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DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT B: STRUCTURAL AND COHESION POLICIES

REGIONAL DEVELOPMENT

ECONOMIC, SOCIAL AND TERRITORIAL SITUATION OF

NOTE

This document was requested by the European Parliament's Committee on Regional Development.

AUTHOR

Dr. Esther KRAMER Policy Department Structural and Cohesion Policies European Parliament B-1047 Brussels E-mail: [email protected]

EDITORIAL ASSISTANCE

Ms Lea Poljančić

LINGUISTIC VERSIONS

Original: EN Translation: EL

ABOUT THE EDITOR

To contact the Policy Department or to subscribe to its monthly newsletter please write to: [email protected]

Manuscript completed in June 2011.

Brussels, © European Parliament, 2011.

This document is available on the at: www.europarl.europa.eu/studies

DISCLAIMER

The opinions expressed in this document are the sole responsibility of the author and do not necessarily represent the official position of the European Parliament.

Reproduction and translation for non-commercial purposes are authorized, provided the source is acknowledged and the publisher is given prior notice and sent a copy.

DIRECTORATE GENERAL FOR INTERNAL POLICIES POLICY DEPARTMENT B: STRUCTURAL AND COHESION POLICIES

REGIONAL DEVELOPMENT

ECONOMIC, SOCIAL AND TERRITORIAL SITUATION OF GREECE

NOTE

Abstract This Note provides an overview of Greece's economic, political and administrative framework for EU Cohesion policy, as well as of the state of play of the implementation of the National Strategic Reference Framework for the period 2007-2013. It focuses in particular on the regions of Central , and West Macedonia.

The note has been prepared in the context of the Committee on Regional Development's delegation to Greece, 13 - 15 July 2011.

IP/B/REGI/NT/2011_03 June 2011

PE 460.052 EN

Economic, Social and Territorial Situation of Greece ______

TABLE OF CONTENTS

LIST OF ABBREVIATIONS 5 1. KEY FACTS AND FIGURES 9 1.1. and politics 10

1.2. The economy 10

1.3. Regional disparities in Greece 11

2. ADMINISTRATIVE STRUCTURES IN TRANSITION 13 2.1. Institutional framework for EU Cohesion policy 15

2.2. State of play of the implementation of EU Cohesion policy 16

3. EU COHESION POLICY IN GREECE 2007-2013 19 3.1. Objectives, priorities and funds 19

3.2. NSRF and Operational Programmes in Greece 21

3.3. European Territorial Cooperation objective 23

4. ZOOM ON THE REGIONS OF WEST MACEDONIA, AND EPIRUS 27 4.1. The region of West Macedonia (Dytiki Makedonia) 27

4.2. The region of Central Macedonia (Kentriki Makedonia) 30

4.3. The region of Epirus (Ipeiros) 33

CONCLUSIONS AND OUTLOOK ON GREECE'S ROLE IN COHESION POLICY AFTER 2013 37 REFERENCES 39

3 Policy Department B: Structural and Cohesion Policies ______

4 Economic, Social and Territorial Situation of Greece ______

LIST OF ABBREVIATIONS

CF Cohesion Fund EIF European Investment Fund ERDF European Regional Development Fund ESF European Social Fund EU EUR GDP IMF International Monetary Fund IPA Instrument for Pre Accession Assistance JEREMIE Joint European Resources for Micro and Medium Enterprises JESSICA Joint European Support for Sustainable Investment in City Areas MoU Memorandum of Understanding NCA National Coordination Authority OP Operational Programme PASOK Panhellenic Socialist Movement

5 Policy Department B: Structural and Cohesion Policies ______

6 Economic, Social and Territorial Situation of Greece ______

LIST OF FIGURES

Figure 1 Map of Greece 9

Figure 2 Key Data 9

Figure 3 7 new decentralised administrations of Greece 13

Figure 4 13 Peripheries (regions) of Greece 14

Figure 5 Targets of absorption according to MoU (in million EUR) 17

Figure 6 Attribution of EU funds for Greece in billion EUR 2007–2013 19

Figure 7 Map showing Convergence and Competitive Objective regions in Greece 20

Figure 8 NRSF of Greece 2007-2013 (EUR) 22

Figure 9 Map indicating the location of West Macedonia in Greece and details of the region 27

Figure 10 Peripheral units and municipalities of West Macedonia 28

Figure 11 Thematic overview of EU Structural funds implementation in 29

Figure 12 Maps indicating location of Central Macedonia in Greece and details of the region 30

Figure 13 Central Macedonia's peripheral units (former prefectures) 31

Figure 14 Thematic Overview of EU Structural funds implementation in Central Macedonia (EUR) 32

Figure 15 Maps indicating location of Epirus in Greece and details of the region 33

7 Policy Department B: Structural and Cohesion Policies ______

Figure 16 Peripheral units and 18 new municipalities of Epirus 34

Figure 17 Thematic Overview of EU Structural fund implementation in Epirus (EUR) 35

8 Economic, Social and Territorial Situation of Greece ______

1. KEY FACTS AND FIGURES

Figure 1: Map of Greece

Source: www.lonelyplanet.com

Greece is located in southern , bordering the , , and the , between and .

Figure 2: Key Data

2 Area 131 957 km

11,305,118 (2010) Population

86 (2008) Population density (per km2)

Greek Official language

Currency Euro

94 (2009) GDP per capita (PPS)

-2,3 (2009), - 4,5 % (2010) Growth rate

14,1 % (2010) rate

4,7 % (2010) rate - 15,4 % (2009); -10,5 % (2010) Budget deficit

142,8 (2010) Public debt Source:

9 Policy Department B: Structural and Cohesion Policies ______

1.1. Government and politics

Greece is a parliamentary republic. The current constitution was drawn up and adopted by the Fifth Revisionary Parliament of the Hellenes and entered into force in 1975, after the fall of the military junta of 1967–1974. It has been revised twice since, in 1986 and in 2001. According to the constitution, executive power is exercised by the President of the Republic and the government. The nominal is the President of the Republic, who is elected by the Parliament for a five-year term; currently it is Karolus Papoulias. In 1986, the President's duties were curtailed to a significant extent and political power now lies in the hands of the Prime Minister who heads the Council of Ministers, the national government. Legislative powers are exercised by a 300-member single-chamber Parliament, with elections held every four years, except if the Cabinet proposes early elections in view of dealing with a national issue of exceptional importance or in case of a motion of no confidence passed by the opposition which obliges the President to dissolve the Parliament earlier.

The Judiciary is independent of the executive and the and comprises three Supreme Courts: the Court of Cassation, the Council of State and the Court of Auditors.

Since the restoration of , the Greek two-party system is dominated by the liberal-conservative (ND) and the social-democratic Panhellenic Socialist Movement (PASOK). Other significant parties include the Communist Party of Greece (KKE), the Coalition of the Radical Left (SYRIZA) and the Popular Orthodox Rally (LAOS).

