ECONOMY

Deal with EU on CSF III

Faced with the loss of billions of euros in EU aid from the Third Community Support Framework (CSF III) program, the government has negotiated a deal with the EU that will allow it to absorb as much money as possible by transferring resources to more feasible projects, reducing the size of the national contribution and moving some funds to the upcoming CSF IV. The deal, described in a letter by European Commission President Jose Manuel Barroso to Prime Minister Costas Karamanlis, is to be signed within a few days, government sources said yesterday. Specifically: – The Commission approves of the transfer of 500 million euros in EU aid initially earmarked for projects that are now unlikely to be implemented to more feasible ones. Greece had asked for an additional 200 million euros. This is the third revision of Greece’s CSF III program. – The Commission allows Greece to put up 1.2 billion euros less in matching funds. Before the deal, the unabsorbed funds were 16.5 billion euros (about a third of the total CSF III program), including 10.5 billion in EU aid and 6 billion euros in matching national funds from the state and the private sector. After the deal, Greece must contribute 4.8 billion euros by the end of 2008, while the EU contribution remains the same. – Greece can transfer to CSF IV so-called «bridging projects» worth slightly over 1 billion euros. – The Commission refused to allow Greece an extra year (that is, to end-2009) to absorb the earmarked CSF III funds. The agreement allows all jointly funded projects to move faster, as Greece was unable to meet its financing obligation and, at the same time, maintain its tight fiscal policy. The deal comes just days after the Commission announced that Greece was on track to exit the excessive-deficit procedure which imposed a close monitoring of the government’s economic policy by the EU. The government’s dismal record in absorbing EU aid had become a source of friction between Economy and Finance Minister Giorgos Alogoskoufis and Environment and Public Works Minister Giorgos Souflias, who complained of not getting enough funds from Alogoskoufis to implement the projects.