VZCZCXRO7731
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHTH #0725/01 1261357
ZNR UUUUU ZZH
P R 061357Z MAY 09
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC PRIORITY 0147
INFO EU MEMBER STATES COLLECTIVE
EU CANDIDATE STATES COLLECTIVE
EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEHIK/AMCONSUL THESSALONIKI
RUEHTH/AMEMBASSY ATHENS

UNCLAS SECTION 01 OF 04 ATHENS 000725 
 
SIPDIS 
PASS TO USAID/WASHINGTON: BOB ICHORD AND IRA BIRNBAUM; 
USAID/ALBANIA: ROBERTA MAHONEY 
 
E.O. 12958: N/A 
TAGS: EAID ECON PGOV GR EU
SUBJECT: GREEK DEVELOPMENT AID TO THE BALKANS: BUSINESS AS USUAL 
DESPITE IMPACT OF FINANCIAL CRISIS 
 
REF: 2008 ATHENS 1223; ATHENS 065 
 
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SUMMARY 
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¶1. (U) Since 2001, Greece has given a consistent level of 
assistance to the Balkans, albeit not up to the level one 
might expect from a country with such regional leadership 
potential.  In 2007, Greece programmed 83.3 million euro 
of official direct assistance (ODA) for development in the 
Balkans.  This and previous assistance was geared towards 
technical cooperation (equipment, scholarships, training) 
and large scale capital investments in infrastructure and 
construction. 
 
¶2. (U) Given Greeces worsening budget realities and EU 
pressure to increase development assistance to poor 
countries in Africa, it does not appear that Greece is 
poised to increase its assistance to the region.  Nor 
does it appear that the government is considering a 
strategic re-think to ensure its dwindling development 
resources in the Balkans are allocated towards high- 
impact sectors or projects that can help mitigate the 
effects of the financial crisis on countries in its 
neighborhood.  Rather, it is business as usual for 
Greece as it doles out its development assistance.  This, 
coupled with Greeces outdated aid system, will challenge 
Greeces ability to strategically introduce aid to help 
relieve worsening economic conditions in the Balkans as 
the financial crisis there deepens.  It could also hamper 
Greeces ability to strengthen its leadership role in the 
region. 
 
¶3. (U) Nonetheless, development cooperation under the 
auspices of the U.S.-Greek Economic and Commercial 
Cooperation Commission (ECCC) continues to move forward 
at a steady pace (see reftel A), and the GoG has 
indicated a willingness to expand cooperation to other 
regions and sectors (see reftel B).  In the renewable 
energy/energy efficiency (RE/EE) arena, the U.S. and 
Greece have undertaken assessment missions and presented 
stocktaking reports to all countries included under the 
MOU in order to help define projects for collaboration in 
these countries.  Under the tourism MOU, the GoG has 
agreed to participate in a USAID contract to help improve 
competitiveness in Albanias tourism sector.  End Summary. 
 
------------------------------- 
Greek ODA Trends in the Balkans 
------------------------------- 
 
¶4. (U) Since 2001, Greece has expended approximately 656 
million euro in ODA assistance in the Balkans (Albania, 
Bosnia and Herzegovina, Bulgaria, Kosovo, Montenegro, 
Republic of Macedonia, Romania, and Serbia), averaging 80 
million euro per year.  Greece has given consistent 
amounts to the region over the past few years, although 
the most recent and comprehensive figures for Greek aid 
to the Balkans come from 2006.  According to Eleni 
Zorbala, Deputy Directory General of Hellenic Aid (HA), 
figures for aid dispersed in fiscal year 2007 are still 
in draft but should be released in a matter of weeks to 
the Greek Parliament and subsequently made available for 
public consumption.  HA shared some basic statistics for 
2007 with Post, which showed approximately 83 million USD 
in development aid being disbursed to the Balkans.  This 
is consistent with historical disbursements to the region 
in the amounts of 82 million USD in 2006, 86 million USD 
in 2005 and 80 million USD in 2004.  Statistics for 2008, 
however, will not be released until next year. 
 
¶5. (U) HA reports on Greek development assistance by 
classifying the funds into four different categories. 
Based on the preliminary 2007 data, the amount of funding 
to the Balkans in each category was as follows: 
 
-- Technical Cooperation (equipment, training, 
scholarships): 73 million USD or 88 percent; 
-- Investments (construction and rehabilitation of works 
and infrastructure): 8.5 million USD or 10 percent of 
 
ATHENS 00000725  002 OF 004 
 
 
funding; 
-- Program Aid (budget and balance of payment support): 1 
million USD or 1.3 percent; and 
-- Other Aid (relief and emergency aid): .7 million USD 
or .6 percent. 
 