PASOK gained an absolute majority in Parliament at the general election on October 4th 2009, with 160 out of 300 seats. On September 7th 2010, Prime Minister Papandreou reshuffled his cabinet, incorporating some party stalwarts into the new administration. In March 2011, Mr. Papandreou sought support from opposition party leaders for the government’s implementation of structural reforms, but his request was rebuffed. In recent months, there has also been internal party opposition as senior members of PASOK - which has a history of intra-party rivalry - have spoken out against reform measures. Political instability could grow as the government continues to push through difficult, unpopular measures.

Moreover, in 2010 and 2011 numerous general strikes and social unrest have affected the political scene, and it will be increasingly difficult for the government to continue to implement painful measures in the face of social and industrial unrest, without opposition support and with division between traditionalists and reformers in the governing party. Some observers see a risk that the government could call an early election before 2013.

1.2. The economy

The depends increasingly on the service sector, which contributes 68.3% of GDP (2009). Retail, tourism and transport, storage and communications constitute the largest share, while the knowledge-intensive services account for only 6.1% of the total value added of the economy.

The contribution of agriculture to the GDP is with 3.6% one of the highest among the EU Member States despite its significant decline over the last years, employing around 12% of the total labor force. The manufacturing sector is undersized compared to the EU average (10.3% compared to 14.7%); especially the construction sector which has played a crucial role in earlier development is shrinking significantly during the present financial crisis.

10 Economic, Social and Territorial Situation of Greece ______

The shipping industry is a key element of Greek economic activity dating back to ancient times. It accounts for 4.5% of GPD and employs about 160,000 people (4% of the workforce). The Greek-owned maritime fleet is today the largest in the world, with 3,079 vessels accounting for 18% of the world's fleet capacity (making it the largest of any country).

After joining the European Communities on 1 January 1981, Greece experienced a period of remarkable and sustained economic growth. Widespread investments in industrial enterprises and heavy infrastructure, as well as funds from the EU and growing revenues from tourism, shipping and a fast-growing service sector have raised the country's to unprecedented levels. The country adopted the Euro in 2001.

However, this growth period was not exploited to eliminate permanent structural problems and regional disparities, but was, surprisingly, even accompanied by significant deterioration of national competitiveness since 2005.

Soon after Prime Minister Papandreou came to power in October 2009, it was revealed that the deficit was twice what the outgoing government had estimated. On November 15th 2010 Eurostat revised Greece’s budget deficit and debt figures for 2006-2009 upwards, which had significant effects on 2010 estimates and the 2011 budget.

Facing unsustainable interest rates on the international markets, the Greek government requested a joint lending facility from the IMF and Euro zone partners. On May 2nd 2010 the "Troika" of IMF, Euro area members and the Greek government announced that they had agreed a package for Greece amounting to EUR 110 billion, in exchange for which Greece would implement a draconian fiscal austerity package and economic reforms as delineated in a Memorandum of Understanding (MoU).

In March 2011 the Greek authorities discovered a hole in the 2010 budget owing mainly to a deficit in the social security funds (compared with an expected surplus). In May 2011 the Troika conducted its fourth review of progress on the MoU. This assessment concluded that Greece needs a second bailout to give it more time (until 2014 instead of 2013) to try to resolve its debt crisis. The EU, the and the IMF have been working with the Greek government on a new plan for spending cuts, revenue increases and privatisations after missed fiscal targets under the first bailout. The new budget plan currently debated would include faster privatisations and EUR 6.4 billion of new savings including some rises.

In 2010, GDP fell by 4.5%, and considering the difficulties the Greek economy is facing, first growth by 1.5 % is expected only for 2013. According to most sources, the severe austerity package agreed in May 2010 to gain access to the IMF/euro zone lending facility will cause public consumption to contract by 2.9% in 2011 and 4.2% in 2012, before returning to moderate growth in 2013.

Private consumption is expected to fall even more, by 5.9% in 2011, with a return to growth foreseen in 2014. Consumer demand will be restrained by falling real , rising , high unemployment (over 14 %) and low consumer confidence. With low business confidence, higher corporate taxes and tight bank lending policies, investment is expected to fall by 10.7% in 2011 and 1.3% in 2012, but to grow moderately from 2013 on.

1.3. Regional disparities in Greece

There are severe regional disparities at inter-regional and intra-regional level in Greece, as well as a significant development gap of the entire country with the EU average, especially in terms of competiveness.

11 Policy Department B: Structural and Cohesion Policies ______

Regional policy in Greece intends to address both aspects, but in general the focus has been more on national than the regional level development. The main aim is to reduce the gap between Greece and EU development.

The whole territory of Greece is divided into 13 NUTS 2 regions. The regional disparities in terms of economic development are determined by the population, the level of urbanisation, the geographical location and the availability of transport infrastructure. For example, in 2007, disparities in GDP (PPS) per head were between EUR 14 900 and EUR 31 900 depending on the region, while the unemployment rate differed between 5.3 % and 12.7 %.1

Only the regions around the two metropolitan centres (Athens and ), namely and Central Macedonia, are wealthy areas, Attica being the best performing in terms of productivity growth. According to Eurostat data, it is the only region outperforming the EU average in terms of GDP per head (128%). Due to their natural endowment (climate for tourism and natural resources for energy production), the regions of the Aegean and Western Macedonia are also above the national GDP per head.

On the other side, the numerous isolated mountainous areas and a large number of small, peripheral islands remain with difficult access to the mainland and face all the challenges and regional disparities of remote areas.

Disparities are also evident in the level of education with the region of Attica (hosting the largest ) ranking top followed by Central Macedonia, and . Moreover, in the least developed regions (, , Eastern Macedonia, Thrace and Thessaly) more than 20% of the employed population is working in the agricultural sector. These areas have little assets to participate in the highly technical, competitive economy envisaged by the EU 2020 strategy.

1 Eurostat, 2007.

12 Economic, Social and Territorial Situation of Greece ______

2. ADMINISTRATIVE STRUCTURES IN TRANSITION

Greece is a unitarian state and was, until 2010, structured by 4 levels of government: national level, regions (peripheries), prefectures (nomi) and communities and towns. It has followed the tradition of Napoléon of centralized government, but in recent years, several attempts of decentralisation have been made. The latest is the which entered into force on 1 January 2011.

The Kallikratis Plan brings major change to the administrative structure of the country. It is now divided in 7 large decentralised administrations: Attica, Thessaly and Continental Greece, Epirus and West Macedonia, , Crete, Central-East Macedonia and Thrace, Peloponnesus, and West Greece. They are headed by a General Secretary appointed by the central government, assisted by an advisory council drawn from the regional governors and the representatives of the municipalities. These administrations are operating as decentralized authorities of the central government, comprising 2 or 3 peripheries (except for Attica and Crete).

Figure 3: 7 new decentralised administrations of Greece

Attica, with the capital of Athens; Macedonia–Thrace, with the capital of Thessaloniki; Epirus-Western Macedonia, with the capital of ; Thessaly–, with the capital of ; Peloponnese, Western Greece and Ionian Islands, with the capital of ; Aegean Islands, with the capital of ; Crete, with the capital of Iraklion.

Source: Wikipedia

In 1997, the 13 Greek peripheries (regions) featured in Figure 4 below were established and given some responsibilities for economic development and planning, as a response to the institutional demands requested by the EU (Kapodistrias Plan). Until 2010, these regions were branches of central government, i.e. they did not have any directly elected body.

