Introduction

The recent change of government in Greece raises questions about the future relationship between Greece and the European Union (EU). Unlike the perspective of a kindergarten teacher or a nanny, the EU operates under stringent rules that require adherence to significant fiscal targets. This article delves into the implications of the new government's policies and their potential impact on the broader EU-Greece dynamics.

The New Government and Previous Challenges

It is crucial to understand the context of the previous government, which was a 'huge train wreck' marked by ignorance, amateurism, arrogance, and cowardice. Any competent interlocutor would likely have performed better. The previous government's inability to communicate effectively—often failing to string two words together—highlighted their incompetence. This article argues that while the new government might not seem to be doing EU any favors, their potential for better governance could indeed result in a more favorable outcome for Greece.

Fiscal Policies and Primary Surpluses

The new government, under Mitsotakis, is seeking a reduction in primary surpluses, which is a reasonable request. While everyone agrees that primary surpluses are essential for debt repayment, having excessively high targets limits the government's ability to implement fiscal policies such as tax cuts. The EU, however, is wary of granting too much leeway to the Greek government, fearing the potential misuse of funds, particularly in the context of clientelistic networks that contributed to Greece's previous financial troubles.

Specifically, the EU is concerned about Greece's past practices, as evidenced by its troubled history of fiscal mismanagement. The party, New Democracy (ND), must prove that it has changed its stance and can genuinely implement free-market policies, which are essential for Greece's economic recovery. However, ND also opposed the Prespes agreement, which aimed to resolve naming disputes between Greece and FYROM. Despite this opposition, Mitsotakis has publicly acknowledged the challenges and has stated that he reserves the right to veto FYROM's accession to the EU, showing a willingness to maintain good relations with the EU.

Strategic Steps for Trust and Future Negotiations

To regain the trust of the EU and improve fiscal policies, Mitsotakis has outlined a blueprint of strategic steps. These include:

Unblocking important privatizations and foreign investments, such as the Hellenikon project worth approximately 8 billion euros. Digitizing public administration to reduce bureaucratic red tape. Implementing structural and deregulatory reforms aimed at increasing productivity and competitiveness.

By successfully implementing these measures within the next six months, Mitsotakis can restore the credibility of Greece and possibly achieve a relaxation in fiscal targets. Higher rates of growth and the execution of these reforms will bolster his case for fiscal flexibility, making it more likely that the EU will agree to a reduction in fiscal targets.

Government Formation and Reform Agenda

To date, Mitsotakis has appointed many technocrats to his government, many of whom come from the classical liberal center and the 'reformist' think tank of Greek Blairism/Macronism. This suggests a commitment to continue with a reformist agenda. However, whether this will be enough to gain the trust of the EU remains to be seen.

Conclusion

The change of government in Greece represents a significant opportunity for both Greece and the EU. While the path forward is not without challenges, the potential for better governance and economic reform could lead to a more favorable relationship. As Mitsotakis navigates these challenges, his success will determine whether the EU is willing to ease fiscal restrictions and support Greece's recovery.