Data for previous years show a similar distribution 
amongst these aid categories. 
 
--------------------------------------------- -- 
Delivery of Greeces ODA to the Balkans: HiPERB 
--------------------------------------------- -- 
 
¶6. (U) Virtually all of Greek ODA to the Balkans is 
distributed through two different mechanisms: Hellenic 
Aid (HA), Greeces development agency, which resides in 
the Ministry of Foreign Affairs, and the Hellenic Plan 
for the Economic Reconstruction of the Balkan (HiPERB), 
which is managed by a separate unit within the B1 
Directorate of the Ministry of Foreign Affairs.  HiPERB 
was created as a separate entity from HA and has a 
specific legal framework governing its activities (Law 
No. 2996/2002 on the HIPERB).  Therefore, HiPERBs 
proposal review committee, monitoring committee, and 
evaluation committee are entirely separate from HA.  The 
only place where HA and HiPERB intersect is in the 
reporting of ODA (which a large part of HiPERB aid 
qualifies as) to the OECDs Development Assistance 
Committee (DAC) and in publicizing the aid efforts of 
Greece internationally.  As currently organized, HA is 
responsible for relatively little in terms of programming 
aid in the Balkans.  Rather, its primary function seems 
to be as a liaison between the DAC and the GoG by 
reporting on Greek ODA delivered in the Balkans. 
According to HA, HiPERB was created to streamline 
delivery of Greek development assistance in the Balkans 
in order to help meet Greeces ODA commitments.  HiPERBs 
aim is to provide aid for productive investments, 
infrastructure, energy, institutional building and 
training. 
 
¶7. (U) Under HiPERB, the Greek government committed 550 
million euro to development and construction projects in 
Albania, Bosnia, Bulgaria, Kosovo, Macedonia, Montenegro, 
Romania, and Serbia.  The GoGs original timeline to 
implement the projects under the HiPERB program was 2002- 
2006, but this was extended to 2011 due to the GoGs 
extremely slow progress in granting HiPERB funds. 
According to the most recent data available from HA, 
current projects approved under HiPERB total only 270 
million euro, or 52 percent of total funding.  The 
majority of these funds (227 million euro) have been used 
to fund public investments or large-scale projects, 
including road infrastructure, government buildings, 
hospitals, clinics, a high speed fiber optic network, and 
upgrading museum facilities.  The largest of these public 
investments envisaged under the program is the Pan- 
European Corridor X highway that runs from Salzburg to 
Thessaloniki.  HiBERP is contributing a total of 150 
million euro to the project: 50 million euro for the 33.2 
kilometers of the motorway being built in Macedonia and 
100 million euro for 74.6 kilometers through Serbia. 
 
¶8. (U) By country, Greece has allocated the largest 
amount of HiBERP funding to Serbia (232.5 million euro), 
followed by Macedonia (74.8 million euro), Romania (70.4 
million euro), Bulgaria (54.2 million euro), and Albania 
(49.8 million euro).  HiBERP funding by sector breaks 
down as follows: Public Investments (79 percent), Private 
Production Investments (20 percent), and Small Projects 
Fund (1 percent).  Public Investments consist of large- 
scale projects as mentioned above.  Private Production 
investments consist of subsidies to and/or projects in 
the manufacturing and agriculture sectors.  The Small 
Project funds are placed at the disposal of Greek 
Embassies located in the recipient countries and are 
intended for small scale technical projects of an urgent 
nature. 
 
------------------------- 
Despite Financial Crisis, 
No Change in Aid Strategy 
 
ATHENS 00000725  003 OF 004 
 
 
------------------------- 
 
¶9. (U) Both HA funds allocated to the Balkans and HiPERB 
operate on the call-for-proposals system, which relies on 
potential implementers proposing projects that they would 
like to do and are applicable to HiPERBs guidelines. 
According to HA officials, the GoG has not yet determined 
the level of development aid it will program for the 
Balkans in 2009, since it is still collecting proposal 
applications.  Decisions will not be made until later in 
the year. 
 
