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Update No: 059

The Greeks have a skilled diplomat in their foreign minister, George Papanadreou, who has forged a very good working relationship with his Turkish opposite number, Ismail Cem. They met in early February in Istanbul at a conference to improve relations between the Islamic and the Western worlds. Their talks covered everything in dispute between the two countries, above all the problem of Cyprus.
The Greeks are gratified beyond measure at the new rapprochement in the air between the two communities in Cyprus. The Greek Cypriot leader Glafcos Clerides has realised that the accession of his island enclave to the EU, which he and his compatriots greatly desire, would be hugely advanced by a solution to the Cyprus problem. His meeting with Turkish Cypriot leader Rauf Denktash in early January represents a major breakthrough, in which a new amity was forged, although much scepticism remains about reunion.
Greece is expected to have the highest growth of any member EU state in 2002, some 4%. Indeed, Greece has been having considerable success of late, lowering its inflation rate to 3-4% on an annual basis, facilitating its membership of Euroland in January 2002, the hallmark of its modernity.
The premier, Costas Simitis, head of the Socialist Party, says the government's successes are enough to withstand criticism. The country joined Euroland in January and is growing strongly despite adverse conditions in the rest of Europe.
He had some luck last autumn. A campaign to challenge him was being mounted for a party conference in October. Then came 9:11. It was obviously not the moment to be disloyal. The Greeks have their own problem with terrorism, the November 17th movement, which assassinated the British military attaché two years ago. Simitis is back in the saddle.

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AVIATION

Cyprus Airways eyeing Greek airline market, says Angelis

Cyprus Airways (CY) has ambitious new plans to branch into Greece next year. CY spokesman, Tassos Angelis, was quoted by Cypria.com as saying that the company was expecting the results of a study in March into the type of airline it would create, which would have its base in Athens.
With an eye on the crumbling fortunes of ailing Greek carrier Olympic Airways CY is poised to plug a gap in the Greek market. Efforts to sell Olympic have foundered with the collapse of Axon, the private Greek carrier that beat CY in the cut and thrust-bidding to take over Olympic early last year and the failure of negotiations with third runner, Integrated Airline Solutions.
CY pulled out of the race when its bid failed, more in frustration with the Greek government's lack of a clear policy on how Olympic would be broken up following its disposal. "We are convinced that there is room for another airline in Greece," Angelis said, adding: "Olympic is in trouble and there is only one private carrier left, Cronus, and they have problems too."
The spokesman said CY has not yet decided if it would create a charter or scheduled airline operating into Europe from Athens but hope to have it up and running by 2003.

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BONDS

Greece is on fast track to be one of top issuers

Greek bonds will find a home in more and more portfolios as the government cements its position as one of Europe's top issuers across the entire yield curve, the Wall Street Journal Europe reported on Mach 6th.
Greece's latest offering - a new 20-year syndicated issue due in April - is set to become the euro zone's benchmark in this maturity.
That's not bad for a country that only joined the single-currency bloc in January last year - two years after the founding members. The country has been building on the foundations of a ratings upgrade, with increased liquidity helping establish a broad spread of marketable issues for investors to choose from. 
"In April, we shall have the completion of the Greek curve across all maturities," said Chistoforos Sardelis, the manager of the debt agency, who expects an issue size of as much as €3.5bn.
Now comes the hard part: how to deliver on a range of financial reforms that will win Greece a place at the top table of debt issuers. Only then can a further credit upgrade and lower financing costs - be contemplated.
With two successful syndicated issues in 2001, the 10-year and five-year, and now the forthcoming 20-year, syndication has proved successful in attracting foreign investors and offering the necessary liquidity for most issues to be included on the EuroMTS platform. "In 2000, we chose the method of syndication to make sure that the spread over Bunds would reach desirable levels," said Mr. Sardelis in an interview.
"We will stick to syndication as we want to be able to select our end-investors, but also to make sure that the large amount offered will be absorbed - something that would be difficult through auctions."
Mr Sardelis sees 60% of the Greek debt being eligible to follow the EuroMTS platform by the end of 2002.
But for the market, liquidity across the whole curve is key and here Greece is forging ahead, with daily volumes averaging around €4bn.
"We are able to deal with the higher cost of funding through swaps," said Mr Sardelis, who sees spreads by the end of the year at current levels, or 35-37 basis points over Bunds. The next big leap is the credit upgrade - Greece is "one of the very few countries in the euro zone that offers upside growth in its credit," Mr Sardelis said.
Moody's has rated Greek sovereign debt single-A2/P-1 for both foreign and domestic issues. Under Standard & Poor's the debt has been rated at single-A. A notch higher by both rating agencies is a possibility towards the end of the year, though these expectations are already priced into the spread.