With the Kallikratis reform in 2011, the position of the 13 peripheries has been strengthened: Their formerly appointed Secretary Generals have been replaced by elected Governors; a regional council is also elected every 5 years.2 The Governors have taken over most competences of the former prefectures which have been abolished.

2 The first local administration elections took place in November 2010.

13 Policy Department B: Structural and Cohesion Policies ______

Figure 4: 13 Peripheries (regions) of Greece

1 Attica 8 2 Central Greece 9 Peloponnese 3 Central Macedonia 10 4 Crete 11 Thessaly 5 East Macedonia and Thrace 12 West Greece 6 Epirus 13 West Macedonia 3 7 Ionian Islands - (autonomous) Source: Wikipedia

The peripheries are divided into peripheral units, usually but not always coterminous with the former prefectures. Each peripheral unit is headed by a vice-regional governor drawn from the same political block as the regional governor.

Finally, the decentralisation brought the merger of the former 1033 local entities into now 325 municipalities which also get more responsibilities in policy areas such as waste treatment, health and education.

Local governance had already been reinforced in recent years, with a focus on capacity building within the public administration. Co-operation amongst local authorities was promoted to strengthen their role in the and implementation of development projects. The organisation of local governance was quite formal, with a General Assembly of all mayors, an Administrative Council, an elected President and an Executive Committee. This set-up will have to be adapted to the new decentralised administrative system.

3 There is one autonomous area, Mount Athos, which borders the periphery of Central Macedonia. The male-only autonomous monastic state of Mount Athos is not part of the Macedonia precincts. It is under the spiritual jurisdiction of the Ecumenical Patriarchate and enjoys a special self-governed status. The EU takes this special status into consideration, particularly on matters of taxation exemption and rights of installation.

14 Economic, Social and Territorial Situation of Greece ______

2.1. Institutional framework for EU Cohesion policy

Before the ongoing transition to a more decentralised system will become effective, the former institutional framework for Cohesion policy is still in place and therefore presented in this chapter.

In 2007, the Greek tradition of administrative centralisation, with top-down co-ordination, had been strengthened by new arrangements for Cohesion Policy administration. At the central level, the Ministry of Economy, Competitiveness and Shipping has been in charge of policy co-ordination regarding Regional policy.

The administration of the regional programmes 2007-2013 was set out in the Law on Management, Control and Implementation of Development Actions, which was passed in 2007 and amended 2010. It promoted a strictly centralised approach in order to improve policy effectiveness and to reduce and managerial costs. The number of regional Operational Programmes was cut back from 13 during the previous programming period to 5 for 2007-2013, and managerial responsibilities were transferred from 13 regional authorities to one central authority.

The implementation framework included an Interministerial Committee of Development Programmes to manage and monitor the implementation of the NSRF 2007-2013. The limited number of Committee members was said to encourage flexibility and speed up decision making. The Committee has been assisted by the National Co- ordination Authority (NCA), responsible for preparing its meetings and providing the relevant data and information. Until now, the NCA has had wide-ranging jurisdiction and authority over almost all phases of the programme either by directly deciding on issues or by advising programming authorities, in order to improve the quality and effectiveness of Structural Funds management. Monitoring Committees for the regional Operational Programmes and the managing authorities were established.

In 2009, it was decided that this centralised system had made a place-based Cohesion policy too difficult. The Kallikratis decentralisation reform described above will become effective for Cohesion policy on 1 July 2011, thus institutions and actors in Regional policy will have to be adapted to the new policy approach. For example, the composition of the Monitoring Committees of the regional programmes will have to be changed, as well as the cooperation between national, regional and local level. Most importantly, the newly elected governors of the 13 regions will become responsible for the planning and implementation of Structural funding in Greece. Temporarily until July 2011, these tasks are performed by the heads of the 7 decentralised administrations (thus still by appointed representatives of the central government).

The has followed the reform of the Greek administrative system closely and does, for the time being, not see major problems for the implementation of Structural funds interventions. Nevertheless, the real impact of the reform and the consequences for EU Cohesion policy will take some time to become effective. Especially in the context of the current deep crisis in Greece, it will be a challenge to implement the new management system for Structural funding smoothly in order not to disrupt projects on the ground which already encounter difficulties.

In the past, the national development policy has been largely structured around EU Cohesion policy and its OPs. In fact, the management and implementation of Cohesion Policy has led to spill-overs into the national system, and experiences gained by delivering the Structural Funds have influenced the practices and procedures used for managing national policies. In the future, these experiences will be combined with the decentralisation so that in the longer term, a more efficient management approach can emerge.

15 Policy Department B: Structural and Cohesion Policies ______

2.2. State of play of the implementation of EU Cohesion policy

The severe financial crisis and the recession influence Regional policy in Greece in multiple ways: Structural funding has to be somewhat neglected when all efforts of the government are concentrated on the international monetary markets and the Troika negotiations. Moreover, during 2008/09 all the resources of the national administration were absorbed by the delays of the closing of the programmes of the previous programming period, and later on the strict public finance controls have affected public investments, meaning matching funds had to be cut down or at least delayed.

Furthermore, the change of government in autumn 2009 and its need to modify the development plan in the legal framework adopted by the previous government, created an additional delay of 3 to 9 months, depending on the ministry in charge. And finally, the ongoing administrative reform, including the restructuring of small municipalities into integrated, larger ones, has caused delays in regional development programming and will continue to do so for some time. In addition, the Greek government is considering even a revision of the Operational Programmes - despite scepticism of the European Commission fearing further implementation delays.

As a response to the crisis, in the framework of the European Economic Recovery Package, Greek authorities have mainly adopted measures to support SMEs through ERDF resources because they have been particularly hit by the crisis, with rapidly increasing bankruptcies. At the end of 2010, EUR 1.5 billion have been committed to this end according to the European Commission. Also, Greece has used the possibility to allocate more ERDF funding for housing, up to EUR 396 million for energy efficiency interventions.

The 2007 - 2013 National Strategic Reference Framework of Greece (NSRF) was designed to address the country’s development needs but its implementation is exceedingly slow. Despite progress in some areas, the skills and organisation of the national administration and potential beneficiaries (municipalities, city councils and local development companies) have been a major factor of concern.

According to latest information of DG Regional Policy, absorption in Greece, i.e. payments made by the EU budget, amount to EUR 4.934.521.416 which correspond to 24,42% of the total EU allocation to Greece. This percentage includes the advance of 7%. Based on these numbers, compared to other Member States, Greece performs slightly below the EU-27 average which is 25,34%.4

However, other sources indicate that until the beginning of 2010, progress was limited to single digit absorptions. In this context, it should be noticed that the indicated level of absorption 2010 was mainly attained by extensive use of financial engineering instruments JEREMIE and JESSICA - thus less by structural interventions on the ground. More than EUR 1 billion have been allocated to financial engineering mechanisms giving access to finance for micro, small and medium-sized enterprises during 2010.

The country struggles in all areas to ensure adequate structures for planning, implementing and monitoring interventions so that despite the fact that Greece was one of the first countries to sign an agreement with the European Investment Fund (EIF) on JEREMIE financing, these measures reached the market only by the end of 2010. Greece continues to focus on these resources, another important call for expression of interest for JEREMIE is currently underway,5 and JESSICA interventions have been allocated during 2010 for EUR 256 million.

