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  GREECE



REPUBLICAN REFERENCE

Area (sq km)
131,957

Population
10,400,000

Capital
Athens

Currency
Drachma

President
Costas Stephanopolous

Private sector
% of GDP

over 60%

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Background:
Greece achieved its independence from the Ottoman Empire in 1829. During the second half of the 19th century and the first half of the 20th century, it gradually added neighbouring islands and territories with Greek-speaking populations. Following the defeat of communist rebels in 1949, Greece joined NATO in 1952. A military dictatorship, which in 1967 suspended many political liberties and forced the king to flee the country, lasted seven years. Democratic elections in 1974 and a referendum created a parliamentary republic and abolished the monarchy; Greece joined the European Community or EC in 1981 (which became the EU in 1992).

UPDATE January 2002

Greece is a key country in the new crisis of security that the world faces. As a country heavily dependent on tourism, it faces problems in the fall-out for the aerospace industry. Numbers are likely to fall in 2002.
Greece still has at large terrorists of its own, notably November 17th which assassinated the British military attaché at the embassy two years ago. Fiercely anti-Western and anti-NATO it is likely to have been delighted at 9:11, even if not by subsequent events.
Then again, Greece, is a country that invented a substitute for warfare over 2,000 years ago, the Olympic Games. These were originally convened to get the warring city-states of Ancient Greece together in peace and amity. As it so happens, it is hosting the Olympics in 2004. It gives an opportunity to recreate the initial pacifist aims of the games, encapsulated in a new concept articulated recently, that of the Olympic Truce.
The government needs to get its act together if the International Olympic Committee is not to wrest the next games from out of Athens' control. Preparations have been inadequate. A visit of a delegation of the administrators to Sydney to learn how games should be organised would be advisable.
The government of Costas Simitis and his Socialist Party have been having a rough ride recently. But an October party conference in the new atmosphere of post 9:11 went off peacefully. Co-operation against terrorism, as against earthquakes, should draw the Greeks and Turks closer together or rather less far apart. The Greek and Turkish leaders in Cyprus have been meeting face-to-face for the first time.
The Greek economy is faring reasonably well, as it enters the full-fledged Euroland in January. Growth of GDP has been steady in the 3-4% range per year for some time past, while inflation has been brought down into middle single figures.
Greece is forging new ties with former Yugoslav republics, indeed it should be a beneficiary as well as a sponsor of the Balkan Stability Pact. It is heavily invested there and has long held the ambition, with its EU and NATO membership, to become the dominant nation state in the Balkans region.

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BANKING

NBG-AlphaBank merger approval just round the corner


Following the announcement on November 1st, the boards of directors of National Bank of Greece SA (NBG) and Alpha Bank AE have provided further details regarding their proposed merger, New Europe has reported. The two banks have offered for approval by their respective general assemblies of shareholders an exchange ratio of seven new NBG share for every nine Alpha Bank shares.
This exchange ratio implies a relative ownership of approximately 61.3 per cent and 387.7 per cent in the merged entity by NBG and Alpha Bank shareholders respectively.
The proven track record of the managements in restructuring both banks' respective operations and containing costs is a strong base from which the operational efficiency of the enlarged group will be enhanced, a press release noted. Cost savings have been identified in a variety of business areas: information technology; operations and processing; distribution network; credit policy; funding costs; and areas such as telecommunications networks, marketing, combination of central administrative divisions, as well as in domestic and international subsidiaries, including the two banks' respective insurance operations.
In total, the above cost synergies are expected to generate by 2005 annual pre-tax cost savings arising from the merger totalling approximately €200m. It is expected the 25 per cent of these cost savings will be achieved in 2002, 60 per cent in 2003, 90 per cent in 2004, with the full cost savings being achieved in 2005.
In addition revenue enhancements are expected to generate by 2005 net annual gains before tax of approximately €85m. It is expected that five per cent of these benefits will be achieved in 2002, 60 per cent in 2003, 90 per cent in 2004 with the full revenue enhancements being achieved in 2005.
The enlarged group's two branch networks are expected to continue to operate in parallel until the end of next year, by which time the group's management will have had the opportunity to carefully analyse the contribution and importance of each of the branches within the two banks' networks. The process of branch network restructuring and rebranding is expected to be completed by the middle of 2003.

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FINANCIAL NEWS

Greece sees Euro as progress in catching up with the rest of EU


The Greek drachma will soon be history, reports New Europe. On January 1st 2002 Greeks will be able to swap their old and unstable currency, the drachma, for brand new Euro notes and coins. For a country that has trailed behind its European Union partners for the past two decades, winning a spot in the single currency club is considerable progress for this tiny Mediterranean country. Elsewhere in Europe, doubts are frequently express about the whole purpose of the Euro. But in Greece the single currency enjoys almost unanimous support.
Opinion polls show some 70 per cent of Greeks are in favour of joining the single currency, not least because the drachma, Europe's second-oldest currency, is linked in Greek minds with economic and political instability. "I will not be sad to see the drachma go," said Harris Papachisto, a teacher in Athens. "It has been associated with a weak financial market. Greeks will definitely get used to it and see the positive sides of it."
Athens has had its eyes set on the Euro for quite some time. Despite being a member of the EU since 1981, It was the only EU member unable to meet the criteria for the Euro when it was launched in 1998. High inflation, a debt-ridden economy, a serious budget deficit and very high interest rates ruled Greece out of initial membership in the Euro club. But many observers believe the recent economic developments have made it a European success story.
DPA quoted Emmanuel Kamarianakis, a diplomat in Athens, as saying: "Greece has achieved striking progress towards convergence. It quickly got its macro house in order by lowering inflation and bringing its budget deficit under control. Overall, it has made a remarkable recovery."
Political change has contributed towards Greece's transformation. When the long-serving Prime Minister, Andreas Papandreou, died in 1996, the leadership of the Socialist POSOK party passed to Costas Simitis, a former professor of economics. He led the party to election victory in 1996, and with a combination of radically new style of leadership and a more technocratic and pro-market policy, launched the economy on the path to join the European Monetary Union. The economics speak for themselves. Economic growth has increased, the budget deficit has been significantly reduced, the national debt has dropped, and inflation is down to EU levels.
Ken Matziorinis, an economist with Hellas Capital Corporation is hopeful that the benefits of a stronger, more stable currency will contribute to greater economic growth over the coming years. But while Greece stands to gain from joining the Euro, Matziorinis warns that the Euro is not a magic wand that can save all the problems. "The government has to restructure the Greek economy if it is to grow at a decent rate and take advantage of the opportunities that Euro membership provides. More liberalisation must take place and it has to lower tax rates at the corporate level," said Matziorinis.

