OA aid must be returned

After the European Court ordered Greece yesterday to recover almost 200 million euros in unauthorized subsidies granted to national carrier Olympic Airways in recent years, the government accused the previous Socialist administration of misleading Brussels in the past. The European Court of Justice in Luxembourg ruled that Greece had «failed to fulfill its obligations» by not recovering 41 million euros that the EU had given to Greece for the restructuring of the carrier – renamed Olympic Airlines – between 1998 and 2002 and a further 153 million euros of new operating aid granted by the government to Olympic without notifying the Commission. «It is a ruling that does not flatter the policy of the Simitis government. A lot of money was spent on, as they said then, reforming Olympic Airways while, simultaneously, there was an effort to mislead the Commission,» said government spokesman Theodoros Roussopoulos, blaming the PASOK administration of former Prime Minister Costas Simitis, which was in power until last March. Brussels initiated proceedings against Greece in 2002 as part of a drive which required the reduction in state subsidies to loss-making national enterprises to ensure fairer market competition. It ruled that the 41-million-euro restructuring plan had never been implemented and that the Greek state had been deferring payment or accepting non-payment of various VAT, rent and airport charges from Olympic between 1998 and 2001. However, in December 2003, the government merged Olympic Airways and its subsidiaries – Olympic Aviation and Macedonia Airlines – into a single company, Olympic Airlines. The European Court ruled that the transfer of all the airline’s assets, without any of the debts, placed an «obstacle» to the recovery of the aid. The court said that, as a result, the Commission’s aim «to restore undistorted competition in the civil aviation sector has been seriously undermined.» The court also said that Greek initiatives to recover the subsidies were «late, incomplete or without binding effect.» By 2001, Olympic Airways had run up debts totaling some 120 million euros. In January, Olympic posted losses of 23 million euros for 2003. Five firms submitted binding offers for the airline last month.

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