Greece faces threat of EU funding cuts

Despite the announcement of the draft budget for 2005, Greece still faced the threat of funding cuts from EU officials as punishment for last week’s revelation that the public deficit figures it had declared for the past four years were substantially inaccurate. The Greek government hoped the pledge, included in Finance Minister Giorgos Alogoskoufis’s draft budget, to lower its public deficit from a projected 5.3 percent of GDP to below the 3 percent limit set by the EU would be enough to calm the waters that had been stirred up by the revised figures last week. However, it seems EU officials will take more convincing. «We might consider the possibility of suspending cohesion funds for Greece as foreseen by the regulations. The decision has not yet been taken and will depend on what the Greek commitments are on the budget deficit,» Gilles Gantelet, spokesman on regional policy for the Commission, told Reuters. This opinion was also voiced by Austria’s finance minister, Karl-Heinz Grasser, on Tuesday. Cohesion funds aim to even the gap between rich and poor member states through the provision of financial aid. Gantelet added that Greece had asked for 34 percent of the 563 million euros in cohesion funds that it could apply for this year. Greece will have to wait a little longer before the Commission decides whether to punish it or not. «I don’t think anything can be discussed before November,» said Gerassimos Thomas, spokesman for the EU Commission, which acts as a financial watchdog. Although he did give Greece a glimmer of hope by suggesting that if a country took the appropriate steps to bring itself in line with EU financial limits, then suspending cohesion funds would be unnecessary. With an informal meeting of eurozone finance ministers due in October, Greece is far from being out of the woods. Luxembourg Prime Minister Jean-Claude Juncker, who will become president of the eurozone finance ministers in January, was stinging in his criticism of Greece. «I think when the pact is examined, some consideration should be given to the possibility that we should have to apply sanctions to countries who are lying,» said Juncker.

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