EU threatens to cut Greek farm subsidies by 10 per cent

(BRUSSELS) - The European Commission warned Greece on Wednesday that it faced a cut of 10 percent in EU farm subsidies unless Athens improves controls on the way the funds are being spent.

EU farm commissioner Mariann Fischer-Boel has sent a letter to the Greek authorities to warn them that "we've started a procedure which could lead to us reducing Greece's agricultural payments by 10 percent," her spokesman said.

It could see subsidies cut by 200-300 million euros (318-477 million dollars), said spokesman Michael Mann.

He said that under EU laws from 2005, Brussels can "take such safeguard measures in the case that a member state does not have its control systems in place to ensure the correct spending of agricultural subsidies."

He underlined that farmers would not lose money as Athens pays them the subsidies first and is then refunded by the commission from the EU budget.

Greece has until early September to address the concerns. Brussels will conduct a new audit there on September 22 and take a final decision on what course to follow in the European autumn.

"We are clearly saying that there is a risk that we might have to reduce payments to Greece by 10 percent," Mann said.