Hahn: Cohesion Policy is Greece's main public investment
Cohesion Policy will be the main public investment instrument for Greece in the foreseeable future, EU Commissioner for Regional Policy Johannes Hahn told Greek regional governors in Athens. EurActiv Greece contributed reporting for this article.
Hahn urged Greece to change business as usual in order into fight what has turned from an economic crisis into a "job and confidence crisis".
“This crisis bites and your citizens suffer,” Hahn told the Greek regional governors in Athens on Friday (19 October), pointing out the fact that the country's consumption-based economy has hurt its trade balance, as well as its capacity to produce goods and to innovate.
He suggested two main drivers for Greek regions that would create jobs and stimulate economic growth.
The first driver is identifying a number of key areas in which Greece has know-how and expertise and in which it is highly competitive. The areas they pick must be job-intensive, Hahn said. He suggested the fields of energy technology, agri-food, sustainable tourism and culture.
Greece has already taken some initiatives in this direction, the most recent being Corallia, a project meant to boost competitiveness, entrepreneurship and innovation through cluster-development support activities.
Hahn referred to this project, saying: “We need to see more of this in the future.”
The second driver, the Regional Policy commissioner said, has to focus on key reforms of the business environment. Whilst some measures have been taken already, such as easing licencing procedures, fast-tracking investment authorisation and creating a single business registry, Greece needs to further simplify its bureaucracy and cut red tape in order to improve access to finance for smaller businesses.
Unlock business financing
Access to bank lending for Greek small- and medium-sized companies has decreased threefold over the period 2009-2011, Hahn said.
The commissioner suggested that Cohesion Policy - the EU's budget instrument meant to bring regions closer to each other in terms of socio-economic development - should be used to unlock business financing.
“Jobs and growth will not come from the public sector – they will be created by the Greek private sector, and in particular by innovative and thriving SMEs,” Hahn said.
In order to achieve this, Greek regions must identify their individual strengths and decide where the money will deliver the best results.
The country cannot be treated as a block, he warned, because there are great internal regional disparities. The Attica regions containing the capital, Athens, has a GDP per capita of 120% of the EU average, whilst the GDP in Western Greece and Eastern Maccedonia is around 67%.
“In many ways this is a test for you and how you will shape the future,” Hahn told the Greek governors.
The EU is already helping Greece to fashion better ways of spending EU funds. The 'crisis co-financing rule' has seen EU contribution at 95% and Greek contribution at 5% for projects.
But some big projects, such as the construction of roads, have been stalled. This is because banks have been reluctant to offer financing in the past years and the co-financing rate could not be covered by the the Greek government, according to EurActiv Greece.
In his press conference, Hahn said that the European Development Bank should do more to increase liquidity in Greece. He suggested that he would have to try to convince banks to offer backing for such projects.
But these problems are also linked to bureaucratic procedures. The government, EurActiv Greece said, is often itself confused about what projects it wants to finance and takes a long time to make decision.
European Union heads of states are expected to wrap up negotiation on the EU's budget for 2014-2020 at a summit on 22 November. And Cohesion policy is expected to be simplified for regions to access more funds.
The European Commission presented on 29 June 2011 its proposals for the EU's next seven-year budget for 2014-2020 – the so-called Multi-Annual Financial Framework (MFF).
The Commission proposed raising the next budget to €1.025 trillion, up from the current €976 billion. This represents a 4.8% increase, which is beyond the average 2% inflation recorded in the last decade.
Cohesion policy is the second biggest envelope in the EU's multi-annual budget, after the Common Agricultural Policy. The European Commission asked for €336 billion for cohesion spending in the next budget.
- 22-23 Nov.: Special EU summit to debate the EU's long-term budget for 2014-2020.
- 13-14 Dec.: EU summit in Brussels.
- By 31 Dec.: Negotiations on the EU's next seven-year budget expected to wrap up.