GREEK INFRASTRUCTURE ANALYSIS: European funding will eventually run dry – Maintenance and modernisation are the new challenges

When, during the 1990s and 2000s, the country was developing the major infrastructure it possesses today, the primary goal was to acquire it. Inspired by the European model, it launched significant projects, primarily in Athens, with two Metro lines, a new airport, an urban motorway, while simultaneously upgrading the initial sections of the national motorway and railway networks.

All these projects became a reality thanks to European funding. The same occurred during the 2000s, when Athens’ Metro was expanded, the construction of Thessaloniki’s Metro began, and upgrades continued on motorways, railways, ports, and airports.

During the decade of the crisis, public works funded by Europe kept the country afloat, as much as possible. Progress was made in completing the core motorway network, the main Athens-Thessaloniki railway line, and reforms continued with the privatization of transport infrastructure through concessions involving motorways, railways, ports, and airports.

As we approach the middle of the current decade, what we observe are complementary projects in the motorway network, as well as developments in the railway system and the Metro networks of Athens and Thessaloniki.

Funding for infrastructure is running dry

Over the years, the European Union has supported the country’s major projects, and without question, its image would not be the same without them. This is a significant acknowledgment. Even today, for example, we are constructing projects such as the Northern Crete Highway (BOAK), the E65 motorway, railway projects, Thessaloniki’s Metro, and Line 4 of the Athens Metro, with primary funding coming from the EU’s Structural Funds (ESPA).

However, the EU Structural Funds (ESPA), as a key tool of the European Union, are intended for developing countries. Once certain targets are met, the funding for infrastructure decreases. Essentially, ESPA functions as an aid for countries lacking the financial strength to implement projects, generously providing its support.

This assistance to the country remains significant because the economic crisis set it back considerably, reducing per capita income and GDP, which kept the country among the beneficiary economies.

If the economic crisis had not occurred, it is very likely that this discussion would have taken place 10 years earlier. As Greece continues to develop and converge economically, the funding from ESPA, particularly for infrastructure, will gradually decrease.

Already, in the current 2021-2027 program, the operational program for transport amounts to €1.9 billion. It is the smallest program in this category in decades.

Additionally, having acquired these significant infrastructures, the country now faces a new challenge: to continue developing complementary or new infrastructures while also being able to maintain them.

This factor can no longer be overlooked in how we perceive our infrastructure, whether it involves buildings, squares, sidewalks, metro networks, railways, ports, or airports.

For those infrastructures that have been privatized or concessioned, such as motorways or airports, maintenance has been accounted for in the contracts. However, there are many other infrastructures, either under the umbrella of ministries or managed at the regional or municipal level, that now require maintenance.

Here lies an explosive combination: you need funds not only to launch new projects but also to maintain what has been built over the past decades and remains public property, despite reduced funding from the European coffers. For example, we urgently need funds for new trains in Athens, refurbishment of old ones, maintenance of stations, upkeep of the railway network, public ports, new buses, and public buildings, many of which are highly energy-intensive, among other needs.

These developments occur during a favorable period, thanks to the Recovery Fund, which provides significant relief by contributing to major projects such as the northern section of the E65 motorway, the BOAK, building projects, and more.

The rise of PPP projects over the past five years is no coincidence. With European funding decreasing and the country unable to finance these projects on its own, this shift became almost a necessity.

Today, nearly 50 PPP projects are underway in various forms, with many of them being signed. However, there is a limit here as well. Since PPP projects are also recorded as debt, they can only be implemented prudently and cautiously. According to government officials, it seems that we have reached a ceiling in this regard.

The Gordian Knot

Based on the above considerations, we face a challenging combination: the need for new projects, the expansion of existing infrastructure, the modernization of others, and the maintenance of the many assets we have created. This comes at a time when PPP projects have reached their limit, and funding from the EU is decreasing.

Additionally, the Recovery Fund is nearing its end, and even if extended, it will primarily cover actions already initiated. It resembles a Gordian Knot, requiring more than just foresight to untangle.

Even if we decide to proceed with further concessions or PPPs (which seem to address the issue of maintenance), these will only apply to specific infrastructures or facilities. Nonetheless, there will still be a vast number of local projects or structures that cannot be adequately addressed.

The problem is not mathematical; it is economic, and the solutions are not straightforward. This year, the Public Investment Program (PIP) has nearly doubled (just a few days ago, the Deputy Minister of Infrastructure, Nikos Tachiaos, placed it at €630 million, up from €350 million) to meet the increased demands.

Even this amount, it seems, is not enough, and additional resources are needed to support all the initiatives mentioned above. This does not even take into account specific challenges in construction, such as the lack of personnel, which impacts smooth implementation. The primary concern remains the fundamental need for funding.

Just for the extensions of Line 4, nearly €3 billion is needed, and there are plans for extensions to other lines, expansions of Thessaloniki’s Metro, funding for the railway network, local projects, and, of course, flood control and climate crisis mitigation projects (which mainly involve interventions in existing infrastructure).

With all this, it seems that we need more than just one solution. We are likely entering a period where all available tools must be combined, while also identifying additional funding sources for projects that encompass not only implementation but also maintenance and modernization.

At the same time, it seems inevitable to further increase the Public Investment Program (PIP) for the same reasons, while also exploring ways to implement projects in the future without burdening future generations with excessive costs.

The entire situation appears almost unsolvable, like a puzzle for advanced problem-solvers. What is certain is that this issue will preoccupy us greatly in the coming period or even years, until we find a balance that allows us to reduce the country’s near-total dependence on European funds. This would enable us to undertake more projects independently while maintaining and modernizing the infrastructure we have built.

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