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ENERGY

Greek defence minister upbeat about prospect of oil pipeline with Bulgaria

Cooperation between Bulgaria and Greece in the defence industry field and in constructing the Burgas-Alexandroupolis oil pipeline was the main topic of the talks Prime Minister Simeon Saxe-Coburg held with Greek Defence Minister Ioannis Papandoniou, who is visiting Bulgaria, Bulgarian Radio has reported. 
After the meeting, the Greek defence minister said: "We demonstrated a willingness to construct the Burgas-Alexandroupolis oil pipeline, because the two sides are interested in achieving the expected results. Energy cooperation allows us more freedom that is very valuable for our future relations." 
According to the minister, after Putin's visit to Athens, the prospects for providing enough oil supplies to the pipeline are very good. The Minister expressed a willingness to step up the procedures related to the signing of a memorandum on the oil-pipeline along with companies from the three countries [Greece, Bulgaria, Russia] participating in the project.

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FINANCIAL NEWS

Businessmen optimistic for successful economy in 2002

Greek businessmen, who took part in the annual economic report conducted by the Euro-Chamber, appear to be more optimistic than the majority of their European colleagues with respect to the prospects for their companies and their country's economy for this year, New Europe has reported.
The report includes figures directly related to the 10 EU candidate-states, the 15 members-states as well as a total of 100,000 businesses. According to the report, the Greek economy has a good performance and points to favourable prospects. This is mainly attributable to the increase of the 3rd community framework of support funding by 10 per cent and the Athens 2004 Olympic Games.
In addition, the opening of the Balkan markets and the fall in consumer loan interest rates promises to lead to a major increase in exports, investments and private consumption, MPA reported.

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FOREIGN ECONOMIC RELATIONS

Turkish-Greek economic commission first meeting takes up cooperation

Cooperation in energy, industry, agriculture sectors and among small and medium scale enterprises, and interregional cooperation in transportation, tourism, customs, contracting and consultancy services were taken up during the Turkish-Greek Joint Economic Commission (JEC) first term meeting, Anatolia News Agency has reported. 
A statement from the Foreign Trade Undersecretariat said on 14th February that first JEC meeting between Turkey and Greece was held in Athens between 12th- 13th February. 
The statement noted that Turkish Foreign Trade Undersecretary, Kursad Tuzmen, and Greek Deputy Foreign Minister, Andreas Loverdos, chaired the two delegations. 
Tuzmen met Greek Minister of Transport and Communications, Khristos Verelis, Deputy Minister of Development Khristos Theodorou, Deputy Minister of Environment, Town Planning and Public Works Rodovia Zisi and Deputy Minister of National Economy and Finance Khristos Pakhtas, the statement said. 
The statement pointed out that commercial and economic issues were taken up while the ways to increase bilateral relations were listed during the meeting. 
A memorandum of understanding was signed in Athens at the end of the contacts on13th February, the statement added.

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FOREIGN LOANS

EIB to assist funding of Olympic projects

Philippe Maystadt, chairman of the European Investment Bank (EIB), recently stated that the bank would set up a priority to help finance projects for the upcoming 2004 Olympics to be hosted in Athens. 
Speaking in the Greek capital following a meeting with the Finance Minister, Nikos Christodoulakis, Maystadt further noted that the EIB favoured financing links for infrastructure projects in south-eastern Europe including energy, transport and electronic networks, Athens News Agency (ANA) reported. Furthermore, the EIB has agreed to hold talks with the government regarding restructuring the country's debt to the bank.