4 Note of DG Regional policy, May 2011. 5 Deadline is 30 June 2011, see www.eif.org

16 Economic, Social and Territorial Situation of Greece ______

Most of the implemented projects on the ground were the continuation of interventions which started in the previous period, among them the Egnatia Odos motorway in the north- west of the country and the interregional motorway Elevsina-Korinthos-Patra-Pyrgos- Tsakona. This facilitated the commitment of resources, but did not prevent serious delays in these projects either.

Unlike the restrictive measures of the MoU in other policy areas, the explicit aim regarding Cohesion policy in Greece is to accelerate the absorption of EU Structural funds by financial and non financial measures. Concretely, it was agreed that Greece has to increase its annual rhythm of payments on the ground and present 15 major Cohesion projects per year to the European Commission. The following official targets of absorption of EU contribution in Greek Structural funding have been fixed in the MoU6:

Figure 5: Targets of absorption according to MoU (in million EUR) 2010 2011 2012 2013 ERDF and Cohesion Fund 2330 2600 2800 3000

ESF 420 750 880 890 Total 2750 3350 3730 3890

While the 2010 targets have been achieved, there are difficulties in achieving the 2011 objectives, mainly due to a lack of national investments matching the EU funding. Of course, the worrying debt situation will determine future developments.

For the time being, the Greek government is struggling to catch up with the delays: a large number of calls were launched in 2010 and 2011. It appears that the authorities now accept all applications as long as they comply with the formal requirements. However, decisions should not be guided by absorption only. For example, the longer-term impact of the high amount of SME support through Regional policy is uncertain, even more so as past schemes did not prevent the Greek competitiveness to erode rapidly.

That is why the underachievement in policy areas linked to the highly developed EU 2020 areas, like energy/environment and research, should be addressed as soon as possible at the regional level. In other words, the quality of interventions should not be neglected for the sake of higher absorption rates. It has been very welcomed that Greek authorities now do give higher priority to plans of environment and energy actions, addressing the concept of green entrepreneurship, green infrastructures or green tourism.

Another problematic aspect of implementation in Greece concerns the fact that impact, effectiveness and outcomes of interventions are hardly taken into account. Evaluations are limited to almost the minimum number deriving from the legal obligations of the country to the EU. This is also due in part to gaps in regional statistics and to the lack of an operational land register in Greece.7 These issues need to be dealt with in order to achieve better implementation results in Cohesion policy in Greece.

6 These targets are maintained in the updated version of the Memorandum of Understanding, attached to the Letter of Intent of the Greek Government to the IMF, 06.08.2010, here page 43. 7 EPRC and Euroreg, The objectives of Economic & Social Cohesion in Economic Policies of Member States, page 99.

17 Policy Department B: Structural and Cohesion Policies ______

18 Economic, Social and Territorial Situation of Greece ______

3. EU COHESION POLICY IN GREECE 2007-2013

3.1. Objectives, priorities and funds

For 2007–2013, Greece has been allocated EUR 20.4 billion in total Cohesion Policy funding:

 EUR 19.6 billion under the Convergence Objective;

covering 8 regions: Eastern Macedonia and Thrace, Western Greece, Peloponnesus, Ionian Islands, Crete, Thessalia, Epirus, ; and covering 3 "phasing out" of the Convergence Objective regions: Attica, Central Macedonia and Western Macedonia;

 EUR 635 million under the Regional Competitiveness and Employment Objective;

covering 2 "phasing in” regions under the Competitiveness Objective: Mainland Greece and South Aegean Islands.

 EUR 210 million under the European Territorial Cooperation Objective.

Figure 6: Attribution of EU funds for Greece in billion EUR 2007–2013 FunEU Nation Objective Fund EU National Total Public CF 3.7 1.2 4.9 Convergence ERDF 11.6 2.9 14.5 ESF 4.3 1.2 5.5 Total Convergence 19.6

ERDF 0.5 0.3 0.8 Regional Competitiveness and Employment ESF 0.1 0.1 0.2

Total Regional Competitiveness and employment 0.6

Total European Territorial ERDF 0.2 - 0.2 Cooperation8 TOTAL 20.4 5.7 26.1

Source: DG Regional Policy

10.16 million people (92.2% of the total) live in Convergence regions, including 6.13 million in phasing-out areas. The rest live in Regional Competitiveness and Employment regions. For comparison: Between 2000 and 2006, 100% of the population lived in regions falling under the former Objective 1.

8 Each Territorial Cooperation programme includes a minimum of 15% co-financing from each participating Member State.

19 Policy Department B: Structural and Cohesion Policies ______

Figure 7: Map showing Convergence and Competitive Objective regions in Greece

Convergence Regions Phasing-out Regions Phasing-in Regions Competitiveness and Employment Regions Source: DG Regional policy

Priorities

The main priorities of EU Structural funding in Greece cover both aspects, on the one hand traditional infrastructure investments, primary in the transport sector, and on the other hand interventions supporting the /EU 2020 objectives.

The following breakdown based on financial allocations in the NRSF indicates how these objectives are covered by 4 priority areas:

 Transport infrastructure and accessibility (EUR 6 billion);

 Environment, sustainable growth and climate change (EUR 5.5 billion);

 R&D and innovation (EUR 3.6 billion);

 Training, employability and social inclusion (EUR 2.2 billion).

The differentiations in priorities between "Convergence" and "Competitiveness" funding indicates that the latter is concentrated more in entrepreneurship, research and technological development, education and human resources development and e-economy, while "Convergence" priorities focus on transport infrastructure (mainly motorways, urban transport and urban development) as well as environment and sustainability.

European Union Solidarity Fund The European Union Solidarity Fund was created after the floods which hit in summer 2002. It grants emergency aid to Member States and acceding countries in the event of a major natural disaster.

20 Economic, Social and Territorial Situation of Greece ______

Greece benefited from EUR 9 million to help deal with the consequences of the devastating floods that severely hit the region around in March 2006.

Greece also received aid from the Solidarity Fund following forest fires in the summer of 2007 which caused severe devastation in several parts of the country. The aid totalled EUR 90 million.

3.2. NSRF and Operational Programmes in Greece

Greece has 14 Operational Programmes (OPs) - 5 regional Programmes funded by the European Regional Development Fund (ERDF), and 8 thematic programmes funded by the ERDF, the Cohesion Fund and the ESF. One additional OP relates to Greece’s decision to reserve an amount of the Structural Fund contribution to the Convergence objective for a national contingency reserve.

According to the NSRF of Greece, EUR 12.36 billion is channelled to the Operational Programmes through the ERDF and the remaining EUR 4.36 billion will be funded by the European Social Fund (ESF).

Additionally, Community funds of EUR 3.7 billion are earmarked for Greece through the Cohesion Fund (CF).

