To ensure a level playing field for businesses in the European Union, said the Minister of Finance Christos Staikouras in an interview with CNBC last week that Greece is supporting in the context of negotiations that have begun to change industrial and competition policy in the EU, in response to the well-known IRA (Inflation Reduction Act) legislation USA.

In essence, this means that Greece, as logically, joins these EU countries. who would like to create a pan-European fund to support the industry of countries with limited fiscal capacity, as an addition to the considered removal of restrictions on state aid in the EU.

Germany and France have made it clear that they would like to see these restrictions lifted to support their industries threatened by the energy crisis, and now also face competition from the US with €370 billion in IRA support for American businesses.

However, economically weaker states such as Greece, which do not have the fiscal space to support their own industries like financially strong states, fear that such a policy will stifle them. In addition to the threat from the United States, they will also have to face competition from the industries of powerful European states, which will be supported by state budgets. That is why the question of creating a pan-European fund to support the weak was raised.

This is a question that will dominate Europe in the near future, as its businesses face a common threat, but member states see the appropriate response differently. The creation of the fund is controversial, although German Chancellor Olaf Scholz advocates the creation of new financial instruments.

Thus, according to the information of the Greek representation in Davos, the German side interpreted that the German Constitutional Court would not easily accept the creation of a new fund, since it accepted the Recovery Fund only in exceptional cases and due to the special circumstances of the coronavirus. Also, according to the same information, the German side has doubts about the direction of financing through the European Investment Bank, whose decision is under consideration.

There are many open questions regarding the creation of the Fund: what will be its size, how it will be financed, whether it will provide loans or grants, according to what criteria and when.

In any case, the discussion was opened on a new active industrial policy, along with a change in competition policy, with the active role of the commissioner for the single market, Thierry Breton. At the same time, Commissioner for Competition and Executive Vice President of the Commission Margrethe Vestager sent a letter to member states asking them to express their positions on this issue by 25 January.

Finance Minister Christos Staikouras briefed Ecofin on Greece’s position last Tuesday and Mrs. Vestager in a teleconference on Thursday.