EU to investigate Greek government's 3.5 million

EU regulators will investigate the Greek government's Ђ3.5 million (US$4.1 million) bailout of a military vehicle firm, the European Commission said Thursday. The EU state aid watchdog said it doubted that a decision to write off debts Hellenic Vehicle Industry S.A., or ELVO, owed to the public sector from 1988-1998 covered just military vehicles for the Greek army.

It said it believed the 1999 write-off, in effect a state subsidy, may have also covered jeeps and spare parts sold commercially. ELVO, with around 750 employees and an annual turnover of about Ђ150 million (US$175 million), is the Greek army's main supplier of tanks and armored vehicles.

Governments are allowed to subsidize military production, but EU rules restrict the amount of public money they can give companies to prevent one firm gaining an unfair competitive advantage over others. The countries are allowed to protect their legitimate national security interests, EU Competition Commissioner Neelie Kroes said.

"But this safeguard cannot be used as a pretext for granting illegal state aid to civilian activities," she said. "We have to examine such cases with care in order to prevent distortions of competition on markets for civilian products,” reports the AP. I.L.

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