ECONOMY

EU frontloads disbursement of subsidies

The European Commission proposed on Tuesday that the European Union should continue contributing 95 percent of funding to subsidized projects in both Greece and Cyprus through 2015.

According to EC calculations, this measure would ease the disbursement next year of 400 million euros for Greece and 20 million euros for Cyprus of cohesion funds.

Brussels has said that this would not constitute additional funding, but comes from subsidies that have already been budgeted for the two crisis-hit nations. Without the extension, Athens and Nicosia would run the risk of missing out on hundreds of millions of euros in funding that has already been set aside as they struggle to cover their quota.

The measure for increased EU participation would help Greece and Cyprus get a grip on youth unemployment, support small and medium-sized enterprises, and invest in important infrastructure projects.

“Without the proposed measures, cohesion policy investments that favor growth may be lost owing to the lack of time for the allocation of the funds or the difficulty in finding national and private co-funding in the current economic climate,” the Commission’s statement read. “The proposal that was requested by European governments and the European Council will now be forwarded to the European Parliament and the EU Council of Ministers for approval.”

Should the proposal go through, the EU would continue contributing up to 95 percent of the cost of subsidized projects for another couple of years, reducing the minimum national contribution required to just 5 percent. In 2014 this will concern about half a billion euros, of which 400 million is destined for Greece, 100 million for Portugal and 20 million for Cyprus. This means that the 2014 budgets of all three countries will be lightened through the EU’s increased contribution.

Commenting on the decision, the EU’s regional policy commissioner, Johannes Hahn said yesterday that “the targeted measures we proposed today will help these countries utilize the necessary investments for the creation of jobs through supporting small and medium-sized enterprises and allowing access to funding for the support of young people seeking employment and for encouraging innovation and research. However this proposal is no substitute for reforms and for the acceleration of resource absorption.”