European Commission President Jose Manuel Barroso on Tuesday announced that he intends to propose a European Union plan to help Greece boost competitiveness and create jobs, giving it access to developmental funds of roughly one billion euro. He said that the plan could be financed by EU structural funds but also any member-states that want to contribute.
Barroso underlined that fiscal austerity programmes for reforming public finances had to run in parallel to action designed to boost the country's flailing economy.
The European Commission president said aspects of such a programme had been discussed during his meeting with Greek Prime Minister George Papandreou the previous day and that he would raise the issue at the upcoming EU summit.
Clarifying that the money to Greece would come with tighter supervision and technical assistance, he said the aim would be to "concentrate funds on where it matters most", frontloading some projects and allowing accelerated payouts of money available to Greece from structural funds. He also spoke about having better coordinated cohesion policies and ways to help Greece tap into the funds available. The Commission's goal would be to return Greece to growth in 2013, Barroso said.
"If Greece takes action, we have plans in order to help it," he stressed, adding that it was "up to Greeks to say if they want to be saved". Referring to his meeting with Papandreou, he said the Greek prime minister had left him in no doubt about his determination to make the necessary changes. He also noted that the ability of Greek public administration to act had to be enhanced.
Barroso noted that in the case that Greece failed, the repercussions for Europe and the rest of the world would be grave. This danger, combined with the need to show European solidarity, had to convince European public opinion about the need to further assist Greece, he added.
On the issue of political consensus in Greece, Barroso denied that this had ever been a condition for continuing support to Greece from the EU and IMF. He noted, however, that achieving consensus would be an extremely important element in the success of the programme to reorganise the Greek economy.
"Greece is currently at a crucial turning point and for this reason, exceptional courage is needed," the EU Commission president stressed, repeating his appeal to political parties in Greece to strive for consensus that would give the austerity programme greater credibility.
"It is a mistake to give the impression that there could be an alternative plan to the existing agreements between the Greek government and the troika," Barroso underlined, stressing that the EU and IMF were not prepared to finance any other economic policy apart from that already on the table. Barroso underlined that reforming public finances was the only option for improving the competitiveness of the Greek economy.
He said a vote of confidence in the government, due to be held in the Greek Parliament after midnight, was "crucial" but that the moment of truth would come next week, when the Greek Parliament voted on the Medium-Term programme.
Regarding the success of Greece's fiscal adjustment effort, Barroso said that this had started strongly but was then followed by "reform fatigue" so that there was a notable reduction in the deficit but less impressive progress in the area of structural changes and privatisations.