INSPECTORS FROM the EU-IMF “troika” are due back in Athens next week to sign off on a drastic new austerity plan that may well stretch Greeks and their embattled government to the limit.

Can it fly?

Even with the greatest good will, recent experience gives little ground for optimism.

Nevertheless, a new EU Commission “task force” has gone to Greece to impose order on the country’s porous tax collection system and other parts of its wayward public administration.

This will be an uphill task. While the very existence of the task force raises inevitable questions about external interference in internal Greek affairs, the commission insists the task force has not been imposed on the country.

Its arrival in Athens follows an offer of “technical assistance” which was accepted by prime minister George Papandreou. While seeking to modernise a bloated bureaucracy, the task force also has a mandate to examine the deployment of EU structural funds to stimulate bank lending to small businesses in Greece.

“Possible guarantees from the structural funds which are available is one of the matters which is a very high priority in my view in order to give at least some hope to the Greek population, which as you all know is at the brink of not accepting any further pain,” says Horst Reichenbach, the German who leads the task force.

There will be 30 people in his team – 20 in Brussels, 10 in Athens – but it may hire “hundreds” of external technical advisers in the drive to ensure the recession-struck state receives more tax from more people.

The prime task now is to scrap “discretion” in the tax system, which facilitates evasion and leaves collectors open to corruption. In spite of the difficulties they face on this front, European officials believe significant progress can be made within a year.

They are less certain that quick progress can be made to achieve greater control over the social security system, but say that must also be a priority.

The challenge is momentous. In two years of near-constant crisis, the Greek state has proved largely immune to modernisation. What is more, local sources freely acknowledge that previous reform efforts have been sabotaged from within.

“The problem of the Greek administration is huge. I think we should be under no illusion,” says a senior EU official who has seen up-close the inner workings of the Athens bureaucracy. “This is something which requires long-term determination and attention by the political level. Without this the Greek administration will not become more effective and efficient.”

Crucial here is the fact that the Pasok “socialist” party, in power for almost two years, draws much of its support from the state sector. Moreover, it is difficult to extract reform from a workforce that feels besieged.

Greek public servants blame the country’s problems on corruption and tax evasion. In the private sector, where more than 200,000 jobs have been lost since the onset of crisis, they blame a bloated administration for strangling the state.

Those who know Greece well say each of these complaints rings true. The new recovery plan will only aggravate tension. Pensions and pay are to be cut, 30,000 public servants will be put on notice and a controversial new property tax is to be extended.

We have been here before, but Mr Papandreou’s government has repeatedly failed to make good on its promises to persist with tough policies when the going gets tough.

It was different in the months after the first Greek bailout was agreed in May last year, when the government was perceived to have fulfilled its obligations. Political friction intensified, however, and drift set in.

The country has spent most of this year in a grinding game of cat-and-mouse with the troika over missed targets, delayed reforms and the growing threat of sovereign default.

This has greatly raised the stakes in Europe’s debt emergency, which is now spreading from comparatively small countries such as Ireland to a major industrial power like Italy. That prompts serious questions over the viability of the 17-country single currency and Greece’s prospect of avoiding a dangerous sovereign default.

Yet no matter how the drama plays out, an EU official who has examined the failings of the Greek state says the requirement for fundamental reform will remain.