ECONOMY

Commentary

One recent item of economic news has been rather surprising: The European Union-subsidized investment programs for small and medium-sized enterprises, part of the Third Community Support Framework (CSFIII), has failed to attract the anticipated interest. It is perhaps one of the few times when those who can be subsidized do not turn up. Technical reasons can be blamed, as well as red tape and high specifications; perhaps it is not so simple, after all, for someone to apply and receive the subsidy. But these really sound like excuses; for decades now, Greek enterprises of all sizes have received huge subsidies. The surprising change may be a reflection of the realization that this time, financial support must really be utilized for the purpose they are granted, and do not represent easy money that may be spent for reasons other than the stated one. If we reject this explanation, we are led to the conclusion that there is simply a lack of opportunities; small and medium-sized enterprises (SMEs) may be finding it difficult to decide which opportunities are worth their while tapping. This would be the most pessimistic scenario for businesses. At a time when most are complaining about the lack of liquidity, and when overdue payments in the market are rising at an annual rate of 17 percent, the lack of interest in support for small investment initiatives can legitimately be described as odd. CSF programs are clearly useful, as they contribute to the creation of infrastructure works that improve productivity, and also because they help to enhance general prosperity by improving the performance of smaller companies. As far as the large infrastructure projects are concerned, these are unquestionably making progress, but it is also true to say that they are costly. This, combined with the apparent ineffectuality of SMEs, seriously erodes the usefulness of EU subsidies. It should be clear that the effective absorption of subsidies is mainly related to the general conditions that favor the growth of entrepreneurship. It does not appear particularly sensible for a firm to buy computers, for instance, when the future looks uncertain; why should an SME make even a small investment when it feels the market caving in? Although, in theory, the Greek economy is swamped by the bonanza of CSFIII and the Olympic Games next year, the economic confidence index monitored by the Institute for Economic and Industrial Research is sliding; consumers’ estimates and businessmen’s expectations are definitely becoming gloomier. And what is the outlook?, one may ask. The most likely outcome is a repetition of what occurred with the large projects. When officials realize that precious time has been lost and deadlines are pressing, they will begin lowering their standards. Projects will be speeded up, with priority on disbursement rather than on better utilization. And there will not be much more coming; any subsequent CSF will mostly go to new EU members.