Greece Takes EU Helm, Still Focused on Self

Six-Month Presidency Could be Overshadowed by Demands of Bailout

By MATINA STEVIS

Updated Jan. 9, 2014 2:26 p.m. ET

Greece's turn at the helm of the European Union, a largely administrative role that rotates every six months, could find itself overshadowed by something close to home: Greece's own bailout.

According to EU etiquette, the country holding the presidency is expected to leave aside its national agenda and focus on managing legislative drafts and negotiations, wearing a neutral, EU hat. That option isn't available to Athens.

"We have full understanding of the European nature" of the presidency, Deputy Prime Minister Evangelos Venizelos told the foreign press in a briefing Wednesday. He then went on to tackle at length and in detail questions about Greece's bailout.

Greece's role as administrator of EU legislative affairs for the next few months will be limited. Its effective term—cut short by elections for the European Parliament in May—will largely focus on striking a deal with the Parliament to advance the euro zone's banking union.

But the country's battered economy, the management of its €240-billion ($326 billion) bailout and a dreaded discussion about its heavy debt load are much likelier to make headlines over the period.

The country formally assumed the role Wednesday. European commissioners flew in for ceremonies full of pomp and circumstance. Greek flags waved alongside the EU's starred blue-and-yellow banners on the capital's main avenues, under an uncharacteristically warm January sun. Protests were banned in the city center in an effort to avoid visible signs of a nation in economic distress.

Prime Minister Antonis Samaras would like the EU presidency to mark Greece's economic recovery and a minimal presence in Athens of international bailout inspectors—the unloved "troika" from the European Commission, the European Central Bank and the International Monetary Fund.

He may get this wish. The team returns to the Greek capital next week to pick up stalled talks with the local authorities. But following this mission, the country is set to see less and less of its bailout overlords.

In theory, Greece has €8.6 billion in euro-zone aid left to draw on in the first half of this year. The IMF's part of the package runs longer, with a further €16.2 billion in loans scheduled to be doled out between now and the first quarter of 2016.

Greece's bailout is lacking some €11 billion in financing for the next two years, Finance Minister Yiannis Stournaras said, but that won't necessarily translate into a new bailout, as had been previously anticipated.

The hope in Athens is that it will be able to tap longer-term debt markets this year, riding a wave that saw Ireland—the first euro-zone bailout graduate—triumphantly return to the market this week.

This year yields on Greece's 10-year bonds have fallen below 8%, and on Wednesday reached their lowest point since February 2010, when the country last borrowed from the private sector.

Greek banks, which have suffered along with the economy, will be back on the agenda soon. They are still waiting for an assessment, from BlackRock, of their balance sheets, which was due last month. Depending on the results, they could be forced to raise additional capital in the market before tapping the leftovers of a government bank-recapitalization fund.

Greece's government debt will be a matter for debate in the spring. Despite the IMF's demands for an outright reduction in the debt stock from an extraordinary 176% of GDP last year, Athens and its euro-area peers seem to be in agreement that a minor reduction in already low interest rates and a stretching-out of the repayment schedule, while not shrinking the debt, will make it much easier to repay.

Troika technocrats aren't happy but are finding themselves increasingly superseded by their political bosses. A senior euro-zone official said he was worried that, with Athens distancing itself from the troika and Mr. Samaras enjoying political support from German Chancellor Angela Merkel, unfinished business in Greece to overhaul its economy may stall or stop altogether.

The IMF, long concerned by the sheer weight of Greece's debts, may make a fuss, but there is no sign yet that it will.

If Mr. Samaras can avoid such controversies and his wish of a Greek recovery materializes, it may help turn the tide of voter sentiment that has shifted dramatically against the EU since the crisis began. The prime minister suggested at Wednesday's ceremony that the fates of Greece and that of the EU are intertwined.

"At the end of the Greek presidency, Greece will be back on its feet and Europe will have taken a major step to exit its crisis. What was once Europe's 'weakest link' will be a symbol that Europe works, Europe can, and Europe will make it," he said.

Write to Matina Stevis at matina.stevis@wsj.com