Letter to the President of the European Commission, Jose Manuel Barroso

PRIME MINISTER
PRESS OFFICE
June 30, 2011

Dear President,

A few hours ago the Greek Parliament voted the medium term fiscal strategy as well as its implementation Law. Consequently, Greece has fulfilled at this stage the obligations that have been set as conditions for the disbursement of the fifth installment and for the approval of the new Programme for additional financing. I expect that in the coming days the appropriate authorities of the EU and the IMF will convene to finalise all the necessary procedures.

Still, following the conclusions of the last European Council and the expected approval of the Programme, I address to you this letter regarding the implementation of the Commission’s intention to support any effort that will reinforce the economic effectiveness and the synergies between the Programme and the EU funds. I would also like to bring to your attention a set of proposals for the shaping of a plan aiming at the recovery of the Greek economy, in which the economic cooperation and the technical assistance of the Member States will play a crucial role.

Firstly, after thanking you personally once again for your support, I would like to express the readiness of the competent Ministries of the Greek Government and of the executives of the Greek Administration to contact as soon as possible the appropriate authorities of the European Commission in order to immediately take action for the acceleration of the absorption of the resources from the EU funds.

The Greek Administration has been working systematically in this direction. In cooperation with the Commission departments, we have already set into course the operational readiness of a new executive administrative unit for the management of resources and we have moved ahead with registering the non-performing projects, as well as elaborating the changes in the legal framework that governs their funding. We expect that jointly we will be able to adopt a process of acceleration of the absorption of the resources and a focused review of the projects with a reorientation of the funding and a shifting of funds away from projects of low absorbability and limited economic effectiveness. Emphasis will be put on improving productivity, reinforcing economic growth and increasing employment.

The competent Ministers of the Greek Government will present to the European Commission a comprehensive plan for the immediate acceleration of the absorption of resources. The proposed plan will be combined with a process, to be completed very soon, of a coordinated review and reorientation of the programmes and projects. The acceleration of the absorption of resources and the synergies with the Programme for additional financing could also be facilitated, if necessary, by the increase of the EU contribution in funding and certainly by the extension of the rules of eligibility. The national contribution in funding could also, if a strong political will existed, even be suspended temporarily or definitively for the period 2011-13. These ideas reintroduce to the agenda what you had proposed in the recovery plan of December 2008, which was the frontloaded payment of the EU contribution, thus giving the opportunity to a Member State to reimburse its national contribution in the following years. It also recalls the recent proposal made by my colleague Prime Minister Jean-Claude Juncker regarding the definitive suspension of the national contribution for countries that are facing problems such as Greece.

I realise that the proposed ideas require some legislative amendments in the existing regulations. But my assessment is that since our proposals do not imply an increase of the total sum of funding for a country and have the unanimous political support of the Member States, they could be implemented quite soon.

In this way the acceleration of the absorption of the EU funds can contribute to the effort of the Greek economy to exit from recession. This demands the combination of the medium-term fiscal programme with a set of proposals for a plan of the recovery of the Greek economy. The plan should aim at the reinforcement of the potential for growth and healthy entrepreneurship. It could move along five main directions:

- The first should refer to urgent actions for the adaptation of enterprises and administrative mechanisms to managing the crisis conditions, according to actions that have been specified in the updated Memorandum and necessitate a focused technical assistance.

- The second direction should take advantage of the contribution both of the European Investment Bank and of the nationalone; it comprises the exploitation of financial instruments for enterprises and feasibility studies for large scale investments in infrastructure projects (ports, transport and communications).

- The third direction should ensure the participation of the private sector in the real economy. Large private enterprises of Member States currently participate in private/public partnerships that contribute by more than 60 billion euro to the GNP of our country. In the immediate future we will present proposals for synergies to engage the European enterprise sector in the effort to recover the Greek economy.

- The fourth one should deal with a redrafting of projects for the reinforcement of employment, as well as addressing the unemployment problem with an expansion of the formation, vocational training and lifelong learning programmes.

- Lastly, the fifth direction should deal with an initiative undertaken by the competent Ministries of the Greek Government for the setting up of Comprehensive Programmes of Technical Assistance with Member States and with the European Commission. The preparation of these programmes is already underway. Our ambition is that they become a basic part of the overall programme of technical assistance, which should be flexible, in order to have concrete results, both for the interstate economic relations and for the Greek economy itself.

Mr. President,

Based on the abovementioned ideas, as well as those expected to be proposed by the members and the departments of the Commission, I believe that, taking into account the imperative priority of supporting the recovery of the Greek economy, the synergies identified between the Programme for additional financing and the policy of economic and social cohesion of the Union will contribute decisively not only to implementing the adaptation programme but also to ensuring the social cohesion in Greece.

Please accept, Mr. President, the assurances of my highest consideration.

Sincerely yours.

George A. Papandreou