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FOOD & DRINK

Coca-Cola finalises acquisition of units in Russia


Coca-Cola Hellenic Bottling company (CCHBC) quoted on the Athens bourse, has announced that it has finalised the acquisition of all units and operations in Russia belonging to the Coca-Cola Company. The plants are located in Moscow, St. Petersburg and central and eastern Russia, the buyer said in a statement, quoted by the Athens News Agency.
The Greek company has also purchased the Coca-Cola Company's 40 per cent stake in Coca-Cola Company's 40 per cent stake in Coca-Cola Molino Beverages Ltd., in which it already has 60 per cent of stock. The buyout means CCHBC will now handle all Coca-Cola bottling operations in the region. 
By the end of 2001, the Greek bottler should also have completed acquisition negotiations in the Baltic countries of Latvia, Lithuania and Estonia. The fresh buyout will take CCHBC into 26 countries serving more than 500 million consumers with around 1.2 billion crate units of non-alcoholic beverages per year.

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SHIPPING

Greece eyes maritime-tourism joint businesses


Greek companies are showing a serious interest in the maritime business and tourism in Bulgaria, Greek ambassador to Sofia, Michael Christidis stated during a three-day business forum at the Riviera holiday club in late November, New Europe has reported.
Commenting on this, analysts said that such interest is strong evidence that Greek entrepreneurs have the intention to invest in the Varna shipyard. Of seven offers that have been received by the ministry of economy concerning the future sale of the shipyard, one was submitted by Greece's Kiriaku Group.
The pending privatisation of Navigation Maritime Bulgare is also being followed with keen interest. "We hope that Greece, which is experienced in the shipping business, will come up with an offer acceptable to the Bulgarian side," Christidis was quoted as saying by ITK Pari.
Meanwhile, Greece's interest has also been oriented towards the tourist area in the form of joint co-operation. The possibility for joint tourist offers was discussed during Bulgria's deputy economy minister, Dimitar Hadzhinikolov's visit to Greece.
Varna will fully renew its sports base in early 2002 and will rely on Greek assistance in the organisation of the pre-Olympic training camps of foreign teams at the Black Sea, Varna Mayor Kiril Yordanov stated to the press revealing another field of co-operation with the neighbouring country.
By 2002 Greece will have invested €54.3m in Bulgaria. The financing will be directed mainly towards improving the infrastructure and for social projects.

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TELECOMMUNICATIONS

OTE targets new markets


The Hellenic Telecommunications Organisation SA (OTE) is one of the leading groups of companies in Greece and ranks among the top 10 telecommunications organisations in Europe. Analysts say one of the main reasons for OTE's success in building an extensive telecommunications system was its timely decision to invest in the markets of Southeastern Europe, the International Herald Tribune has reported.
According to George Skarpelis, OTE's executive vice president and chairman of OTE International Investments, the group has so far invested more than €1.6 billion (US$1.4bn) in Eastern Europe. He says his company realised the potential of markets in the region at an early stage, after the fall of Communist regimes, and dared to go where other European telecommunications companies were hesitant to tread.
Says Mr Skarpelis: "The telecommunications market in Southeastern Europe is in the early stage of development, and mobile and internet markets are in the initial phases of their development. We are walking the road together, providing our experience and expertise and at the same time establishing OTE as a major player in the region."
OTE's regional investments, some of which are at the launching stage, are expected to contribute substantially to the total value of the OTE Group from 2003 onward.
Meanwhile, OTE claims that its aggressive policy is already paying off - it has gained 8 million customers in the region, in addition to its 9 million customers in Greece. Its target is to increase its customer base to 20 million by the end of 2002. The OTE stock price and that of its subsidiary, Cosmote, have grown since the beginning of 2001, by 26.1 per cent and 38.4 per cent respectively.
International opportunities for OTE arise from the favourable demographic and economic developments in southeastern Europe, as well as the cultural, economic and historical ties between Greece and its neighbours.
The rationale is to expand the home market to boost future OTE business development, consolidate existing operations and export home-market expertise.
Says Mr Skarpelis: "The vision of the OTE group is to become partners in the economic development - and the integrations into the European Union of all Southeast European countries."
Greek Prime Minister Costas Simitis concurs. On a recent visit to Slovenia, Mr Simitis said Greece upholds that the EU should embrace as many European countries as possible since this will lead to greater security and development. Greece is expected to move things in this direction when it assumes the EU rotating presidency in 2003.
The OTE Group currently has a presence in Albania, Yugoslavia, Bulgaria, Romania and the former republic of Yugoslavia. It is also starting to turn its attention to Central European countries. 
Mr Skarpelis concludes: "The OTE group has a stake in the development of the region, setting as its top priority the creation of a technologically advanced, competitive and customer-oriented telecommunications market that will provide the public at large with high-quality services at affordable prices."

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