The following 5 regional Operational Programmes are expected to address the development problems concentrating on the specific characteristics of each of the regions:

 Macedonia - Thrace  Western Greece - Peloponnese - Ionian Islands  Crete and Aegean Islands  Thessaly - Mainland Greece - Epirus  Attica

Operational programmes covering more than one of the three objectives of Cohesion policy are not permitted except where otherwise agreed by the European Commission and the Member State. Greece justified these 5 multi-objective regional programmes by the nature of the investments concerned and the need to strengthen coordination and programming in the regional territorial units for the 2007-2013 period.

Therefore, the 13 Greek regions were aggregated into these 5 regional Operational Programmes with geographical criteria. As a consequence, neighbour regions of different development status (convergence, phasing in and phasing out) are put together under the same programme, keeping different funding axes. This was a political decision of the Greek government, accepted by the European Commission. Observers have criticised this decision since there is no common ground, no common development needs and no visible benefit, while the distinct funding axes create additional bureaucracy.

As for all regional programmes, the implementation of projects in the field of "Digital convergence and entrepreneurship", the TEN and some other transport projects have been transferred to the respective thematic programmes.

Besides these regional programmes, Greece has 8 sectoral Operational Programmes which address the following country-wide political priorities: Funded by ERDF and the CF:

 Environment - Sustainable Development  Accessibility Improvement  Competitiveness and Entrepreneurship

21 Policy Department B: Structural and Cohesion Policies ______

 Digital Convergence  Technical Support for Implementation

Funded by ESF:

 Human Resource Development  Education and Lifelong Learning  Public Administration Reform

A 9th programme is the "National Contingency Reserve" under the Convergence Objective.

Figure 8: NRSF of Greece 2007-2013 (EUR)

Operational Programme Fund Total EU contribution

Convergence objective ERDF & CF

Competitiveness and ERDF 1 291 000 000 Entrepreneurship

Digital Convergence ERDF 860 000 000

Technical Assistance ERDF 192 000 000

Improvement of Accessibility ERDF 1 583 000 000

CF 2 117 160 864

Environment Sustainable ERDF 220 000 000 Development

CF 1 580 000 000

Attiki ERDF 2 438 000 000

Dytiki Ellada - Peloponissos ERDF 914 000 000 Nisia

Makedonia - Thraki ERDF 2 675 000 000

Thessalia - Mainland Greece - ERDF 738 000 000 Epirus

Κriti & Νisia Αιgaiou ERDF 731 000 000

ESF

National contingency reserve ESF 158 800 403

22 Economic, Social and Territorial Situation of Greece ______

Human resources development ESF 2 191 205 707

Education and Lifelong learning ESF 1 396 166 468

Improvement of Public ESF 489 627 824 Administration Efficiency

Total ERDF 11 642 000 000

Total CF 3 697 160 864

Total ESF 4 235 800 402

All Funds 2007-2013 19 574 961 266

Competitiveness and Employment objective

ERDF

Thessalia - Mainland Greece - ERDF 367 000 000 Epirus

Κriti and Νisia Αιgaiou ERDF 140 300 178

ESF

Human resources development ESF 68 794 293

Education and Lifelong learning ESF 43 833 532

Improvement of Public ESF 15 372 176 Administration Efficiency

Total ERDF 507 300 178

Total ESF 128 000 001

All Funds 2007-2013 635 300 179

Source: DG Regional Policy

3.3. European Territorial Cooperation objective

During the 2007 - 2013 programming period, the total budget of the European Territorial Cooperation objective amounts to EUR 8.7 billion, of which EUR 210 million from the ERDF have been earmarked for Greece. Including national resources, nearly EUR 300 million of Community and national resources are foreseen to be allocated to programmes under this objective.

23 Policy Department B: Structural and Cohesion Policies ______

Greece participates in 12 territorial cooperation programmes:

 3 cross-border cooperation programmes which cover internal EU borders (Greece/, Greece/, Greece/) and 3 such programmes with partners outside the EU;

 2 transnational programmes which cover larger areas of cooperation – "South-East Europe" and "Mediterranean" (MEDA);

 4 interregional cooperation programmes (total budget for all the 27 EU Member States: EUR 443 million): INTERACT II, URBACT II, ESPON and INTERREG IVC.

The following 6 cross border programmes, with a total budget that exceeds EUR 320 million, prioritise the reinforcement of competitiveness and entrepreneurship, promotion of research and innovation, improvement of quality of life, environmental security and sustainable development, reinforcement of accessibility and human resources development:

 Greece-Bulgaria Programme, with ERDF contribution of EUR 110,735,958;

 Greece-Italy Programme, with ERDF contribution of EUR 88,955,170;

 Greece-Cyprus Programme, with ERDF contribution of EUR 41,633,290.

There are also cooperation programmes with non-EU Members:

 Greece-Albania Programme, co-funded by the Instrument for Pre Accession Assistance (IPA) with a budget of EUR 22,143,015;

 Greece-FYROM Programme, co-funded by IPA with a budget of EUR 24,810,005.

 The Greece-Turkey Programme, co-funded by IPA with a budget of EUR 34,088,992. This programme has been suspended and no investments have been made during the current programming period.

Furthermore, Greece participates in the following 2 transnational programmes:

 MEDA Programme (Budget: EUR 193,191,331) Greece with , Italy, , , –Gibraltar, , Cyprus, , and Bosnia–Herzegovina. One of the 2 Liaison Offices is located in , for supporting candidate partners and final beneficiaries from the candidate and potential candidate countries for accession to the EU participating in the programme.

(Budget: EUR 206,691,645) Italy, , , Slovakia, Slovenia, , Bulgaria and Greece, Moldavia, Croatia, , Montenegro, Bosnia-Herzegovina, Albania, FYROM and the .

Finally, Greece also participates in 3 multilateral cross-border cooperation Programmes:

 Adriatic Programme with eligible territories of and in Greece, as well as regions in Italy, Bosnia-Herzegovina, Montenegro, Albania, Serbia and Slovenia. The Programme is co-funded by IPA, while Greece contributes EUR 5,659,992.

 Mediterranean Sea Basin all countries located around the Mediterranean Sea. The total programme Budget exceeds EUR 170,000,000.

24 Economic, Social and Territorial Situation of Greece ______

 Black Sea with the regions of Central and Eastern Macedonia–Thrace in Greece, as well as regions in Bulgaria, Romania, , Turkey, Azerbaijan, the Ukraine, , Romania and Moldavia. The contribution of Greece amounts to EUR 1,132,000 and it has a reinforced role, as it has designated the first consultant of the Managing Authority, hosted in Romania.

External relations

Because of its geopolitical location, Greece has an important role in the external relations of the EU, be it in the Mediterranean, the European Neighbourhood Policy or international relations.

Stavros Lambrinidis took over as Minister of Foreign Affairs in June 2011. Greece can be expected to continue to refuse to consent to Macedonia’s membership of NATO or the EU under the name of the "Republic of Macedonia".

Greece’s bilateral relations with Turkey have been troubled in the past, but improved significantly since the 1990s. However, tensions are likely to continue over the divided island of Cyprus and the Aegean Seas, among other issues.

25 Policy Department B: Structural and Cohesion Policies ______

26 Economic, Social and Territorial Situation of Greece ______

4. ZOOM ON THE REGIONS OF WEST MACEDONIA, CENTRAL MACEDONIA AND EPIRUS

In the following section the Greek regions of West Macedonia (Dytiki Makedonia), Central Macedonia (Kentriki Makedonia) and Epirus (Ipeiros) will be presented, as well as the main features of EU Cohesion policy in these areas, including some landmark projects.

