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Victoria Mindova

High unemployment, cumbersome administrative system and lack of competitiveness are the three challenges of the task force Horst Reichenbach has found. The head of the head of the task force formed by the European Commission said that the reforms required to be made here were very hard for any country in the world, especially for Greece, which was encountering particular difficulties in these sectors for years. He stressed that the role of the task force was only advisory and it was intended to facilitate the process of structural reforms. It is convened at the request of Prime Minister George Papandreou and formed by European Commission President Jose Emmanuel Barroso. One way to stimulate the local economy are the specifically provided European subsidies.

In Greece, there are several major obstacles to the effective use of structural funds in order to flow them in the real economy. The first is the framework within which they operate. It required at least until recently 20% contribution from public funds, so that European subsidies be granted for real projects. Bankrupt Greece currently is unable to make such contributions to programs that meet European standards. To overcome this difficulty, the European Commission is currently lobbying to reduce this rate to 5%.

When all member states accept the change, the funds can be granted to projects that have been approved already. This will solve the second problem for Euro funded programs that have been frozen due to macroeconomic difficulties. Many infrastructure and energy projects have been blocked since the beginning of the crisis. They are likely to lose the approved structural funds, because they cannot meet the time limits. Resuming these projects will help to re-direct some of the jobs lost in the past two years and will allow Greece to take a breath in times of recession.

The third challenge is how to help small- and medium-sized enterprises that are financially healthy, but cannot find financing to develop or preserve jobs. Therefore, the Ministry of Development and Competitiveness has suggested that the European Commission should make part of the funds in the Structural Funds guarantees for loans, which would be used to fund the Greek banks. The money will be allocated primarily to healthy small- and medium-sized enterprises and the total amount of loans guaranteed by the European Structural Funds would reach € 500 million.

Energy remains a key sector that is of interest to foreign investors. Reichenbach and his experts are helping the government to develop favourable conditions for development of large photovoltaic parks that can produce clean electricity. The German Finance Minister Wolfgang Schäuble gave the idea Greece to export green electricity from solar parks to Germany in the middle of the year, when the issue to stimulate economic growth in recessionary Greece was raised for the first time. Reichenbach explained that these are not projects that could be implemented immediately and that they require a lot of work even before the initial stages of construction, but said they would have a positive impact on the local economy in the long run.

Waste management requires immediate actions too as it is at a very low level in Greece. Putting this sector in order is not only important for public health, but it will bring additional opportunities for growth, say the Europeans.

Justice also needs serious reform. It should become more efficient and faster. Reichenbach said that the Greek justice system is built following the French and somewhat the German model, which allows local authorities to learn from positive practices in these countries, and make the necessary improvements. The German expert stressed that in Europe there is a growing trend of settling many cases out of court, which facilitates the process, significantly shortens the time for resolving disputes and reduces the cost incurred by the parties concerned. This practice should be applied more often in Greece, which will give further impetus in resolving civil disputes.