Cohesion funds may provide relief

The European Union could help boost the Greek economy through an early payment of 1 billion euros in EU funds earmarked for Athens under a plan of reducing economic and social differences in the 27-nation bloc, the head of the EU executive said on Tuesday.

?It is very important to supplement our macroeconomic efforts with something credible,? European Commission President Jose Manuel Barroso said.

?If we are going to get benefits in the long term we have to already start mobilizing our resources for more practical purposes so that Greek people become aware that there is hope and that we are not just asking them to make sacrifices.?

Greece has been unable to access billions of euros in EU funds designed to boost development in the bloc?s poorer regions because it can?t co-finance projects and prove that it can use them effectively.

Barroso said that the EU could accelerate payouts and frontload some projects, which could give Greece quick access to some 1 billion euros to help make its businesses more competitive and boost employment and training. That?s only a small fraction of the 15 billion euros or so Greece could still get from the EU until 2013.

?We should concentrate these funds on where it matters most,? he said.

Barroso also called for a longer-term, tighter system of technical assistance for Greece. That could help the country plan the kind of projects that qualify for EU funding, but it would not abolish the need for co-financing, which requires that EU countries have to come up with 50 percent of the money needed for projects. That requirement has been harshly criticized by several European politicians in recent weeks.

Greece has been in recession since 2009 and the Commission only expects it to return to feeble quarter-on-quarter economic growth in the second quarter of 2011 and to year-on-year growth only in the last three months of this year.

Barroso?s appeal comes ahead of a summit of EU leaders later this week where Greece?s finances will be at the center of discussions.

Separately, German Chancellor Angela Merkel said on Tuesday she was optimistic the European Union would manage to resolve the Greek sovereign debt crisis but said Athens must press ahead with more austerity measures.

Speaking in Warsaw hours before Greek Prime Minister George Papandreou?s Cabinet faced a confidence vote in Parliament, Merkel also reaffirmed Berlin?s view that private investors should take part in any bailout of Greece.

Subscribe to our Newsletters

Enter your information below to receive our weekly newsletters with the latest insights, opinion pieces and current events straight to your inbox.

By signing up you are agreeing to our Terms of Service and Privacy Policy.