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European Commission

Johannes HAHN

Commissioner for Regional Policy

"Engineering Recovery and Growth with Cohesion Policy in Greece"

To the Governors of the Greek Regions

Athens, 19 October 2012

Dear Governors,

Dear Secretary General,

Ladies and gentlemen,

Greece is going through rough times. There is no denying that the financial and economic crisis has turned into a job and confidence crisis. This crisis bites and your citizens suffer. This is why we cannot continue to do business as usual.

That is not to say however that there is no future for Greece. The temptation is there to be defeatist in the face of such a hard crisis. There is a mountain to climb, yes, but there is light and hope on the other side.

Today, I will focus my intervention on two key words which will determine whether Greece makes the most of future cohesion policy in the period 2014-2020. These two words are: competitiveness and governance.

The Greek economy has for too long been consumption-led. Its trade balance has been in deficit for decades and still is, even if the figures are improving every quarter.

Relying too much on imports has a negative impact not only on the trade balance, but also on the capacity to produce goods and to innovate. The loss of know-how and innovation must be stopped. This must be where the transformation of the Greek economy starts. Greece must become an export-driven competitive economy.

Easier said than done, you will say. Indeed, this is a difficult challenge. But it is a necessary challenge.

It is the only way to move towards a sustainable economy and sound public finances.

So – where do we start ?

The European Commission has already made a number of proposals last April in its "Growth for Greece" Communication. The Government and all the democratic institutions must now show strong leadership to develop and implement a strategic vision for the future. A vision that should in my view be based on two main drivers.

The first driver is to define the key sectors that will bring growth and jobs back to Greece. Greece does have know-how and expertise in sectors which are highly competitive and job-intensive. I have in mind for instance renewable energy technology, agri-food, sustainable tourism and culture.

There have been some positive initiatives recently such as the Corallia Clusters set up to promote "Innovation made in Greece". We need to see more of this in the future.

The second driver has to focus on the key reforms needed to become a competitive economy. Reforms are needed in the business environment if Greece is to create the right conditions for its companies to prosper. Steps have already been taken: licensing procedures have been simplified, investment authorisations have been fast-tracked, there is now a single business registry. This is a good start, but more is needed and it is needed fast.

Public administration needs to become more efficient and less inclined to develop burdensome procedures. Further efforts are needed to complete the infrastructure gaps, particularly when it comes to broadband access or multi-modal transport. Natural resources need better protection and management.

In support of these much needed developments, we must also look together at how we can improve access to finance for SMEs which have the capacity to innovate, bring new products to the market and export on the global market. Access to bank lending for Greek SMEs has decreased 3-fold over the period 2009 to 2011. Cohesion Policy and other instruments of the European union should be used to unlock SME financing – jobs and growth will not come from the public sector – they will be created by the Greek private sector, and in particular by innovative and thriving SMEs.

Identifying strategic sectors, implementing much needed reforms and facilitating access to finances for SMEs are the three ingredients which, if combined effectively, will be the keys to higher competitiveness in Greece.

Now to my own policy area in the European Commission – European Cohesion Policy.

Our policy seeks to bring all regions of Europe closer to each other in terms of socio-economic development. It is organised in such a way that regions at the centre of our delivery mechanisms.

In Greece, internal regional disparities are a fact. The region of Attica has a GDP per capita of 120% of the EU average whilst in Western Greece and in Eastern Macedonia and Thrace it is of 66% and 67% respectively. When it comes to socio-economic development, Greece cannot be approached as a block, with a one-size-fits-all approach.

On the contrary, if Greece is to transform itself into a competitive economy, it must build on what its regions have to offer. With the recent Kallicrates reform which gives more competences – and therefore more responsibilities - to the Regions, Greece has the opportunity to turn its regions into the engines of recovery and future growth.

Naturally, an administrative reform is never enough by itself. It needs to be accompanied by concrete measures. Electing regional governors is a step in the right direction. Now it is time to take further steps – regions should define their own competitive advantages and build on that to present to their citizens strategies that will translate into new economic opportunities and deliver growth and jobs.

In fact, you have now an excellent opportunity to show that you can find the right strategy for your individual regions. With the reprogramming exercise for the current period a shift of 500 million EUR of additional support to SMEs is proposed. And your job will be to clearly identify where the money will deliver the best results. In many ways this is a test for you and how you will shape the future.

In preparing for the next financial period of cohesion policy, I have asked that all regions of the European Union present their "smart specialisation strategies" to us. In Greece too, I expect to see this. The Commission is providing assistance, our experts are already active in the field – I count on you to respond to this challenge and grasp the opportunity this process provides for the regions to take their future in their own hands.

But defining a strategy is only the first step. When cohesion funding becomes available to Greece, the systems must be in place to ensure that the funds are spent effectively and efficiently.

Effectively, because the funds must be spent on the priorities that were identified in the strategies, focusing on a limited number of themes where the impact will be the greatest.

And efficiently, because spending must be done in a simplified way, using reasonable time and resources.

For this, Greece needs to think carefully of the management framework it wants to put in place for the period 2014-2020. It is worth considering using the new regional set up to ensure that projects are developed and managed by regionally accountable bodies. It is worth thinking about how to combine the need for investments of national importance with the regional dimension. It is important to always ensure that strong coordination takes place so as to avoid wastage and capitalise on synergies.

Ladies and gentlemen,

I am aware that I have given you much food for thought. But I need to repeat: there is no business as usual!

In the coming months, you are going to enter into a crucial dialogue with the European Commission, on where and how the next cohesion funding package should be used. Cohesion Policy will be the main public investment instrument for Greece in the foreseeable future.

Our ultimate objective and responsibility is to ensure that these investments produce the desired results. Together, we will take important decisions that will define the socio-economic future of your country.

We must prepare for these decisions in the best possible way. We must from the outset, work together in full trust and transparency, to determine how we bring Greece back on its feet.

You can count on the European Commission's support in this process. I hope I can count on your support to and commitment to change and transformation.

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