# CE2004084EN.01082601.xml

| 3.4.2004 | EN | Official Journal of the European Union | CE 84/826 |
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3.4.2004

EN

Official Journal of the European Union

CE 84/826

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(2004/C 84 E/0921)

WRITTEN QUESTION E-0631/04

by Ioannis Marinos (PPE-DE) to the Commission

(3 March 2004)

Subject:   Abolition of the interest rate subsidy for border regions in Greece

Subject:

The Chamber of Commerce of the Dodecanese has complained that the Greek Government has decided to abolish Joint Ministerial Decisions 2041901/16.5.1989 and 2078809/10.10.1989 authorising ‘the payment of a 3 % difference in interest, to be charged to the joint account of Law 128/1975, in respect of updated balances of loans granted for the working capital of commercial and craft undertakings based in the prefectures of Evros, Rodopi, Xanthi, the Dodecanese, Lesbos, Chios and Samos.’

Recent ministerial decisions (9034/B.289/10.2.2003 and 37497/B. 1232/2.6.2003) have amended the above Joint Ministerial Decisions of 1989, and it has been decided that craft and commercial undertakings in border regions shall be subsidised for the entire amount by bank loans up to 20 % of the annual turnover for the previous year or the last twelve months for newly founded undertakings and that the subsidy provided for by Joint Ministerial Decision 2041901/16.5.1989 shall be granted until 31.12.2004.

A letter from the Ministry of Finance (Protocol 80771/B.2334, dated 2.12.2003) states that the reason for the abolition of the interest rate subsidy in border regions of Greece is that ‘given our role in the EU, it is not advisable that interest rate subsidies be granted without an expiry date or limits in respect of the sum granted, even in the case of urgent socio-economic circumstances affecting the less developed regions of the country.’

Does the EU really impose this restriction? Is it contrary to Community law to subsidise interest rates — as the Greek authorities have been doing for 15 years — in regions which are mostly island regions whose per capita income is one of the lowest in the EU?

Answer given by Mr Monti on behalf of the Commission

(15 April 2004)

(15 April 2004)

Regional aid, i.e. aid designed to develop the less-favoured regions by supporting investments and job creation in a sustainable context, can take the form of aid for initial investment and/or aid for job creation. Regional aid is defined as a percentage of eligible cost of initial investment or linked to job creation and is conditional on the maintenance of the investment in question and of the employment created for a minimum period of five years. Therefore, unlimited interest rate subsidies, which by definition cannot be quantified, cannot be considered as investment aid even if they could be linked to eligible cost.

Exceptionally, in regions eligible under the derogation in Article 87 (3) (a) of the EC Treaty regional aid aimed at reducing a firm's current expenses (operating aid) can be granted under certain conditions, but the aid must be both limited in time and progressively reduced (see point 4.15 of the guidelines on national regional aid (1)). Therefore, even if the measures involve operating aid, they should be limited in time and progressively reduced, which was apparently not the case until now.

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The Commission can thus only welcome the Greek authorities' correct interpretation of the guidelines on national regional aid.

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(1)  OJ C 74, 10.3.1998 and OJ C 258, 9.9.2000.

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