Arriving in Brussels on Thursday where European Union leaders met to decide the size and distribution of the bloc’s budget, Prime Minister Antonis Samaras appeared determined to seek a decent stake in European subsidies for debt-wracked Greece, noting that the country has made progress in implementing reforms.
“Fiscal consolidation and structural reforms are under way in Greece,” Samaras told reporters before joining his EU counterparts. “The major target now is recovery and growth,” he said, adding that “structural funds are a key guarantee to success for Greece and Europe.”
The premier’s message to reporters may have been one of optimism but the real expectation – based on the way that EU subsidies are calculated – is that Greece will receive significantly less funding than last year – some 14 billion euros compared to 20.4 billion in 2012.
Many fear that this reduction would entail a real political threat for the coalition government by putting its economic adjustment program at risk but there appear to be few chances for Greece to get a bigger slice of the pie.
Nevertheless, in a bid to wrest the best possible deal from his EU peers in talks expected to continueo on Friday, Samaras has traveled to Brussels with a copy of a report by the Roland Berger consultancy, which estimates the impact on gross domestic product and employment of reduced aid to Greece. In recession for the sixth year in a row, Greece lost 6.3 percent of its GDP last year alone and one in four of its active work force is unemployed.
According to the report, keeping Greece’s funding at 20.4 billion euros would increase the size of the country’s GDP by 46 billion by 2020 and create between 147,000 and 203,000 jobs during that period. This scenario could also reduce the country’s debt burden by between 3.9 and 5.2 percentage points by 2020, contributing to debt sustainability, according to Roland Berger, which recommends a generous approach to Greece, noting that the country met fiscal targets in 2012 and now needs a program that will boost growth.