A decade after the start of the global financial crisis, Greece is recovering well. A recent European Central Bank stress test showed a return of confidence to the Greek banking sector, as the country prepares to exit its eight-year EU bailout programme this Summer. A bill was passed on Thursday approving the last batch of reforms required by international creditors, in areas ranging from taxation to pensions. But a key enabler of the implementation of these reforms hit the ground in 2015, with the establishment of the Structural Reform Support Service (SRSS) under the auspices of the European Commission.
The SRSS was designed as a successor to the Taskforce Greece and the Support Group Cyprus. Both bodies were responsible for helping Greece and Cyprus implement macroeconomic reform programmes through the provision of technical support. As a result of its success, the SRSS’ role has evolved. With its recently expanded budget, the SRSS currently supports structural reform plans relating to education, health, public administration, financial management, and business policy across 22 additional countries.
To oversee the SRSS’ crucial work, the Commission appointed Maarten Verwey, a former Dutch Ministry of Finance director and the former Deputy Director-General for Economic and Financial Affairs in the European Commission. Verwey also had ample experience in advising Cyprus on its financial planning and reform from 2012-2014.
Interview with Maarten Verwey, Director-General and Head of the Structural Reform Support Service in the European Commission
For South EU Summit magazineRead More
Now, three years since the SRSS was formed, Verwey says both Greece and Cyprus have made significant progress through SRSS support. “A good example would be the support provided to the Greek revenue administration. This support has contributed to a significant increase in tax revenues for the Greek state. Another example would be support for the introduction of general minimum income schemes in both Greece and Cyprus. In both Member States the system is now up and running.”
While some critics have been unhappy with the pace of reforms in Greece, Verwey noted that Greece has made great strides in areas such as judicial and public administration reform. Nevertheless, he does concede that there is still room for improvement, stating that “continued efforts are crucial for a sustainable recovery.”
Furthermore, he highlighted the need for patience as the country tackled some of its more significant challenges. “The country [Greece] has come a long way,” Verwey said. “At the same time, substantial stock imbalances remain: not only the public debt stock, but also the NPLs [non-performing loans] burdening banks’ balance sheets or the number of unemployed, which are all expected to take time to return to more acceptable levels.”
Thus, even though Greece is set to exit the bailout programme by the end of this summer, the SRSS will continue to provide invaluable support to the country for the foreseeable future.
In 2016 the EU and Turkey struck a landmark agreement, which aimed to stem the tide of migrants arriving on Greece’s shore. At the start of Europe’s migrant crisis, Greece was the main entry point, with around 885,000 migrants arriving in the EU through Greece in 2015 alone. Importantly, this bilateral deal helped reduce one of Greece’s most pressing burdens. “Almost overnight the daily arrivals dropped from an average of some 3,500 per day in the six months prior to the EU-Turkey statement to around 80 per day since (a drop of 97 percent),” noted Verwey, who in March 2016 was appointed by Commission President Jean-Claude Juncker as the EU coordinator for the implementation of the EU-Turkey agreement.
However, tensions between Turkey and Greece have been on the rise lately. In June, Turkey suspended its bilateral migrant readmission deal with Greece in response to a Greek court ruling that refused to extradite eight Turkish soldiers who fled Turkey after the coup attempt in 2016. While the EU-Turkey deal remains intact, the suspension of the bilateral deal with Greece could mean an increase in migrants for the country, putting pressure on Greece’s structural capacity.
“Cooperation among Greece, the EU and Turkey is key,” Verwey said, adding, “and it has proved that it brings better results.”
Additionally, the EU must sort out its own regulations for asylum processing to help ease the burden on Member States. Negotiations between Members States and the European Parliament about a Common European Asylum System are ongoing, with the goal of reaching an agreement by June on the EU’s future migration policy. The biggest point of contention so far has been the proposed reform of the Dublin Regulation, which includes a plan to automatically distribute people in need of international protection across EU states. Moreover, there are six other EU legislative files to reform under the European asylum system that must also be agreed upon in order for the Dublin Regulation to be properly implemented.
All of this means entry point countries like Greece will experience added pressure until the asylum regulations are passed.
Even with the start of the migration crisis in 2015, Greece – along with Cyprus – has continued its upward trajectory of recovery. And as these two countries reform, the SRSS, while remaining engaged, is also extending its reach to other EU Member States. The SRSS is now active in 24 Member States all together, providing on demand, practical and tailored services to fulfill the needs of specific EU countries.
“Accelerating the pace of reform is not only relevant for Member States that are in a crisis. It is important for all EU Member States,” explained Verwey. “For this reason, the Juncker Commission decided in 2015 to create the SRSS as a technical support service for all Member States of the EU.”
Still, a large focus remains on Greece and Cyprus. The SRSS provides hands-on migration management support to Greece, for example, and monitors the application of the Green Line Regulation on the divided Cypriot territory.