¶10. (U) When asked if the GoG will adjust its development 
strategy in the Balkans to help respond to the current 
financial crisis, Zorbala said that she was still 
waiting for project proposals from NGOs and other 
implementors, and that Hellenic Aid will have to see 
what the priority countries and projects will be 
according to these proposals.  According to Zorbala, the 
EU is pushing member countries to increase development 
aid to Africa, not the Balkans.  The comments by Zorbala 
and others at HA suggest that the GoG currently has no 
strategy in place of using its development aid to help 
mitigate the effects of the financial crisis on countries 
in the region.  [Note: Despite criticism by the OECDs 
DAC, Greece continues to program its assistance through 
the call-for-proposals system.  This method of 
programming aid is not conducive to strategic long-term, 
large-scale aid arrangements that help create 
partnerships with recipient countries by addressing their 
long-term development needs and priorities and by 
allowing shifts in programming as country 
needs/priorities evolve over time.  Under this system, HA 
programs funding based on what implementers want to do, 
as opposed to against a GoG strategy for what it 
ultimately would like its assistance to achieve in the 
region, or in response to worsening economic conditions. 
End note.] 
 
-------------------------------- 
Room for Improvement in Greeces 
Balkan Development Strategy 
-------------------------------- 
 
¶11. (U) According to the DACs Peer Review of Greeces 
development assistance strategy, Greece has a long way to 
go to improve its aid delivery process.  Although Greece 
is one of the smaller and newest members of the DAC, its 
NATO and EU membership give it clear leadership potential 
in the Balkans.  In addition, Greece has much to 
contribute from a lessons learned perspective to 
transitioning countries in the region.  But this 
potential does not come out in Greeces development 
assistance strategy.  Although Greece puts more aid 
dollars in the Balkans than in any other region, the DAC 
points out that Greece needs to address its shortcomings 
in its aid strategy in order to allow for higher impact. 
The DAC has said that Greece should establish strategic 
country programs based on partners own strategies in 
each priority country (all the Balkan countries are 
currently listed as priority countries for Greece). 
Since projects are accepted annually through the call- 
for-proposals procedure, longer-term and larger-scale 
projects are unfeasible. (Note: This is probably the 
reason why HiPERB had problems quickly getting out out 
the door at the start of the program, thus leading to its 
extension. End note.) 
 
¶12. (U) A longer term strategy by HA would increase aid 
predictability, build sustainable capacity in and 
strategic partnerships with recipient countries, and 
allow for shifts in strategy to better respond to changes 
on the ground (e.g., the global financial crisis).  In 
addition, the call-for-proposals model tends to have 
higher transaction costs and presents the risk of a 
supply-driven approach.  Lastly, in 2006 Hellenic Aid had 
a staff of only 40 employees.  A recent visit to their 
office suggests that Hellenic Aid has not increased its 
numbers significantly since then.  Only one specialist 
for the Balkans was present at the office and she could 
not speak with competence about the activities of HiPERB. 
In addition, she offered little information regarding 
 
ATHENS 00000725  004 OF 004 
 
 
HAs activities in the Balkans.  Considering that the 
Balkans region is a priority for Greece, few human 
resources seem to be invested there  an indication of 
Greeces weak strategy in the region. 
 
-------------------------------------- 
Development Cooperation under the ECCC 
-------------------------------------- 
 
¶13. (U) On a more positive note, development cooperation 
in the Balkans under the auspices of the U.S.-Greek 
Economic and Commercial Cooperation Commission (ECCC) is 
proceeding at a steady pace (see reftel A), and the GoG 
has indicated a willingness to expand the cooperation to 
other regions and areas (see reftel B).  Under the Energy 
MOU, USAID and Greeces Center for Renewable Energy 
Sources (CRES) have already undertaken assessment 
missions to all countries included under the MOU 
(Ukraine, Moldova, Croatia, Serbia, Albania, Macedonia, 
Bosnia, Montenegro, and Georgia) and recently presented 
an RE/EE stocktaking report for each country, which will 
help define projects for collaboration within these 
countries.  Under the Tourism MOU, the GoG recently 
responded positively to the idea of working with the 
USAID mission in Albania under their recently-signed 
contract to improve the competitiveness of the Albanian 
tourism sector.  MFA Secretary General for International 
Economic Relations and Development Cooperation, Theodoros 
Skylakakis, told the DCM in January meeting (reftel B) 
that he would like to expand development cooperation 
under the ECCC to Africa and small Caribbean Island 
countries, as well as to the functional areas of the 
environment and climate change. 
SPECKHARD