Hübner: Athens could lose regional aid

By Tim King

Date: 16/12/04

THE European Commission has warned Greece that it will suspend the payment of regional aid unless Athens improves its financial management of EU- funded projects.

Danuta Hübner, the regional aid commissioner, told her colleagues this week that Greece had failed to meet the requirements of a corrective plan of action agreed in February to strengthen controls.

The plan was drawn up after an audit in October 2003 revealed deficiencies.

"There were no guarantees of sound financial management," a Commission spokeswoman said.

"The Commission has an obligation to ensure that there is sound management of the EU budget."

Greece has been allocated l28 billion from EU funds in 2000-06 for regions that are lagging behind in development. Of this, nearly l25bn comes from the regional development programmes under Hübner's department.

The Commission was concerned about the paucity of checks being made to ensure that projects complied with the EU rules.

Although Greece has since complied with parts of the action plan to improve some of its controls, it had not complied fully by the deadline of the end of September.

The Commission meeting on Tuesday (14 December) authorized Hübner to write to the Greek government threatening suspension of regional aid payments.

The letter will be sent "by the end of the year", the spokeswoman said.

If payments are suspended, Greece could lose some of its regional funding entitlements because payments have to be made within defined deadlines.

Greece will have a month to respond to the letter and in the light of that response the Commission will decide "if there is reason for suspending payments or not", the spokeswoman said.

For 2000-06, the Commission increased the obligations on member states to police the provision of regional aid.

National administrations have to provide a certificate at the closure of each programme, drawn up by someone independent of the authority that has managed the programme, giving an opinion on the checks carried out and the legality and regularity of the spending.

The obligation is placed on national administrations to make any necessary financial corrections.

Greece has been among the laggards in putting the required controls in place.

The European Court of Auditors reported last month that, in 2003, the Commission had completed assessments of control systems for all the EU-15 save Spain, the UK province of Northern Ireland and Greece.

The previous year, the Court had been critical of Greece's controls.

The Commission spokeswoman stressed that there was no link being made with Greece's failure to provide accurate statistics on its budget deficit. The regional aid problems predated those difficulties, she said.

A spokesman for the Greek government said that he was in no position to comment on the case.

Greece receives 10% of the structural funds allocated in 2000-06 to the EU-15.

Measured as a percentage of gross domestic product, only Portugal receives more.

EU officials say that the Commission is keen to ensure that Greece complies with the controls as an example to the states that joined the EU this year, which will increasingly benefit from EU regional aid.

The European Commission has warned Greece that it will suspend the payment of regional aid unless Athens improves its financial management of EU-funded projects. Danuta Hübner, European Commissioner for Regional Policy, told her colleagues that Greece had failed to meet the requirements of a corrective plan of action agreed in February 2004 to strengthen controls. The plan was drawn up after an audit in October 2003 revealed deficiencies.