Greece hampers rise of EU’s ‘Club Med’

Posted on September 12, 2016

Alexis Tsipras, Greece's prime minister, left, embraces Matteo Renzi, Italy's primer minister, as he arrives for the first Mediterranean European Union countries' summit in Athens, Greece, on Friday, Sept. 9, 2016. Greek banks are struggling to contain the fallout from the deepest economic slump since World War II and the biggest sovereign debt restructuring in history. Photographer: Kostas Tsironis/Bloomberg©Bloomberg

Alexis Tsipras, Greece’s prime minister, left, welcomes Matteo Renzi, Italy’s primer minister, as he arrives for the summit in Athens

Just when his government’s indolent attitude to economic reform is again exasperating Greece’s eurozone partners, Alexis Tsipras presided over a mini-summit of southern European leaders that was the diplomatic equivalent of a poke in the eye to Germany and other creditors.

Friday’s seven-nation meeting in Athens, to which the leftwing Greek premier invited representatives of Cyprus, France, Italy, Malta, Portugal and Spain, produced a familiar list of rather unfocused demands for EU economic policies, putting the accent on growth and employment instead of austerity.

    In the eyes of Germany, the Netherlands and other northern eurozone nations, the mini-summit was more significant for giving an unwelcome foretaste of how a caucus of southerners might emerge as a vocal lobby in the EU after Britain’s departure reduces the bloc to 27 members.

    Markus Ferber, a conservative Bavarian deputy in the European Parliament, voiced concern that “the ‘Club Med’ group, after Britain’s exit, will possess a blocking minority, with which they will obstruct all the laws that don’t suit them”. Mr Ferber described this group as “a strong coalition of reform-resistant redistributors”.

    Wolfgang Schäuble, Germany’s finance minister, used more pithy language to deride the Athens event. “When socialist party leaders meet, nothing intelligent comes out of it most of the time,” he said.

    For accuracy’s sake, it should be said that the mini-summit was not, strictly speaking, a “Club Med” gathering, since Portugal is on the Atlantic, and not a socialist event either, since Cyprus and Spain have centre-right governments. Moreover, Mariano Rajoy, Spain’s prime minister, who is thought to have a low opinion of Mr Tsipras, made a point of not attending the mini-summit in person.

    As for François Hollande, France’s Socialist president, who did travel to Athens, it seems probable that he made the trip not to benefit from Mr Tsipras’s economic policy insights, but to earn credit with left-leaning voters at home and boost his prospects in his party’s presidential election primaries in January.

    The different motives and political complexions of the Athens mini-summiteers suggest that the southerners are still a long way from constituting a coherent caucus. Yet the tendency for regional blocs to take shape within the EU is no figment of the imagination.

    Europe’s refugee and migrant crisis has breathed fresh life into the Visegrad foursome of the Czech Republic, Hungary, Poland and Slovakia, each of which fiercely opposes EU-imposed refugee resettlement quotas. The EU’s Nordic and Baltic nations enjoy regular policy huddles and share a common apprehension about Russia’s intentions in their region.

    As for the EU’s southern states, however, the chief hindrance to a common front is Greece and its Syriza-led government. After seven months of inept radicalism that almost tipped Greece out of the eurozone, Mr Tsipras reversed course and signed up in August 2015 to a €86bn international rescue — Greece’s third bailout since May 2010.

    Under this deal Mr Tsipras’s government receives aid in return for carrying out precisely defined economic reforms. However, as eurozone finance ministers made clear on Friday at a session in Bratislava, Greece has fallen way behind schedule, having implemented only two of 15 reforms required to unlock the next €2.8bn of financial support.

    On paper, the incentives for Mr Tsipras to do the creditors’ bidding are strong. Greece would qualify for the European Central Bank’s quantitative easing programme, allowing the bank to buy Greek government bonds. Greece would also increase its chances of securing debt relief from its creditors. Instead Mr Tsipras is yet again testing his EU partners’ patience. He is not only dragging his heels on economic reform, but is letting a criminal prosecution go ahead in a blatantly politicised case against Andreas Georgiou, a former head of the national statistics agency.

    In the future 27-nation EU, such behaviour risks putting Greece not at the heart of a like-minded southern caucus, but in a very lonely league of its own.

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