ECONOMY

EU fund absorption needs stronger hand

Two elections in one year along with the Olympic Games are events capable of setting back plans – especially when a number of these plans are still on paper and their creators have been removed (such as ex-Deputy Finance Minister Christos Pachtas, responsible for EU funding), or will be removed after March 7, regardless of the election outcome. Large investments, the absorption of EU funding, the gradual payments required for Olympic Games-related projects and the Games themselves – at least on the cost side – demand immediate action. For the most part, growth in Gross Domestic Product (GDP) is due to private consumption levels which are not in line with the real strength of the economy and household finances. It is, however, indisputable that investments financed through cofunded programs – not just construction projects – contribute to Greek growth rates. Direct intervention in the management of EU funding after the first week of March is necessary for one more reason. The country cannot absorb EU funds, which amount to more than 4 percent of GDP for every year the Third Community Support Framework (CSFIII) is implemented. If Greece falls behind for just one year, then funds are lost. The Economy and Finance Ministry insists that their efforts in the last few months have been successful. «If it were not for the elections,» officials say «we would have had an even higher absorption rate,» since due to pre-election obstacles, the necessary signatures are not being affixed. Given that ministry staff will change the day after regardless of the election outcome, the need to speed up the implementation of the CSFIII is exceptionally urgent, government officials and the opposition party agree. It is also urgent that contracts be signed by 2006 in order to ensure that funds will be available until 2008, the last year the money can be absorbed. As for construction projects, the problem lies in the delay of payments. This is probably due to the fact that they have been postponed to the post-election period on purpose. The situation has arisen because contractors benefit from a corrupt public works regime in order to get an edge on work belonging to the next phase. The problem is much larger in the case of complex projects such as the «Information Society» (more than 1 billion euros and 100 tenders in 2003), where contracts need to be awarded and implemented. Criticism has long been made of the complex and expensive system arising from overstaffing and unnecessary checks. The new government must urgently reintroduce transparency and administrative flexibility in order to achieve the faster execution of contracts. Management authorities, as set up successfully in other countries, are a good solution – on condition there is a standardization of processes to make operations more efficient. This demands good cooperation by parties that know the programs well. Another vital area is the cofunding of projects which demand the participation of the private sector. Because these projects have yet to be determined, the direct involvement of private individuals is necessary. They must announce clearly and bluntly their real interest. This category includes large construction projects, such as Ionia Odos. These are programs which need to be incorporated into the CSFIII to form the basis of the Fourth Community Support Framework. One of the largest challenges facing the new government is this last point. Negotiations for the CSFIV – relating to a Europe of 25 members – have started at a European level. It is not at all a simple matter, despite EU Commissioner Anna Diamantopoulou painting it as such. There will still be strong reactions from the larger funding countries. The absorption of funds equivalent to those of CSFIII will require the involvement not only of the State but also the active role of the private sector. The largest and most immediate big project is that of the Olympic Games. Besides ensuring a successful Games, the new government will need to control excessive spending without affecting the required preparations currently taking place.