As the euro zone continues to dangle the carrot of further aid to a Greek economy hammered by debt, EU leaders on Thursday (23 June) endorsed a European Commission proposal to clean up the country's public sector using EU structural funds.
A proposal by the European Commission President José Manuel Barroso to overhaul Greece's public administration using structural funds won support from leaders at a late meeting in Brussels on Thursday.
But diplomatic sources castigated the move as something that looks like a "nation-building [exercise] for the third world".
While a further injection of EU/IMF aid to Greece is still out of reach as the country's parliament rows over a €28bn austerity package to be approved next week, EU leaders discussed ways to boost the Greek economy "on the ground", President Barroso said at a press conference last night.
Barroso already announced earlier this week that he wanted to "front-load" structural funds set aside for Greek regional projects to help the country rebuild its public sector.
Last night, the Commission president said he wanted to fund new IT systems for the country's beleaguered tax administration in particular.
He pointed out that the EU budget provides over €20 billion for Greece for the period 2007-2013: only a quarter of this has been spent until now. He added that from €675 million structural funds allocated to Greece for technical assistance, €420 million was still unused.
"Tonight we discussed how we can use these funds to maximise an immediate impact on growth in Greece," Barroso said at a press conference.
"This time they want to put across a positive image," said one diplomat, explaining that the Commission wanted to be the bearer of good news for once.
Barroso announced that the Commission was ready to reduce the country's obligation to co-finance projects using structural funds from 50 to 15%.
"I have asked member states to work together with the Commission to bring together all the technical assistance available to help get this money as soon as possible," the president announced.
Greece: A third world country?
"You know what this is. This is nation-building, something that happens in the third world," commented one EU diplomat last night, saying that Barroso's initiative had taken many governments by surprise.
As part of the plan, the Commission will also call on member states to disburse experts from their governments to help Athens overhaul its public administration. Behind the scenes diplomats spoke of a complete lack of faith in Greece's ability to climb out of its own debt problems.
The Greek government is struggling to clean up its image after it not only bungled deficit statistics, uncovered by the Commission last year, but also after it was caught tweaking the terms of the austerity package to try and sell it to its national parliament.
Greece is clambering to secure support at home for an austerity package attached to a second bailout of €120 billion.
A meeting of experts from the International Monetary Fund, the European Commission and the European Central Bank also took place last night to find ways to plug a €5.5bn financing gap in the €28bn package.
Reports last night said the experts had come to an agreement to lower the threshold of taxable incomes from 12,000 to 8,000 per annum, to raise taxes on heating fuel and to impose a minimum tax on the self-employed, notorious for tax evasion.
The Greek parliament is due to discuss these additional measures and the entire package this morning and a vote is expected early next Tuesday (28 June).