Furthermore, a thematic overview of the allocation of Structural funding in these regions and of the state of play of EU payments in the different investment areas will be provided.

4.1. The Region of West Macedonia (Dytiki Makedonia)

The region of West Macedonia is situated in north-western Greece, bordering the regions of Central Macedonia (east), Thessaly (south) and Epirus (west), and bounded to the north by the international borders of Greece with FYROM and Albania. It is the only Greek region without a sea coast. The capital is with 47,451 inhabitants.

Figure 9: Map indicating the location of West Macedonia in Greece and details of the region

Source: DG Regional Policy

4.1.1. The socio-economic situation According to the census of 2001, the population of West Macedonia was 303,857 people, i.e. 2.7% of the country's population. The low population number and density are mainly due to the mountainous and semi-mountainous nature of the region.

The agricultural sector is quite important and contributed by 6.8% to the regional GDP (2007), whereas the services sector accounted for 51% and the manufacturing sector share was 42.2% (2009; mining, marbles, Saffron ( Kozanis), furniture and wood products, construction).

The region has one operational industrial area in and another one under construction in Kozani. It is rich in natural resources such as energy and metallic minerals that partly shape its productive identity as one of the most important electric energy production centres in Greece - 70% of country’s total power is produced in the region. Services such as retail and wholesale trade, tourism and public administration are the most important in terms of value added, while the health and financial intermediation sectors are gradually growing in importance. The research and development services are at a rather low level: only 3,5% of the country’s research foundations are situated in West Macedonia.

27 Policy Department B: Structural and Cohesion Policies ______

The regional economy faces significant challenges due to the need for restructuring towards higher value added activities as the manufacturing sector is declining and due to the considerable degradation of the natural environment resulting from mining and energy production activities.

Over the 2000-2008 period, the annual growth of GDP was 6.6% while the region accounted for approximately 2.0% of the country's GDP. In terms of GDP per capita, during 2007 West Macedonia was positioned 6th among the 13 Greek regions and below the EU- 27 average (76.2%). Moreover, 2.4% of the country's workforce is employed in the region, 47.2% in the services, 32.1% in the industry and 17.8% in the agricultural sector. The unemployment rate was already high before the current crisis (15.2% during 2000-2008), including in the age group of 15-24 which even had 23.3% unemployment.

4.1.2. Administrative set up Since 1 January 2011, West Macedonia and the region of Epirus constitute one of the 7 new decentralised administrations. Like for the rest of Greece, the region's organisation is in transition, it is now divided into 4 peripheral units (former prefectures) and 12 municipalities as indicated in the figure below.

Figure 10: Peripheral units and municipalities of West Macedonia

In shades of yellow, peripheral unit , in red, peripheral unit , in blue, peripheral unit Kozani, in green, peripheral unit Florina. Source: Wikipedia

As with all other regions in Greece, following the Kallikratis decentralisation plan, West Macedonia's competences have been redefined and extended. Most importantly, since 1 January 2011 the region has an elected Governor, Konstantinos Dakis, of the New Democracy party. He will take over the responsibilities for the management and implementation of the Structural funds in Western Macedonia in July 2011.

4.1.3. Structural funding in West Macedonia Western Macedonia is a Convergence - Phasing out - region. As indicated earlier, in Greece, OPs are trans-regional. Therefore, Structural funding in West Macedonia is covered by the regional OP "Macedonia and Thrace", together with 2 other regions (Central Macedonia and Eastern Macedonia and Thrace).

28 Economic, Social and Territorial Situation of Greece ______

As for all regions, the implementation of projects under the thematic objectives "Digital convergence and entrepreneurship" and "Accessibility" have been transferred to the respective national thematic programmes.

The regional OP "Macedonia and Thrace" provides a total funding of EUR 3.26 billion (approx. EUR 2.68 billion ERDF funding and EUR 0.58 billion national resources). Western Macedonia is financing all development interventions through this regional OP and has the possibility to be financed through the Cohesion Fund.

The regional programme is built around 3 thematic priority axes (technical assistance measures are also co-financed if needed):

 Accessibility  Digital convergence and entrepreneurship  Sustainable development

An assessment of the amount of EU payments executed at the end of 2010 in relation to the total funding allocated to these priority axes in the region shows that the measures for "Sustainable development" represent around 50 % of the allocation and thus constitute the top priority. However, the absorption in this area is slower than in the other 2 main priority axes.

Figure 11: Thematic overview of EU Structural funds implementation in Western Macedonia9

EU payments until Priority axis Allocation NRSF December 2010

Accessibility 92 536 000 30 187 512

Digital Convergence and Entrepreneurship 123 560 000 33 922 369

Sustainable Development 299 504 000 39 063 573

Technical assistance 45 260 000 692 668 (West & Central Macedonia)

TOTAL 560 860 000 103 866 122

One landmark project of EU Cohesion policy in the north-western part of Greece is Egnatia motorway, funded under the ERDF and the Cohesion Fund in Greece with a total contribution of EUR 2.4 million.

Egnatia crosses and connects port in Epirus (entrance from Italy) with Kipi in Thrace (frontier with Turkey). Its length is around 670 km and it links major cities of Epirus, Macedonia and Thrace, 4 ports and 6 airports. It encompasses 50 exchangers, 350 access roads, 1650 bridges (40 Km) and 76 tunnels (50 Km).

9 Based on information provided by DG Regional policy in May 2011. Payments executed by the European Commission (payments on the ground may be higher).

29 Policy Department B: Structural and Cohesion Policies ______

Moreover, it is connected with Albania, FYROM and Bulgaria by vertical axes some of which are under construction with EU support. With these vertical axes, Egnatia will form a network that dramatically improves the transport conditions for the and South- Eastern European transport system as Pan-European corridors IV (Berlin-Sofia- Thessaloniki), IX (Helsinki-) and X (-Belgrade-Thessaloniki).

In the environmental field, the major project Diadyma is a successful intervention for waste management infrastructure in West Macedonia. It includes a sanitary landfill, local units of waste management in , Voios, Grevena; Kastoria, Serbia, and Florina and the respective equipment. It is supported by the Cohesion Fund with EUR 9.7 million.

4.2. The region of Central Macedonia (Kentriki Makedonia)

With a population of over 1.9 million, Central Macedonia is the second most populous region of Greece, after the Attica region. The capital Thessaloniki is an important commercial and transport hub of South-eastern Europe and seat of the largest of Greece ( University).

Figure 12: Maps indicating location of Central Macedonia in Greece and details of the region

Source: DG Regional Policy

4.2.1. Socio-economic situation In terms of GDP per capita, Central Macedonia was positioned 7th among the 13 Greek regions and below the EU-27 average (75.7%, 2007). 16.9% of the country's workforce is employed in the region, 58.9% in the services, 24.3% in the manufacturing sector and a considerable share of 13.9% in the agriculture sector. The variance in specialisation in employment compared to both the EU and national averages can be explained by the abundance of agricultural land in the region and by the slow restructuring of the economy towards higher value added activities. The slow pace of restructuring and the steep reduction (-7.3%) of the employment in the agricultural sector keeps unemployment rates rather high, but less severe than in other Greek regions (10.4% in 2007).

