Europe is promising to help kick-start economic growth in Greece as a way of dragging the country out of its debt crisis, but the scheme looks likely to move too slowly to have much impact in the next couple of years.
At last week's summit announcing a second international bailout of Greece, leaders of the 17-nation euro zone pledged "a comprehensive strategy for growth and investment in Greece" that would "relaunch the Greek economy."
The emphasis on growth is an important shift in Europe's approach to the crisis; the first bailout of Athens, launched in May last year, focused instead on slashing the Greek budget deficit, and the reduction in spending hit the economy hard.
Greece's recession was a key reason that it missed targets for cutting its debt under the first bailout. So ending its economic slump quickly would increase its chances of bringing its debt down to manageable levels over the next several years.
Details of Europe's plan so far, however, suggest it will be a limited scheme that concentrates on channeling funds for infrastructure development to Greece and has little impact over the next two years, which will be a key period in determining whether Athens forces more losses on private creditors.
"Greece will get the money, but most will reach the economy in 2014 and 2015. Too many projects have yet to be set in motion," said Nikos Diakoulakis, a former Greek development ministry official who advises the government on European Union funds.
Greece's economy shrank 4.5 percent last year, worse than the 4.0 percent contraction assumed in the first bailout plan, and the International Monetary Fund now expects it to shrink 3.9 percent this year. The IMF predicts meager growth of 0.6 percent next year but this may be too optimistic; a Reuters poll of private analysts conducted in June forecast expansion of just 0.1 percent in 2012 and 0.7 percent in 2013.
Greece has been trying to boost growth by streamlining regulation, cutting bureaucracy and reforming its labor market, but it may take years before such steps have much impact on the creation of jobs and businesses. So the EU's new growth initiative may be Greece's best hope in the short term.
Last week's summit statement was significant partly for what it omitted, however. The initial draft of the statement spoke of a "Marshall Plan" for Greece, a reference to the big U.S.-backed aid program that helped Western Europe recover after World War Two, but that phrase was left out of the final version, perhaps in order to limit expectations.
The new economic plan for Greece focuses on the EU's National Strategic Reference Framework Scheme, which channels grants of money to member countries that need help with economic and social development projects.
Greece has 20.2 billion euros of such funds available to it between 2007 and 2013, and so far has tapped only a little over 5 billion euros. In theory, the remaining funds could add some 2.5 percentage points to annual gross domestic product growth over four years, assuming 3.5 billion euros is disbursed each year and there is then a "multiplier effect" as the money stimulates other economic activity, some analysts estimate.
One obstacle to Greece using the money is a requirement for it to match each disbursement of EU funds with some of its own money. Under a deal announced before the summit, the EU will raise its share of funding for Greek projects from an average 73 percent to 85 percent, and Athens is urging the European Commission to increase that further to 95 percent.
But Greece has already lost valuable time in creating a pipeline of projects ready to attract EU investment, and even if the government can prevent corruption from siphoning off some money, bureaucratic obstacles will not disappear overnight.
"Greece has the most bureaucratic system in Europe for absorbing EU funds," said Georgia Zempiliadou, a Greek development ministry official overseeing implementation of projects with EU financing.
"There are still delays in granting contracts for public works, there are issues with expropriations, licenses, institutions. We will get the money but it will take time to put the processes in place."
Underlining the problems which aid programs in Greece can face, Norway announced in May that it had suspended payment of a $42 million grant to Greece because Athens had not fulfilled commitments and may have broken rules related to the aid.
The Greek government says 4,762 development projects, with a total value of 5.5 billion euros, are stuck in the country's bureaucratic machine and has vowed to reappraise them so they can either move forward with EU investment or be ditched.
Most of the funds are assigned to major infrastructure projects worth 11 billion euros in total. These include five road concessions where construction has stopped, because banks have frozen funding in response to delays in areas such as securing land.
"It is a difficult situation; many of the small projects have stopped. As for the big road projects, they will not start straight away -- there have to be renegotiations so the banks are secured," said George Peristeris, chief executive of GEK Terna, one of Greece's top construction firms.
The government justifies channeling most EU funds to infrastructure by arguing that 40 percent of the recession is due to a collapse of the construction sector, which lost a fifth of its jobs year-on-year in the first quarter of 2011.
Greek construction activity, measured by the number of new building permits, plunged 43.9 percent year-on-year in March, according to the latest official figures. The share of public works in overall construction activity was just 4.3 percent.
Some economists believe, however, that Greece could get more bang for its buck by investing in other sectors with quicker returns.
"We buy cement and bricks and build highways on which nobody will drive. Ports and airports are nice but we need tradable goods -- we have left only 3 billion euros to invest in things such as manufacturing and tourism," said Dimitris Mardas, an associate professor of economics at Aristotle University.
The summit statement hinted that the focus of EU spending in Greece might change to some extent, saying the funds would be aimed at "competitiveness and growth, job creation and training."
Last week the European Commission unveiled a task force that will offer technical assistance to Greece in absorbing EU funds, appointing European Bank for Reconstruction and Development Vice President Horst Reichenbach as its head.
The summit statement also pledged to "mobilize" institutions such as the European Investment Bank, a multilateral lending institution, to help Greece's economy, but it did not elaborate. The EIB's loans in Greece totaled 3.1 billion euros in 2010, up from 1.6 billion euros the year before.