ECONOMY

Lame duck proves costly

BRUSSELS – The European Commission will ask the European Court to impose a fine of 5.3 million euros and an additional penalty of up to 50,000 euros a day for illegal subsidies to Olympic Airways in the period 1998-2002. The size of the fine was determined by a special conference of the legal advisers of the 25 commissioners and the Commission’s move was expected to be approved in its regular session yesterday. Greece was ordered to recover 161 million euros in illegal subsidies from the national carrier in May 2005. This has yet to happen and the Commission is now referring the country to the European Court again for an implementation of the earlier ruling. According to sources close to the Commission, Transport Commissioner Jacques Barrot reasoned that the large size of the fine was justified by the long time that has elapsed since the illegal subsidies were granted. The fine is analyzed as follows: The lump sum of 5.3 million euros is due to Greece’s non-compliance with the order of 2005, while the additional daily fine of 50,000 euros will be paid until the government starts recovering the 161 million euros, or until some other form of definitive settlement is found. In any case, the fine will be payable in case Greece is condemned by the court and will not be valid retroactively, that is, the 50,000 euros a day will be due from the day that the court issues its ruling – most likely more than a year from now. Even if Athens and Brussels reach some form of accommodation before the court ruling, the Commission will nevertheless have the legal right to ask a lower lump sum as a fine. Of the 161 million euros that the government has to recover from Olympic, 41 million was given for the implementation of a restructuring program, which was approved in 1994 and was renewed in 1998 and 2000 but never got off the ground. The 120 million euros represent other operational supports, mainly the silent exemption of the company from various dues to the state, such as the payment of value-added tax for fuels and airport charges. Whatever the outcome of the case, it pales compared to that of subsidies totaling 540 million euros which were given in the period 2002-2004 and on which the European Court is due to rule. Tour operators In a reply letter to the Hellenic Association of Tourism and Travel Agents (HATTA), Commissioner Barrot said that it was only airlines that relied on their own capital, and «definitely not state-controlled» ones were in position to offer satisfactory services in transport and long-term employment. Barrot was responding to a HATTA letter which referred to «the importance of air transport for Greek tourism and Greek society, since the country, due to its large number of islands and its geographical position, depends a great deal on airlines for its tourism and internal travel.» HATTA added that the competitiveness of the country’s tourism product depended on the existence of a number of airlines and their flights under conditions of healthy and fair competition.