The most important services sectors in the region are , transport, communications and tourism. Central Macedonia is Greece's most visited region and accounts for 18.2% of the total tourist flow in the country, with 3.21 million tourists (2008).

30 Economic, Social and Territorial Situation of Greece ______

The manufacturing sector is dominated by medium to low technology labour intensive sectors, such as the food industry, textiles, non-metallic mineral products and furniture, with lower productivity compared to the national average. The majority of firms are SME's, a few larger companies are found in industries such as metal production, chemicals and plastics.

4.2.2. Administrative set up and EU Cohesion policy Along with the East Macedonia and Thrace periphery, Central Macedonia is supervised by the newly created decentralized administration of "Macedonia and Thrace". At the next level, the region is divided into 7 peripheral units (until 2010 prefectures) which are further subdivided into 38 municipalities.

Figure 13: Central Macedonia's peripheral units (former prefectures)

5 6 7 8 9 Thessaloniki 10 11 Source: Wikipedia

As in all other 13 Greek regions, until now, the design of Cohesion policy has been done by the central government and decisions were taken by national ministries, after consultation of the regions. This will change when in July 2011 the Governor of the region will take his responsibilities for the implementation of Structural funds and the decentralisation will be introduced in Cohesion policy.

4.2.3. Structural funding in Central Macedonia Central Macedonia is a Convergence - Phasing out region and is covered by the same regional OP as Western Macedonia described in the previous chapter, i.e. the regional OP "Macedonia and Thrace", with a total funding of EUR 3.26 billion. Thus, the thematic priority axes are also the same as in West Macedonia, starting with the improvement of the region's accessibility, over the promotion of technology to improve productivity and quality in the regional economy, to the support for sustainable development which is, again, the leading field of intervention, but shows also here the least progress of implementation.

31 Policy Department B: Structural and Cohesion Policies ______

The state of play of EU payments in the respective investment areas in Central Macedonia is the following: Figure 14: Thematic Overview of EU Structural funds implementation in Central Macedonia (EUR)10

EU payments until Priority axis Allocation NRSF December 2010

Accessibility 410 000 000 55 700 676

Digital Convergence 614 640 000 235 180 652 and Entrepreneurship

Sustainable Development 1 079 000 00 111 457 375

Technical assistance 45 260 000 692 668 (West & Central Macedonia)

TOTAL 2 148 900 000 403 031 371

The example of the major project of the illustrates the challenges of Cohesion projects in Greece. It is the continuation of a project started under the last programming period (2000-2006). The first phase was co-financed by ERDF resources of EUR 99.9 million, mainly for the construction of 9,6 Km of metro lines, 13 stations and the acquisition of 18 wagons. The estimated completion date was October 2012 but the project suffered important delays, due to expropriations, to the award of contracts and to archaeological excavations (completed by 45%). Due to these difficulties and delays, the initial planning of the project is being currently reconsidered and might be modified.

Therefore, for the second phase, scheduled to be implemented in the period 2007-2013, there is no information besides the fact that national authorities envisage to transfer this project from the regional programme "Macedonia and Thrace" to the national programme "Environment - Sustainable development" and that its estimated budget would be about EUR 250 million.

10 On the basis of information provided by DG Regional policy in May 2011. Payments executed by the European Commission (payments on the ground may be higher).

32 Economic, Social and Territorial Situation of Greece ______

4.3. The Region of Epirus (Ipeiros)

Epirus is located at the north-western part of Greece and is its most alpine and relatively isolated region. After , southern (ancient) Epirus became part of Greece, while former became part of the newly created state of Albania. The capital of the Greek region is Ioannina which has around 62 000 inhabitants.

Figure 15: Maps indicating location of Epirus in Greece and details of the region

Source: DG Regional Policy

4.3.1. Socio-economic situation Epirus exhibited strong development trends before the crisis of 2008/09, with an annual growth of GDP of 7.0% and accounts for approximately 2.2% of the country's GDP. In terms of GDP per capita, Epirus was positioned 9th among the 13 Greek regions, well below the EU-27 average (70.7%, numbers of 2007). The services sector dominates the regional economy and accounts for 69.7% of the regional GDP, while the industrial sector/construction share was 22.1%; 8.2% of GDP came from the agricultural sector during 2007, steadily declining over the past decade. Sheep and goat pastoralism have always been an important activity in the periphery - Epirus provides more than 45% of meat to the Greek market.

Furthermore, in 2007, 2.9% of the country's workforce was employed in the region, more than half of it in the services and 21.6% in industry/construction and 19.7% in agriculture. The unemployment rate was 11.1% in 2007, afflicting young people and women much harder, with 18% and 51.5% respectively. Epirus has few natural resources and industries, and the population has been depleted by migration; only 3.1% of the country's population lives here. Except around Ioannina, population density is low.

The geographical remoteness led in the past to underdevelopment, but EU funded infrastructure projects, a growing tourism and services sector, a dynamic academic environment and the strengthening of traditional industries have gradually transformed the region. The opening of the borders and markets in neighboring Balkan countries created also a new growth potential for Epirus.

The manufacturing sector is dominated by traditional industries and is closely related to the natural resources of the region, food and beverages ( products), non metallic minerals, textiles, wood and cork.

33 Policy Department B: Structural and Cohesion Policies ______

The tourism sector and trade are the most prominent services sectors in the region with significant growth potential. Other important services sectors are those of transport, real estate and other business services and education and health services.

4.3.2. Administrative set up and EU Cohesion policy From January 2011, according to the reform introduced by the Kallikratis programme, the prefectures were abolished and Epirus is now divided into 4 peripheral units: Thesprotia, Ioannina, and . The former municipalities and communities were re-structured to form only 18 new municipalities.

Figure 16: Peripheral units and 18 new municipalities of Epirus

In shades of red, peripheral unit Ioannina, in yellow, peripheral unit Thesprotia, in blue, peripheral unit Preveza, in green, peripheral unit Arta. Source: Wikipedia

Like all Greek regions, Epirus had until now very limited competences in terms of policy design and legislation. From July 2011, the Governor of Epirus will be responsible for the planning and management of Structural funding in the region. Epirus is a pure "Convergence" region and is, with 2 other regions, covered by the regional Operational Programme "Thessaly - Mainland Greece - Epirus". These 3 regions have been put together in the programme because they face similar problems as areas lagging behind the regional development of the metropolitan Greek areas, even though they show considerable disparities regarding income, types of economic activity and accessibility. The total budget of the programme amounts to EUR 1.47 billion, of which EUR 1.1 billion is ERDF funding and EUR 369 million are national resources.

The strategic goals for the Epirus region for 2007-2013 resemble those of the other Greek regions and focus on accessibility, competitiveness, and sustainable models for development.

The progress of implementation and the relative distribution of allocations are also similar to those seen for West and Central Macedonia. This is certainly due to the fact that the decisions on regional development in Greece have, until now, been taken at national, not regional level.

