politico.eu — Einstein defined insanity as doing the same thing over and over again, but expecting different results.
That’s a trap the European Commission wants to avoid as it mobilizes a new team of experts to advise Greece on another bailout.
Between 2011 and the moment it was quietly folded earlier this year, the Task Force for Greece’s experts spent thousands of working days — more than 2,250 until the beginning of 2014 alone — trying to help Athens implement economic and structural reforms in return for billions of euros of credit.
What it apparently achieved was the open contempt of the Greek people — for precious few results in the most important areas.
“After five years of the Task Force, two memoranda (bailout contracts), we still have nothing,” said one veteran of the last EU expert mission.
With Athens now drawing on a third bailout worth €86 billion, Brussels wants to be closely involved in implementing the reforms — without giving Greeks the feeling that the EU is putting boots on the ground.
“We need to avoid the impression that we’re going to take over in any way,” said one EU official close to the new mission, which has been rebranded less militaristically as the Structural Reform Support Service.
Headed by Dutchman Maarten Verwey, who has relevant experience advising fellow bailout recipient Cyprus, the new squad wants to keep a lower profile than the Task Force, whose leader eventually had to speed around in a minivan with bodyguards to protect him from the ire of the Athenians.
“You need the commitment of the CEO” — Tom de Bruin, former Task Force special adviser.
The new rules of engagement for the team of 10-15 EU experts are currently being hammered out in Athens beyond the scrutiny of the media. Possibly the most decisive factor to its success will be the level of support from the left-wing Greek prime minister.
This is an open question. Alexis Tsipras came to power at the beginning of the year promising to scrap the austerity measures prescribed by Berlin. After striking a deal this summer to keep Greece on the EU financial drip (and in the euro) and his subsequent reelection in September, he finds himself having to impose more severe reforms than those he opposed.
“I am worried by the constant message from Tsipras that he says, ‘Well you know this package, I couldn’t do otherwise. I didn’t believe in it, but it’s the only way forward,’” said Tom de Bruijn, a former Dutch diplomat who worked as a special adviser to the Task Force.
“That does not sound very convincing. Anyone knows in any corporate business, you need the commitment of the CEO,” he said.
POLITICO spoke to eight members of the original Task Force team, most of whom insisted on anonymity because they still work for the Commission. Their recollections of the EU’s first attempt at dipping into the governance of a sovereign member state give little ground for optimism that Greece’s third bailout package can succeed in reforming the economy where its predecessors failed.
“The likelihood that all of this will succeed is very low,” said one former member of the technical assistance team, which consisted of a staff of about 20 in Athens and another 20 back in Brussels, joined by a rotating cast of experts flown in from EU countries.
It is partly a problem of political leadership. As well as the lack of commitment from the prime minister, his Syriza party has little hands-on experience of government.
“They have no managers, they cannot follow through procedures, they cannot follow through on practice,” said Haris Theoharis, who now sits in parliament with the opposition party To Potami.
Theoharis was the head of the Greek tax authority for almost 18 months, but submitted his resignation in 2014 to the then prime minister Antonis Samaras because of what he described as threats of violence and political pressure to avoid pursuing tax evaders who had links to the conservative government of the time.
The apparent impossibility of collecting taxes lies at the heart of Greece’s economic difficulties, and is therefore the focal point of efforts to impose reforms. Tax is the first area mentioned in Greece’s latest bailout contract.
Greek tax authorities collect just 40 to 50 percent of total taxable income from independent professionals like doctors, lawyers and architects each year, according to Friedrich Schneider, a top European expert on shadow economies at Johannes Kepler University in Austria.
Other EU countries collect between 70 and 80 percent of taxes from this group, Schneider said. He estimated the level of uncollected taxes from independent workers five years ago, around the time the Task Force began its work, at €26.8 billion.
Last year, Greece was still missing €20 billion and the reduction in that number is at least partly due to the economic contraction rather than progress against evasion.
Tax dodging has deep cultural roots dating to domination by the Ottoman Empire, when evasion was a form of proud patriotic insubordination by the colonized. There is a similar feeling to modern-day evasion, especially after tax hikes that were introduced to satisfy Greece’s international creditors. For some, though, it was a matter of economic necessity, argued Theoharis.
“The crisis forced a lot of people to tax evade just to survive,” he said.
To tackle the problem while avoiding the impression of orders being handed down from Brussels, the Task Force spent years flying in tax experts from other EU member states, such as Bulgaria, Ireland, the Netherlands and the U.K. Verwey’s unit intends to maintain this strategy.
Patchwork approach
But skeptics believe this patchwork approach does not provide the right levels of expertise. Elena Paniritis, a World Bank veteran who has been working as an adviser to the Greek finance ministry, calls it a “bring your own booze approach.”
One difficulty that the Commission’s technical assistance team should be able to avoid this time is rivalry with the International Monetary Fund’s own people on the ground. Theoharis said the IMF experts “knew much more what they were talking about,” but the feeling in Athens and in Brussels was that the Washington-based fund was better suited to dishing out advice in the developing world rather than to an EU country.
“It’s quite a lot of ideology and not a lot of expertise,” was the way one former Task Force member described the IMF’s intervention.
The Commission’s experts tried to profile themselves as the ‘good cops’ in contrast to what many Greeks saw as the orthodox economic reforms espoused by the IMF. However, in reality “it wasn’t easy for the people to make a distinction,” according to Kostis Chatzidakis, a member of parliament who was minister for competitiveness and development in the Samaras government.
Sole purveyor
The Greeks took an immediate disliking to the Task Force’s chief Horst Reichenbach, a German. Greek anarchists torched his wife’s car at their home in Potsdam, outside Berlin, in May 2012, and resentment built up to the point where Reichenbach needed five bodyguards around him at all times in Athens.
A star of the European Commission and one of the architects of the Treaty of Maastricht, the founding document of the euro, he had been tapped by the then Commission President José Manuel Barroso and his top executive, Catherine Day, to lead the mission.
But even his stellar CV and “just call me Horst” demeanor could not salvage what became a “parallel process” — in the words of one EU official — relegated to the margins by the higher profile “Troika” group of creditors, as the Commission, European Central Bank and IMF were collectively known.
Verwey’s unit will not be competing with the IMF, which has stepped back from its hands-on advisory role, and aims to avoid the sprawling lack of focus which had the Task Force overseeing 110 different work streams in 12 reform areas, according to its final quarterly report issued in July 2014, a full year before its work fully ground to a halt. The new agreement between Brussels and Athens envisages assisting Greece in a much more limited number of areas, including tax administration.
None of which will help the European Commission, as sole purveyor of reform advice to Athens, overcome one major problem on the ground which de Bruijn, who is now a magistrate in The Hague, summarized with characteristic Dutch bluntness: “Greek civil servants are badly organized, they lack the proper skills, they have working methods that date from the last century…”
“They are not a modern bureaucracy like we have in Western Europe.”
