Athens may not be the most cordial of occasions comes from the Greek government’s own comments on assuming the presidency. A statement on its website said that austerity policies had “greatly affected social cohesion” and “shaken the confidence” in EU institutions. But it made not a single mention of the role of successive Greek governments in creating the problems in the first place.

Then again, the current administration, which has signed up to austerity measures, is about as good as the troika can expect. Elections in the spring could see anti-austerity parties on the Left undoing the government’s fragile majority, putting the entire programme back to square one.

“With the elections in mind, and with a primary budget surplus, I would also expect the Greek government to be a little more bolshy during the presidency,” says Charles Grant, director of the Centre for European Reform. “I think other countries will just have to accept that, which could lead to de facto forgiveness for Greek debts.”

Others, though, emphasise that Greece’s EU creditors still hold all the aces at the table. For all that the presidency may give Athens the chance to be treated as an equal player, its best option may be not to shout a lot, but simply to make sure that the meetings run smoothly.

“This is not going to be an end to austerity,” says Anand Menon, an expert in European politics at Chatham House. “The best thing the Greeks can do here is rehabilitate their reputation by chairing the meetings effectively and efficiently, and showing that they can run a tight ship.”

Colin Freeman is the Chief Foreign Correspondent for the Sunday Telegraph.

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