ECONOMY

Greece accused of yet more illegal funding to Olympic

Brussels – Greece may be facing yet another court action over illegal subsidies to ailing state airline Olympic Airways. This time, the European Commission says Greece misinterpreted a ruling allowing European Union member states to provide financial aid to their airlines over losses stemming from a decision by the United States, and a few other countries, to close their air space to traffic for the three days following the terrorist attacks on New York and Washington, DC, on September 11, 2001. The Commission will initiate today a procedure against Greece for violating the EU legislation on subsidies and providing nearly 5 million euros to Olympic Airways and private firm Aegean Cronus, nearly double what the Commission regards as appropriate. (The Commission has already demanded that the Greek government take back from Olympic 194 million euros in illegal subsidies. Transport Minister Christos Verelis has disputed the sum, saying it was closer to 41 million.) Following the terrorist attacks in the USA, EU members had agreed on providing emergency subsidies to their airlines, whether state or privately owned. The aid was to cover losses from canceled flights to the USA and other countries that closed their air space for the period from September 11 to 14, 2001. That is, for the duration of the overflight ban. It was expressly stated by the Commission that aid was not to be expected to cover the companies’ total activities over that period or for a period beyond September 14. This, however, was exactly what the Greek government did. It financed all of Olympic’s flights from September 11 to 14, as well as a portion of the flights on the weekend of September 15-16. As a result, Olympic Airways received 4,827,586 euros. Aegean Cronus received 140,572 euros. The lesser amount is not only due to its fewer flights but because it doesn’t fly to the USA and therefore, according to authorities, was less exposed to any economic fallout from the reduction in flights from the terrorist attacks. The Commission considers that the Greek government should have provided a subsidy no higher than 2.4 million euros to Olympic regarding its canceled flights to and from the United States and other countries from September 11-14. That the repercussions of the terrorist attacks on airlines around the world extended far beyond September 14, 2001, is not in dispute. However, the Commission had set clear-cut rules and conditions for the provision of subsidies precisely to prevent a general return of these subsidies, under various guises. To avoid having to reclaim the extra subsidy from the airlines, Greece must now prove either that air space was closed around the world or that the United States maintained the ban through September 16. Both of which assertions would be patently wrong. The government’s extremely generous interpretation of a very specific ruling has, once again, put Greece in an embarrassing position and made Olympic’s financial position even more desperate.