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INDUSTRY

Coca-Cola HBC boosts profits

The leading bottler of the Coca-Cola Company announced a 2001 operating profit of 124.1m Euros, New Europe has reported. The figure doubled on the level accrued in 2000, Coca-Cola HBC (CCHBC) said in statement. Net profit increased to 1.6m Euros against a loss of 46.2m in the previous year and a loss of 122.4m Euros in 1999. Overall volume grew by 8 per cent to 1,085 million unit cases. The figures drops to 7 per cent if the Russian territories are excluded. Sales revenue totalled 3,511.2m Euros, up 10 per cent. EBITDA (earnings before interest, tax, depreciation and amortisation), which is a significant measure of performance, stood at 492.6m Euros, underlying EBITDA growth of 18 per cent.
With the acquisition of the Russian operation last November and the Baltic operation at the start of the years, CCHBC bolstered its alliance with the leading soft-drink company. Shares of CCHBC are listed primarily on the Athens Stock exchange, and secondary listings are on the London and Sydney Stock Exchanges.
"These results continue the steady trading progress achieved by the group over the past two years and reflect both the strength of demand, quality and competitiveness of our product range, as well as the dedication of our workforce to making Coca-Cola HBC a world-class sales organisation," Coca-Cola HBC's Managing Director, Irial Finan, said. "By adding further territories in Russia and the Baltic states we see excellent potential for continuing our profitable growth," he added.
"In the space of two years, the net result of the group has been transformed from a pro forma loss of 122 million Euros in 1999 to a modest profit of 1.6m Euros in 2001, a significant achievement."

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INTERREGIONAL RELATIONS

Bulgaria, Greece ministers discuss crossborder, pipeline joint projects

By the end of March a Bulgarian-Greek commission of experts will determine the funds needed for crossborder projects between the two countries, including the three border checkpoints, BTA web site has reported. In mid-March Bulgarian Deputy Prime Minister, Kostadin Paskalev, and Greek Development Minister, Apostolos Tsokhatzopoulos, will discuss the Burgas-Alexandroupolis oil pipeline project, the Press Office of the Ministry of Regional Development and Public Works said on 12th March after a meeting between Deputy Prime Minister and Regional Development and Public Works Minister Kostadin Paskalev and Greek Minister for Macedonia and Thrace, Yeoryios Paskhalidhis, who was visiting Bulgaria. 
The commission of experts will prepare a report and a general plan on the state of crossborder projects, the procedures and the necessary funds. The data will be presented to the governments of the two countries. 
"We do not want roads leading to nowhere but a common European future," Paskhalidhis said at the meeting. He voiced once again Greece's constant support for Bulgaria's membership in the EU and NATO. This support will find expression within the framework of Greece's presidency of the EU in 2003 and the summit in Thessaloniki, the press release says. "I would like to express my satisfaction with Greece's full support of Bulgaria's Euro-Atlantic goals, as well as with that of its political, regional and local authorities in the implementation of all crossborder projects. There is a complete concurrence of interests between the two countries which will be supported by joint actions," Paskalev said, as quoted in the press release. 
The two ministers also discussed Greece's plan for the reconstruction of the Balkans and its preparations for hosting the Olympic Games. Bulgarian construction companies are ready to take part in the construction and modernisation of sports facilities. Bulgaria may also provide training facilities, the press release says. 
The three border checkpoints to be discussed by the commission of experts are Ilinden-Exochi, Rudozem-Xanthi and Makaza-Komotini. 
According to preliminary estimates, the Burgas-Alexandroupolis oil conduit project will cost between 680 and 700m euro. Its construction may begin in 2003 and will be completed in four years. 
Bulgaria, Greece and Russia are expected to sign in Athens around 19th-20th March, a memorandum on the construction and exploitation of the facility. Then the share of each of the countries is also expected to be determined.

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TELECOMMUNICATIONS

Telenor seeks buyers for its Greek CosmOTE stake

Norwegian state-controlled telecoms firm, Telenor, said it is looking to sell its stake in Greek mobile phone company CosmOTE, in which it holds an 18 per cent stake. Telenor believes it will succeed in reaching majority control of the company - a stated goal for investments in foreign mobile businesses, New Europe has reported. 
CosmOTE parent, OTE deferred a decision to purchase Telenor's stake in late January, giving rise to speculation that the Norwegian operator would begin looking elsewhere, Europemedia.net reported.
OTE, saying it wants to consider other investment opportunities, announced its board had postponed deciding on the stake, which would cost about 650m Euros.

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TRANSPORT

Attiki highway, metro extensions right on schedule 

Prime Minister, Costas Simitis, has noted his satisfaction with the progress being made in the construction of the Attiki highway and an extension of worksites together with Public Works Minister, Vasso Papandreou, reports New Europe.
"I was very impressed by what is being done here," Simitis told Papandreou recently after visiting the Attiki Highway-Kifissias Avenue junction and the extension of line 3 of the metro at the Doukissis Plakwntias station in Polydroso, Halandre.
In statements following the visits, Simitis noted that the works were progressing according to schedule and would be ready by the set deadlines, some this year and the next, with the remainder in 2004 prior to the commencement of the Olympic Games.
Simitis is confident that, upon completion, the projects will serve to greatly improve the life of the citizens in Athens.

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