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Troika: Greece falling short on speedy reforms, political unity

By Alexandra Mayer-Hohdahl Mar 27, 2012, 17:49 GMT

Brussels - Greece's international lenders on Tuesday painted a grim picture of the progress made on getting its economy back on track, bemoaning the dearth of political unity in Athens and the slow implementation of contentious austerity measures and reforms.

'The current pace of reform and adjustment is far from sufficient to make Greece's public finances sustainable or to close the competitiveness gap,' European Union Economy Commissioner Olli Rehn warned during a debate with EU lawmakers working on economic policy.

Joerg Asmussen, a member of the executive board of the European Central Bank (ECB), added: 'There is still a long way to go. We have the clear aim to keep Greece in the euro. It is at the very end up to the Greek authorities and Greek people to decide this.'

Athens has been applying round after round of financial cuts and growth-enhancing reforms under pressure from the EU, the ECB and the International Monetary Fund (IMF), which have required the measures as part of the two bailouts they granted the debt-plagued country.

Rehn welcomed the 'major fiscal adjustments' that have been made under 'exceptionally difficult circumstances,' while Asmussen spoke of a 'remarkable achievement' on lowering the deficit and the IMF's Poul Thomsen praised Athens' 'impressive' progress to date.

But the approach has antagonized Greek citizens and trade unionists, who have repeatedly taken to the streets to protest austerity measures, sometimes leading to violent clashes.

Looming elections have also raised concerns about whether politicians will stick to their austerity and reform promises.

Rehn described a 'lack of political unity' as a continuing 'Achilles heel' hampering Athens' efforts at reshaping its finances.

'Is there security that the programme will work? No ... It will only be possible if there is clear ownership of the programme across the political spectrum,' Asmussen added.

The rescue of Greece has a high risk of going awry, Rehn, Asmussen and Thomsen - the IMF's mission chief for Greece - said.

'The second (bailout) programme includes very significant risks of implementation. These can be best countered by strengthened political unity in Greece, as well as continuous determination to improve the administrative capacity of the country,' Rehn said.

One area of particular concern is the fight against tax evasion, which Thomsen said has been inadequate so far.

'I think there is a risk that the programme will fail unless we do much better here,' he said, while at the same time noting that there is no one 'panacea' that will solve Athens' woes and relaunch growth.

The key is for the government to keep moving forward with promised reforms across various fronts, the three men agreed.

'Yes, the medicine is bitter, but the patient can and will recover if he follows the prescription,' Asmussen said. 'The Greek people are not reforming their economy and their state to please the (EU-ECB-IMF) troika ... They are going through this adjustment process for their own good.'

'As long as Greece does what it is supposed to, Europe will stand by Greece,' Thomsen added. 'This is key. The ball is in the court of the Greeks.'

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