ECONOMY

CSFIV debate gathering pace; prospects unclear

Following the headlines of the European press in the last two weeks, one finds that the debate on the European Union’s Fourth Community Support Framework (CSFIV) investment subsidy plan, which is to run after CSFIII expires in 2006, has essentially opened. The debate will no doubt attract strong interest, as CSFIV will not only make a valuable contribution to upgrading the economies of the newcomer – and mostly poorer – new members, but is also related to a restructuring of the economic goals of the European Union. It seems, for instance, that the bolstering of the competitiveness and the growth rates of the European economies will be given priority, indeed, over the issue of convergence. The major question arising is how the huge package will be distributed and how much the Union’s budget will have to be increased; what percentage of it will have to go toward investment in the great inter-European networks and what share the infrastructures of the new members will absorb. The irritation of the large existing members with newcomers for being largely responsible for the failure to reach a consensus on the European Constitution last month seems to be receding now and giving way to more sober thoughts. The Germans, who entertained the idea that CSFIV could have provided leverage for a deal on the Constitution, now seem more accommodating. They fear the prospect of many regions in the EU remaining poor and of the gap between rich and poor growing, with its obvious implications for social and economic problems. In any case, EU funding is being examined within a new context which will affect European markets and their prospects. If annual budget expenses, for instance, are increased from the current 1 percent of the European GDP to 1.15 percent in 2006 and to 1.24 percent by 2011 (according to one of the bolder scenarios currently being discussed), the annual available resources will rise to 118 billion and 153 billion euros, respectively. The changes are bound not to leave Greece unaffected. If the Community budget is increased and the increment goes mainly to promote cohesion and to the poorer Eastern European countries, Greece does not stand to gain much. If, on the other hand, a readjusted policy earmarked greater sums for inter-European networks, research and technology, it would benefit Greece much more in terms of growth and employment. The second option, which would need about 10 years to be implemented, would include projects of Greek interest, such as the western (Ionian) road axis from Athens to Patras and Igoumenitsa and then on to Sofia and Budapest, and a western Peloponnese highway from Kalamata to Rio. These are seen as bolstering western Greece’s tourism industry.