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Eurozone crisis

Auditors scrutinize Greek austerity efforts

Financial experts from the EU, ECB and IMF are back in Athens to review the bailout program. The so-called troika of Greece's creditors demands cutting jobs in the public sector to enable greater efficiency.

In Greece, no one doubts the necessity of public sector reforms. However, when the time comes for concrete action, Greeks often announce protests and start lengthy fundamental debates.

Young managers like Stelios Stavridis want to prove that things can be handled differently. The successful businessman and engineer is chief executive of the Athens EYDAP. It is his main goal to modernize Greece's biggest water utility - and cut back on bureaucracy at the company.

"Our problem is that hardly anyone in Greece is inspired by reforming state-owned companies," Stavridis said and added that many people are opposed as they believe it is not profitable. But the opposite is the case, he argued: if you cut back unproductive jobs, you set free funds for investments and creating new jobs; you strengthen the company.

Abolish bureaucratic hurdles

Stavridis knows what he is talking about: he heads the Greek Anti-Bureacracy Movement and was a liberal party candidate for parliament in the 2012 elections, though unsuccessfully. Now he aims to fight bureaucracy at the helm of a state-owned company, of all places. Why should he succeed where many others before him failed? Because time is ripe for reform, Stavridis said and immediately had an example to prove his point: if - after suffering a burst water pipe - a person receives a water bill that is much too high, he is required to confirm in writing to the utility company that he actually had a burst pipe. That is absurd: "First we inform a person that he has a burst pipe, and then we demand written confirmation," the new head of the Athens water utilities said, pledging to abolish such ludicrous regulations.

Stelios Stavridis

Stelios Stavridis heads Greece's biggest water utility

That is just one example of the kind of bureaucratic hurdles the so-called troika of Greece's creditors - the EU, International Monetary Fund and European Central Bank - wants to see disappear. Significant job cuts in the public sector are also part of the deal. The government in Athens has promised to reduce the number of officials by 150.000 until the end of 2015, mainly by early retirement. According to Greek media reports, the troika has its doubts about the plan, demanding instead that Greece lay off more than 20.000 officials by the end of this year rather than hoping for large numbers of early retirees.

The troika's demands have raised concern among the ruling three-party coalition, in particular because the Democratic Left party firmly rejects dismissals. While Stelios Stavridis does not expressly support the troika's demands, he does understand them: "At times, the troika's experts do not feel they are being taken seriously by the government." It has happened in the past, he said, that Greek officials "outsmarted the minister responsible, who in turn outsmarted the troika."

Eternal battle

Former Greek government spokesman Dimitris Tsiodras said the troika mistrusts Greek government politicians to a certain degree. While the austerity measures and cuts in the public sector have already been effective, the government was well on its way of securing a primary surplus in the budget for the first time this year; but important reforms are still not being tackled, the Athens-based analyst said.

Dimitris Tsiodras

Tax evasion is still an issue, Dimitris Tsiodras says

If structural reforms do not take effect, additional austerity measures will become necessary to meet budget aims, Tsiodras warned. "That was the deal." He added the troika promised to leave the Greek government 70 percent of any future budget surplus to ensure austerity policies can be cushioned in the social sector. This is the scenario the political analyst envisions since he sees "no leeway for even more salary and pension cuts."

Meanwhile, it would be enormously helpful if the state sped up privatization plans, Tsiodras added. Rampant tax evasion is bound to be another hot topic of discussion with the troika, he said. Greece has only installed 330 of the required 1000 tax investigators so far, the former government spokesman said.

He pointed out that the international creditors also demand building up a functioning tax administration in rural areas, where the danger of tax evasion is particularly high. "People naturally hesitate to accuse friends or relatives of tax evasion in a place where everyone knows everyone else."

A positive audit as part of regular efforts to review the steps Greece has taken to meet its bailout obligations is regarded as a condition to free up financial aid to the tune of 8,8 billion euros ($ 11,4 billion.) Despite all criticism, observers believe the meetings with the troika this week will be more relaxed than in the past. For the first time, Greece's great goal - securing a primary budget surplus - appears to be within reach.

DW.DE

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