Larger EU means less aid

A consequence of the expansion of the European Union in 2004, mostly taking in poor Eastern European countries, will be a dramatic reduction in the EU funds available to Greece – by over two-thirds in some sectors – organizers of a meeting on the effects of EU expansion said yesterday. This could pose a danger to Greece’s efforts to maintain high economic growth beyond 2006, the year the EU’s Third Community Support Framework program (CSFIII) ends. It is known that CSF fund inflows account for at least one-third of Greece’s economic growth. The meeting was organized by the Foundation for Economic and Industrial Research (IOBE), affiliated with the Federation of Greek Industries (SEV), which often articulates business concerns. The newcomers, with the exception of the Mediterranean islands of Cyprus and Malta, as well as Slovenia, a former Yugoslav republic, are much poorer than the 15 current EU member states. While the current EU leaders acknowledge that aid will need to shift to the poorer members, they are reluctant to increase their budgets to continue aid to the relatively poorer among the current members. While agricultural subsidies will not suffer immediately, funds for regional development will certainly be curtailed. IOBE estimates that, if current criteria for disbursing aid do not change, the annual inflow of funds for Greece’s poorer regions will be reduced from 3 billion euros to 831 million. Even in the agricultural sector, reform proposals will shift the aim of subsidies from income transfers to rewarding innovation, environment-friendly practices and strengthening competition. Alternate Foreign Minister Tassos Yiannitsis, responsible for European affairs, told participants that while he could not preclude any outcome, he foresaw tough negotiations ahead for CSFIV.

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