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A Troubled Greece to Assume the EU Presidency



Greek and European union flags flutters in front of the Acropolis in Athens on Nov. 5. Greece will assume the presidency of the EU in 2014. (LOUISA GOULIAMAKI/AFP/Getty Images)

Summary


Greece will take on the rotating presidency of the European Union during the first half of 2014, the fifth time Athens has held this position since it joined the continental bloc in 1981. Athens will focus its agenda on several political and economic issues, most notably the EU plans for a banking union and the immigration crisis in Mediterranean Europe.

Because of Greece's domestic, economic and political situation, Athens' semester at the front of the European Union will have a very limited impact on the bloc. Political fragmentation in Europe coupled with the declining influence of the EU rotating presidency will also ensure that the most important decisions are still made in Berlin, Paris and Brussels.

Analysis


The rotating presidency was born in the late 1950s, created by the founding members of the European Economic Community (the predecessor of the European Union) to strike a balance between supranational integration and intergovernmental cooperation. The evolution of the European Economic Community into the European Union has progressively weakened the role of the presidency, however, as membership has grown from six original members in Western Europe to the current 28 member states from across the Continent.

Today, the main responsibility of the presidency is to establish the political agenda of the bloc for the semester, organize meetings and broker dialogue between EU institutions and member states. While the rotating president still has some degree of influence (for example, this semester's focus on Central and Eastern European issues was partially a result of Lithuania's EU presidency) real policy-making power rests with the largest member states (most notably Germany and France), the European Commission and the European Parliament.

Greece's role in the European Union has substantially changed as well. Athens joined the European Community in 1981, part of the bloc's process of enlargement to the south (Spain and Portugal joined in 1986). At the time, Athens saw accession as a way to consolidate its democracy and fully integrate with the West after the end of the dictatorship that governed Greece from 1967 to 1974.

Greece held the presidency of the European Community for the first time during the second half of 1983, when the organization only had 10 members. While it was a relatively uneventful presidency, it was a very symbolic moment for the country. Athens held the presidency again during the second half of 1988, while Greece's third presidency was considerably more significant. Taking place during the first half of 1994, the Maastricht Treaty (which created the European Union) had just entered into force, and in June Austria, Finland and Sweden signed their respective acts of accession. During Greece's fourth presidency (January-June 2003), 10 countries in Central and Eastern Europe signed their accession treaties, marking the largest wave of enlargement in the history of the European Union.
Greece's Fifth EU Presidency: Some Hope and Some Despair

Athens has set several goals for its fifth presidency of the European Union. It plans to promote the continuation of efforts to achieve a banking union. Since the beginning of the European crisis, Greece has been at the center of financial troubles in the eurozone, and Athens is interested in enhancing financial cooperation and solidarity within the currency union. In late December, member states reached an initial agreement on the creation of a Single Resolution Mechanism for banks in the eurozone -- Athens will request that the European Parliament formally ratify the project. Greece will be in a race against time, however, because the current EU Parliament ends its mandate in early 2014, with a new one elected in late May. Moreover, on Dec. 19, EU Parliament President Martin Schulz said there would be "long negotiations" before reaching an agreement because some members of the institution do not support the plan that was originally approved by member states.

Because of its geographical location in the Mediterranean, Athens will also put special emphasis on immigration issues. In recent months, violence in northern Africa and the Middle East (most notably, the crisis in Syria) led to an increase in the arrival of refugees and illegal immigrants to countries on the southern extent of the European Union. Greece will promote greater border control as well as additional assistance for countries that are dealing with significant waves of immigration (most notably, Greece, Bulgaria and Italy). Athens is likely to have moderate success in this area; Italy -- the country that will hold the EU presidency in the second half of 2014 -- has a similar interest in enhancing EU funding for members on the bloc's external border. However, the EU's main response to the issue will mostly take the form of additional funds for border regulation and better infrastructure for countries in the Mediterranean. A substantial reform of the bloc's asylum policies is unlikely in the current political context, where immigration is a very sensitive issue across the Continent.

Greece also promised to "focus in the areas of economic recovery, employment, cohesion" and to "deepen the Union," goals that may prove difficult to achieve. At the continental level, Europe is still struggling with its economic, social and political crises. During the third quarter of 2013, the eurozone grew by just 0.1 percent, down from 0.3 percent growth in the previous quarter. In its autumn forecast, the EU Commission said the economy of the currency bloc would contract by 0.4 percent this year, with an expected growth of around 1 percent in 2014. Unemployment is expected to remain above 12 percent on average across the eurozone, with only marginal reductions in some countries. Finally, credit conditions will likely remain tight for small and medium-sized enterprises, undermining the eurozone's chances for sustainable economic growth.

On top of the eurozone's troubles, Greece is having problems of its own. The country has been in recession for six years, with unemployment skyrocketing from 9.5 percent in 2009 to roughly 27 percent in 2013. When drafting the country's budget for 2014, the Greek government announced that the economy would return to growth in 2014, but even if that does happen, Athens' problems are far from over. In November, the Organization for Economic Co-operation and Development reported that Greece's debt would reach 157 percent of gross domestic product by 2020, significantly above the EU forecast of 124 percent of GDP for the same period. This means that Athens will probably push for a new write-down of its debt in the coming months -- something that could be very controversial in Germany and other Northern European nations.

Additionally, the troika (the EU Commission, the European Central Bank and the International Monetary Fund) considers that Athens has a budget gap of around 1.5 billion euros (about $2 billion) for 2014, which means that Athens and its lenders will still be arguing over economic reforms (including spending cuts, net taxes and privatizations) for most of next year. The troika is interested in keeping the eurozone afloat, so Athens will probably receive additional financing over the coming year if required. However, as the European crisis spreads to the north, debates about further financial assistance to countries in the south will prove more contentious than ever.

Meager economic growth and high unemployment will yield political consequences in 2014, as anti-establishment and Euroskeptical political parties are anticipating strong performances in upcoming elections. Athens will be especially worried about two in particular: the Greek local elections, to be held on May 14, and elections for the EU Parliament, to be held May 22-25.

At home, the forthcoming elections in Greek regions and municipalities could substantially hurt mainstream parties, weakened as they are. The two largest traditional parties in Greece, the center-right New Democracy and the center-left Panhellenic Socialist Movement, currently share a fragile coalition government, which has been under strong stress because of the enduring social and economic crisis in the country. A poor electoral performance by either one of these parties (and a strong performance from opposition parties in the left, such as SYRIZA, or the far-right, such as Golden Dawn) could further weaken the government in Athens. At the European level, Euroskeptical and nationalist parties are likely to have strong performances and increase their presence in the EU Parliament, which will increase their ability to block -- or at least delay -- policy-making decisions in the European Union.

Because of this combination of domestic crises in Greece and political fragmentation at the European level, Athens' term at the EU rotating presidency is unlikely to be particularly significant. Greece's limited political influence with the EU decision-making elite, the elections in the EU Parliament and the lack of agreement between member states on several issues mean that Athens's European semester will make little contribution to solving any of Europe's structural shortcomings. Most of the significant decisions in the next six months will be made very far from Greece, in places such as Berlin, Paris and Brussels.

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