Friday 9 December 2016

How the EEC helped Athens avoid a Grexit - back in 1983

This isn't the first time that Greece has faced financial meltdown, says former EEC commissioner Richard Burke

Richard Burke

Published 12/07/2015 | 02:30

Richard Burke
Richard Burke

In 1981, Andreas Papandreou won the Greek general election on a promise to leave the EEC (as the EU was then known) and also NATO.

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Generally speaking, western Europe was not too enthusiastic about his activities, especially as he favoured a warmer approach to relations with the Soviet Union. He had refused to support sanctions against them after they had invaded Afghanistan at the end of 1979.

Greece had only just joined the EEC but was already clashing with it over governance policy, especially taxation. Overall, the Greek question posed a daunting challenge for the development of foreign-policy decisions for the whole of Europe, not just the EEC.

By the time I returned to Europe as Ireland's EEC commissioner for the second time in 1982, Mr Papandreou was considering a U-turn over leaving the EEC.

There was a possibility his country might remain inside the fold if she could secure a partial renegotiation of her terms of membership.

A modification of the January 1984 deadline for the introduction of VAT was at the top of his list.

The Greek problem, which was crystallising around VAT, had caught my attention as a member of the Faculty of Leverets House, Harvard University, and as a backbench TD in the Dail in 1981 and 1982.

This was because earlier in my career in 1973-1977, I had served in Liam Cosgrave's cabinet as minister for education. Richie Ryan held the finance portfolio but had not been available to represent Ireland in the Council of Ministers negotiations on the Sixth Value-Added Tax Directive.

Mr Cosgrave asked me to replace Mr Ryan on this important piece of legislation at Luxembourg in November 1976. The directive was to form an essential part of the "own resources" of the EEC which, with levies and duties, would enable the EEC to have its own funds.

After I was appointed as Ireland's EEC commissioner in 1977, I brought in the Sixth Value-Added Tax Directive through the legislative procedures of the commission. Put simply, the directive meant that certain funds collected by way of VAT across the EEC would go directly into the EEC's coffers.

This policy formed the successful basis for collecting funds which, inter alia, would be distributed as part of the structural funds of the EEC, EC and EU member states in later decades.

These funds helped build up the economies of the EEC, especially that of Ireland. VAT was to become, and remain, one of the three fundamental "own resources" of the EEC, along with custom levies and agricultural levies.

After my predecessor, Michael Kennedy, returned early to domestic politics in 1982, EEC president Gaston Thorn had placed strong pressure on Taoiseach Charles Haughey to appoint someone with experience of commission procedures.

Upon my return to the commission, I was assigned by President Thorn, the task of preventing a possible Grexit. I was able to hit the ground running because I was not only familiar with EEC procedures, but also, many of the commissioners had been my colleagues in Brussels during my first term of office.

I recall fondly being welcomed back in Italian by Italian commissioner Lorenzo Natali with the words: "We all know colleague Burke and he knows us - so it is business as usual."

"Business as usual", in the context of Brussels, meant a melange of near-impossible conflicting and competing national interests. On this occasion, the task of negotiating successfully with Greece was complicated by the upcoming Spanish and Portuguese access negotiations and the development of the emerging 1985-1991 Integrated Mediterranean Programme, which would set the scene for the Iberian accession.

I set about spearheading this task with my cabinet colleagues, Liam Hourican, Catherine Day and Michael Lillis among other EEC civil servants. There were many visits to Athens. Some of the wittier journalists described the campaign as Burke's Greek Packaged Tours.

During the visits, I formed a strong personal relationship with Mr Papandreou, so much so, that the negotiations between us two took place at his private residence.

He was a man of imposing physical stature with a mind eager to achieve results, and open to suggestions as to the best method of realising our common goal. At the end of this process, he presented what Greece wanted in a document which became known as the Greek Memorandum.

So strong was the Irish input to the EEC campaign that an Irish OECD official, on a later visit to Greece, was overwhelmed by the generosity of the Greeks' appreciation of our contribution to the process.

At the end of the negotiations, I was due to host a press conference to unveil the commission's response to the Greek Memorandum.

The event would later be described as the shortest and sweetest press conference ever given by an EEC commissioner. It took place on St Patrick's Day, 1983.

It was my first appearance in the EEC's press conference room at the Berlaymount in Brussels since my return to Europe a year earlier. I had also invited the 200-strong European press corps to celebrate St Patrick's Day. (Three 50-litre barrels of Guinness had been secured for the occasion.)

My plans to publish the commission's response to the memorandum were torpedoed by a last-minute change of mind by the commission on its Greek policy, something that was caused by the necessity not to complicate Spanish and Portuguese access negotiations.

In the event, I had to confine my press-conference comments to just one sentence. I decided to focus instead on a celebration of St Patrick's Day. I invited the assembled "hacks" to toast it with a taste of our national drink. I remember the reaction of some of them, who were greatly surprised to see the normally conservative staff at the Berlaymont pouring the Guinness into glasses as if it were some of Belgium's Stella Artois.

They made short work of the liquid. The Soviet Union's Izvestia correspondent remarked: "This is a very popular press conference!"

Thanks to this stroke of Irish luck, I didn't have to face a grilling over the Greek Memorandum and an impasse was avoided.

Sometime later, I proceeded to unveil the commission's proposals for the renewal of Greece's terms of membership. By now, the commission had got its act together.

At the end of the negotiations, I had the honour of being presented with the Grand Cross of the Phoenix by President Konstantinos Karamanlis, a father of 20th-century Greek politics. He had spent much of his career guiding Greece into the EEC to fulfil what he passionately believed was her European destiny.

Karamanlis would have been heartbroken if Greece had left Europe - no doubt something which prompted the honour he bestowed on me with Papandreou's blessing.

I was happy with the result of our efforts, which kept Greece in the EEC and was hailed by some as a Marshall Plan-type development for Greece. It is a matter of some regret to me that Greece now finds itself the centre of a geopolitical maelstrom, which all the responsible political actors should strive to settle.

I found the Greeks to be a delightful people if handled with the respect, which their contribution to European history deserves.

Sunday Independent

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