Greece asks for support to absorb EU regional aid

Athens Parthenon Greece_Picnik.jpg

Athens will need technical assistance to ramp up its capacity to absorb EU regional funding, the Greek Minister for Development, Competition and Shipping, has told the European Parliament.

Addressing the Parliament's Regional Development Committee, Michalis Chrisochoidis stressed that Greece will be unable to solve its debt problem without investment in growth-enhancing projects.

“Our goal is to promote useful projects and infrastructures for the citizens that will initiate the development process, but will also provide relief and solutions to major problems of unemployment and especially youth unemployment," the Greek minister told MEPs on Tuesday (22 November).

€14 billion remain blocked

Chrisochoidis, who has officially announced his candidacy for president of the PASOK party, highlighted the few bright spots in Greece's economic performance such as the substantial increase in exports of manufactured goods, which rose 50% in October 2011 compared to October 2010.

If elected, Chrisochoidis would replace George Papandreou who resigned as prime minister earlier this month but remains head of PASOK.

He outlined the increased rate of absorption of EU regional funds and amendments to EU rules that allowed the European Investment Bank (EIB) to fund small businesses. A new Investment law that has already attracted projects proposals for up to €1.5 billion, he said.

“At this point the acceleration of the absorption procedures is the cornerstone of regional development,” the minister said. “There is a need to unblock this €14 billion that remain stagnant in dead projects and assignments and promote new ones to support the regional economy and the local communities.”

Between 2007 and November 2011, Greece's capacity to absorb EU regional aid reached 25.9% of the total sums allocated, with active contracts amounting to €8 billion compared to nearly zero in 2009. Between June and October 2011, the absorption capacity was up 38.3% compared to the same period last year.

Chrisochoidis said better cooperation with Greece's European Partners was needed in order to tackle the challenges of bureaucracy and centralisation that the country has been struggling with for years.

“We need to improve the management of the EU structural funds and to lay down a comprehensive action plan that will improve the project's management,” Chrisochoidis said, praising the support given by the task force charged by the European Commission with aiding the economic recovery in Greece.

“In order to continue this dynamic implementation of the regional programmes, we must support the current monitoring system of absorption targets for each business plan and each project,” he said, inviting European regional policy ministers to make new proposals and share their know-how in upcoming meetings.

Credit crunch

However, huge challenges remain, the minister said, highlighting in particular the deteriorating credit conditions for business. “Everyday I see perfectly healthy businesses closing down because of liquidity shortages and I can say that we are making huge efforts with our partners to face this problem,” he said.

Chrisochoidis lauded the Parliament's regional development committee for backing a Commission proposal to increase the EU's share of co-funding for projects in Greece. The committee's positive opinion will be put to a  vote during the European Parliament's next plenary session at the end of November.

To tackle the liquidity crunch, the minister called for fast-tracking the EU's new financial programme for SMEs – called Jeremie – that would supply micro-credit, venture capital and  loans to small businesses. He also called for speeding up the creation of a wider EU guarantee fund, worth up to €1.5 billion, that would support development initiatives and infrastructures across Europe.

Chrisochoidis once again highlighted the "sacrifices" made by the Greek population and asked MEPs to back these efforts by facilitating the absorption procedures of EU structural funds.

The chairperson of the European Parliament's Regional Development Committee, Danuta Maria Hübner, supported these calls but highlighted that "local performance" was crucial to achieve development goals.

“It is important that these development efforts begin from the regional base since these kind of targets will have to grow from below.”

Within the current financial framework (2007-2013), spending on regional policy amounts to an average of almost €50 billion per year, which is more than one third (35.7%) of the total EU budget.

Regional policy spending is channelled through three funds – often called 'Structural Funds'. These are the European Regional Development Fund (ERDF), the European Social Fund (ESF) and the Cohesion Fund.

The three main objectives of the EU’s cohesion policy are at the moment: Convergence, Regional Competitiveness and Employment, and European Territorial Cooperation.

  • 30 November: European Parliament plenary sitting.

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