34 Economic, Social and Territorial Situation of Greece ______

This is the state of play of programme implementation in Epirus:

Figure 17: Thematic Overview of EU Structural fund implementation in Epirus (EUR)11

EU payments until Priority axis Allocation NRSF December 2010

Accessibility 106 353 810 8 877 139

Digital Convergence 99 102 698 34 088 252 and Entrepreneurship

Sustainable Development 204 843 492 30 241 497

Technical assistance 9 700 000 271 638

TOTAL 420 000 000 73 478 526

For Epirus, there is little information available about ongoing Structural fund projects of the period 2007-2013.

Under the previous period 2000-2006, the Epirus Technological Park was co-financed by EU funds under the regional programme "Epirus", with a total allocation of EUR 2.2 million. This project contained laboratories and offices, with a capacity to host about 20 enterprises and linked research and technology with productive activities of the region.

In the framework of the same regional programme, the Hatzikosta Hospital received financial support for new medical equipment and renovation during 2000-2006 for a total amount of EUR 344,990.

11 On the basis of information provided by DG Regional policy in May 2011. Payments executed by the European Commission (payments on the ground may be higher).

35 Policy Department B: Structural and Cohesion Policies ______

36 Economic, Social and Territorial Situation of Greece ______

CONCLUSIONS AND OUTLOOK ON GREECE'S ROLE IN COHESION POLICY AFTER 2013

This Note provides a number of insights into the political, socio-economic and administrative context of EU Cohesion policy in Greece, with particular focus on the regions of Central Macedonia, West Macedonia and Epirus.

Greece faces severe regional disparities at inter-regional and intra-regional level, as well as a considerable development gap of the entire country with the EU average. The NSRF for 2007 - 2013 was designed to address these development needs, but a closer look at the state of play in the Greek regions demonstrates that its implementation is exceedingly slow. The fact that the situation is very similar in different regions and that they did not have any political competence until now, suggests that the underlying problems causing the delays are to be found more at national than at regional level.

Despite progress in some areas, the skills and organisation of the national administration and potential beneficiaries have been a major factor of concern which has been even more accentuated in the context of the current financial and economic crisis. Elections in 2009, major fiscal imbalances and a fundamental administrative reform further complicated regional development programming and implementation.

Until now, the implementation system of EU Structural funding in Greece has been highly centralized with little competence at the regional or local level. Since January 2011 a transition is taking place to a decentralised administrative set up of the country, scheduled to become effective for Cohesion policy in July 2011. Then, elected Governors of the 13 Greek regions will become responsible for the intermediate managing authorities of the programmes in their regions.

Despite some difficulties - and probably even more delays - this reform will cause in the short term, its medium and long term impact is expected to be beneficial. A regionalised, place-based Cohesion policy could evolve in Greece allowing a more decentralised implementation and management system.

The 2010 Memorandum of Understanding between Greece, its Euro-zone partners and the IMF related to the financial support package takes the regional development needs of the country into account and features a concrete plan to accelerate the absorption and implementation of EU Cohesion projects.

Thus, the Greek government continues its efforts to catch up with the delays and to improve absorption rates. But what is as important as absorption in the pursuit of an effective and efficient future Cohesion policy, are improvements of administration and regional planning, as well as the adoption of a genuine evaluation culture, ex post and ex ante.

Furthermore, the situation of the regions Epirus, West and Central Macedonia exemplifies another crucial problem: About half of all EU Structural fund resources in these regions are earmarked for measures for sustainable development, which is a positive sign of adaptation to the EU 2020 needs. However, their implementation is even more delayed than interventions in other thematic fields. Hence, the European Commission has stressed the need to accelerate the Structural fund implementation in Greece in general - and in particular for measures under the important "Sustainable development" objective.

37 Policy Department B: Structural and Cohesion Policies ______

Against the backdrop of the severe financial and economic crisis Greece is experiencing, the Greek government considers EU Cohesion policy more imperative than ever.12 In its position paper to the 5th Cohesion report, the Greek government therefore favours an increase of the future budget for Cohesion policy.

It opposes the idea of a stronger European influence on national policy priorities and development programmes, which should not be included in the future "Development and Partnership contracts". In the same vein, Greece is rather reticent as far as the thematic concentration of Cohesion spending on areas is concerned and rejects a mandatory, restricted targeting of investments. The Greek government argues that in certain deprived regions a thematic concentration would be counterproductive and could endanger achievements of socio-economic cohesion. Therefore, it requires more flexibility for the EU Member states in the choice of their priorities on the basis of the condition in the country itself.

Like most other Member States, Greece rejects the introduction of a macro economic conditionality linked to the European Growth and Stability pact in Cohesion policy, but unlike most other Member States, it is also quite critical concerning a more result-based management of Cohesion programmes and projects at the EU level. Instead, according to the Greek government, incentives, not penalties, at the national level would make the policy more efficient, for example by a performance reserve at national level.

In particular, Greece is in favour of the creation of a new intermediate category of regions in order to allow them to resume their process of development and calls for a stronger recognition of the concept of territorial cohesion.

Finally, Greece supports efforts of simplification of procedures, especially in the area of audit, and of common eligibility rules between all EU Funds. It requires for the N+3 rule to be implemented for the whole programming period in order to give the authorities more time to plan their interventions. And last but not least, an extension of the financial engineering tools which have already been widely used in Greece would be very welcomed in Athens.

12 See in: , Greek contribution to the consultation for the future of Cohesion policy on the occasion of the 5th Cohesion Report (courtesy translation), page 1.

38 Economic, Social and Territorial Situation of Greece ______

REFERENCES

 Applica/Ismeri Europa (report for DG Regional policy), Country report on achievements of Cohesion policy 2007-2013, Greece. Expert evaluation network delivering policy analysis on the performance of Cohesion policy 2007-2013, November 2010.

 European Commission, Commission staff working document accompanying the Annual report of the cohesion fund (2009), (COM (2010) 589 final).

 European Commission, Directorate General Regional Policy, Note on the implementation of Cohesion Policy in Greece, May 2011.

 EPRC and Euroreg, The objective of Economic & Social cohesion in Economic Policies of Member States, Part II (country reports), 2010.

 GOVERNMENT OF GREECE (2007) National Strategic Reference Framework 2007-2013.

 Government of Greece, Greek contribution to the consultation for the future of Cohesion Policy on the occasion of the 5th Cohesion Report, Courtesy Translation.

 Government of Greece, Letter of Intent to IMF (with updated Memorandum of Understanding), 6 August 2010.

 Government of Greece, National strategic report 2009.

 Operational Programme Thessalia - Sterea Ellada - Ipiros, 2007- 2013.

 Operational Programme Central Macedonia - Western Macedonia - Eastern Macedonia & Thrace, 2007- 2013.

 OECD, Regional Development in OECD countries, OECD 2010.

 REMACO SA, Management and development consulting, JESSICA Instruments for Energy Efficiency in Greece, Evaluation study March 2010

 www.economist.com

 www.eif.org

 www.espa.gr

 www.europa.eu/regional_policy

 http//:epp.eurostat.ec.europa.eu/portal/page/portal/eurostat/home

 www.imf.org

 www.oecd.org

39

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