Development law would fall afoul of EU requirements

The government cannot fulfill its promises for a new «development law» – essentially, a law providing incentives to domestic and foreign businesses to invest in regions outside Attica – because the European Union will not allow aid to local businesses, government ministers told deputies yesterday. Economy and Finance Minister Nikos Christodoulakis and Development Minister Akis Tsochadzopoulos met with deputies from the ruling Socialist party yesterday in Parliament and, despite knowing about the European Union’s objections to continuing state aid to private companies, even in the form of incentives, promised that they would submit a draft development bill at the beginning of next month. The ministers are finding themselves in an impossible position, as deputies from their own party, from all regions of Greece, demand special incentives for companies to invest in their particular constituency. With elections a year away, at most, and with the ruling PASOK party in grave danger of losing them, these demands have become even more urgent. Deputies have been led to believe that, even now, such a law could produce the necessary investments and the needed result – jobs – quickly enough to allow them to achieve re-election. Business associations, like the Federation of Greek Industries (SEV) have also joined the game; SEV’s chairman, Odysseas Kyriakopoulos, has repeatedly said in interviews that he and his colleagues are eagerly awaiting the new law. This idea for a new development law has been germinating ever since the last national elections, in April 2000, which PASOK won by a whisker. Christodoulakis’s predecessor, Yiannos Papantoniou, had promised a new law by the end of 2001. When Christodoulakis replaced Papantoniou, in October 2001, he quickly realized that drafting a new development law would be hard to reconcile with the demands of the European Union. He let the whole matter lapse. However, the government, and Prime Minister Costas Simitis himself, had promised such a law, and PASOK’s deputies from the outlying regions – most of them much poorer than the Athens area, and with a more acute unemployment problem – would not let them forget. At least Greece has been allowed by the EU to keep its current development law, which, by most accounts, does not provide sufficient incentives to businesses to invest in the Greek regions, until 2006. But the government seems unwilling to confront its own deputies with the truth.