Of Recovery Fund enthusiasm

Posted by Antonis D. Papagiannidis 01/06/2020 0 Comment(s) Economia Blog,

The mid-Eighties is a long time back, but that era still resonates warmly in Greek consciousness. Back then, Greece as new EEC (at that time…) entrant under its firebrand, Euro-sceptic, Andreas Papandreou-led Government turned pro-European through a heavy dose of regional and agricultural spending.

 

Greece was made a test case for the cohesion policies gradually implemented in the Delors years – starting with the Integrated Mediterranean Programmes and evolving all the way to an overall development policy purporting to close the North-South gap in infrastructure and social growth, but mainly giving rise to incomes that gave a tangible content to the notion of “Europe”. Roads, bridges, hospitals, educational facilities, training programmes, agricultural infrastructure and agribusinesses sprouted around the country well into the Nineties and the turn of the 21st century under successive “packages” of Delors, Santer ect. memory, until the NSRF mainly constituting in grants, became a regular component of EU life. (The experience of the Juncker Plan, financial engineering-ad-leverage-based, was met with less enthusiasm; by then, the financial/debt crisis had robbed most of the growth potential of the Greek economy along with its effective appetite for investment).

 

The jury is still out on whether such an approach had a positive influence on the Greek economy, whether it helped reduce structural flaws, whether it ended up with a Mediterranean version of the Dutch disease (inflows of foreign finance causing loss of competitivity in the tradable sectors of an economy) for Greece. But the widespread enthusiasm in Greek media over the Recovery Fund announced at EU level to fight the nasty recession caused by the corona-virus pandemic shows that appreciation for this sort of EU funding remains high. So, both the Administration and the private sector are rolling up sleeves and preparing for a National Plan to be presented to Brussels so as to get the country’s economy ready for the expected 32bn euros of finance over four years (2021-24) to reboot the economy.

 

A closer look to the priority sectors indicated by the European Commission for the Recovery Fund makes for some doubts. First and foremost, activities aiming at reducing the carbon footprint of the economy: Greece has unilately pledged to go for fast decarbonization i.e. to phase out lignite-fired electricity plants until 2028, plus to introduce renewables and energy-saving at a large scale. But when Germany shifts to renewables, when Denmark goes the same way, their own technology will be used in setting up solar plants or wind energy ones; when Italy goes for electrical bicycles instead of scooters, when Germany or France go for electrical cars instead of diesels, they will create demand for their own industries. No such perspectives for Greece. At best energy-saving through the revamping of housing and/or of public-sector buildings carries promise for something more productive that absorption of EU funds to finance imports.

 

Then, speeding-up of the digital transition for the Greek economy. The heroic achievements of e-administration under the tough experience of the corona-virus lock-down, the introduction of tele-working and tele-learning at an extent unprecedented in Greece are indeed cause for optimism. But the deeper one goes in digitalization of production – such as it exists in Greece – and of the service sector, the less enthusiastic is one entitled to be. At least this time around earlier experiences of costly hardware and software acquisition that were not transformed to services, processes or applications of value, nor integrated in production to achieve competitivity, will be hopefully kept at bay.

 

If now one shifts to tourism, the sector par excellence falling prey to corona-virus pandemic lethal aftereffects, one would have to credit the Recovery Fund’s Brussels managers with foresight and flexibility they are rarely associated with, to hope for important sectoral assistance from the Recovery Fund. To rebuild the tourist product offered by Greece will be a Herculean task indeed: but will it fit to the Commission’s list of priorities?

 

Last but not least: modernizing agricultural, bringing it one step further to environment-friendliness and sustainability is of high importance for Greece. Especially so now, that new standards of food safety may well arise. But will Greek producers respond positively enough to this call?

 

Recovery Fund enthusiasm looks set to be an important part of public discourse in Greece. Something more than enthusiasm is needed.

 

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