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  GREECE

REPUBLICAN REFERENCE

Area (sq km)
130,800

Population
10,623,835

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 No: 062 - (20/06/02)

Rapprochement with Turkey under way

One very welcome development for the Greeks and Turks is that a new rapprochement is under way that promises boons for them both. Not so long ago, this would have been unthinkable. As recently as 1974 their troops were fighting each other in Cyprus, leaving the island divided to this day, and this despite both being members of NATO. In 1996 a new clash threatened war over islands near Edremit, a Turkish town separated from Greek islands by a few miles of Aegean Sea.
Now this is regarded as old history. Indeed, there is a renewal of business ties and other links. The turning point came with earthquakes that both suffered in 1999. They rushed to each other's aid, as earthquakes struck Istanbul and then Athens. The Greek foreign minister, George Papandreou, from a distinguished political dynasty in Greece, and his Turkish opposite number, Ismail Cem, have forged a successful working relationship, in which a fresh approach is being made to ancient problems concerning the Greek Aegean islands, far more extensive than Turkey's.
This is reassuring for business and especially the tourist trade ahead of Greece hosting the 2004 Olympics, clearly a major event for the country that began the Games over 2,000 years ago. Technically they will be the first in the new millennium, a point not lost on the Greeks. 
The two governments have agreed to make a joint bid to host the European Football Championship in 2008, which if successful, should keep the momentum going for rapprochement.
To have a new era of peace with the Turks is an augur of good relations all round in the Mediterranean. Papandreou and Cem visited Israel recently to argue that peace can be brokered between ancient foes. The formula, however, goodwill is in shared suffering, is not so easy to find in the Middle East.
The Greeks and Turks are building bridges. A Turkish-Greek Business council has been set up, organising mutual tours for businessmen and encouraging the learning of Greek in such border towns as Edremit. Some 60 Greek firms are already investing in Turkey, while a US$300m project is under way to build a pipeline to take gas from former Soviet Central Asia and Iran to Greece via Turkey and then on to other Western European destinations.
A Greek bank is negotiating the purchase of a bank, Istanbul-based Toprakbank, providing it obtains an US partner as a reassurance. Such trilateral arrangements are a guarantee for all concerned. Business is blossoming, but so are Greek-Turkish relations on Cyprus although the way forward here will be harder.


Domestic political turmoil
The premier of Greece, Costas Simitis, re-elected last year, and his embattled Socialist Party have needed the boost greatly. Joining the Euro, which Greece did in January, has meant a tight money regime. The Athens Stock Exchange has not yet recovered from a battering last year. Controversies over state pensions and other public expenditures which badly need trimming, continue to divide the party in government from its traditional supporters. 
A party in office for most of the last twenty years may well face nemesis in the next elections. It is trailing badly behind opposition conservatives, led by Costas Karamanlis, another member of a Greek political dynasty and an effective campaigner who was rather unlucky last time, early last year; voters were aware of impending membership of Euroland and did not want to switch horses in mid-stream. The next elections are in early 2004, ahead of the Games.

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BANKING

EFG Eurobank moves ahead in Banc Post stake talks 

Negotiations between Romania and Greece's EFG Eurobank for the purchase of a 17 per cent stake in Banc Post are nearing completion. 
Romanian Privatisation Minister, Ovidiu Musetescu, met with the Greek bank's officials recently, when both sides agreed that the contract should be signed before the middle of June, Bucharest Business Weekly reported.
"We are talking about a large amount and it is natural that both the investor and APAPS make sure it is a correct and mutually beneficial process," Musetescu explained.

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FINANCIAL NEWS

Finance ministry forecasts 3% inflation by year-end 

Greek Finance Minister, Nikos Christodoulakis, has said that inflation should fall to three per cent by the end of this year. "Throughout Europe, there has been some upward pressure on inflation since the beginning of the year, due to adverse weather, a rise in fuel prices and other reasons," Christodoulakis was quoted as saying by the Athens News Agency on the island of Crete.
"However, a noticeable deceleration in inflation has begun and I am sure that at the end of the year it will show an approximate three per cent, on average," the minister elaborated.

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FOREIGN ECONOMIC RELATIONS

Simitis points to strength of relations between Greece, China 

Greek Prime Minister, Costas Simitis, addressing a business forum for Greek and Chinese businessmen in Beijing recently, referred to areas where bilateral relations could lead to dynamic development, New Europe reported. The Greek premier notedthe historical relations shared by the two countries, which have a great cultural heritage, and pointed out that cooperation between the two has the ability to expand to sectors such as investments, the Olympic Games, tourism, trade relations, ship building and ship repair, telecommunications, energy and the creation of eco-systems. Simitis emphasised that both Greece and China need to take steps towards economic prosperity, social cohesion and social justice. He said that a common shared element is each country's achievements in the economic sector, MPA News Agency reported. In particular, Simitis referred to the great increase seen in China's economic growth rate and to Greece's accession in the EMU.
On the occasion of the Athens 2004 Olympic Games, the Greek visitor referred to Beijing hosting the 2008 Olympic Games, stressing that as such, a new field of dynamic cooperation is opened for the two countries.
Describing the common vision shared by Greece and China, Simitis said that the main goal is a world where poverty and illnesses will be done away with, human rights will be respected, the environment will be protected and all citizens will have access to education and technology. He further expressed his belief that Greece and China could help each other in the economic, political and cultural arenas.

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TELECOMMUNICATIONS

EETT to prepare another auction for leftover GSM spectrum 

The National Telecommunications and Post Commission (EETT), expects to offer its leftover GSM spectrum under the same terms as its auction in June 2001. The Greek telecoms regulator was due to offer further details of the auction by the end of May.
However, the body said it "will proceed directly to the awarding of the remaining" spectrum. Four operators paid 646.4m Euros for 2G and 3GH mobile licences in 2001, Europemedia.net reported. Vodafone Panafon and Stet Hellas received extra spectrum in order to improve their networks, while Greek IT company, Infoquest, purchased spectrum but has yet to commence services. 

OTE BoD to propose unchanged dividend, mulls BTC stake sale 

Hellenic Telecommunications Organisation SA (OTE), the Greek full-service telecommunications provider, announced recently that its Board of Directors will propose an unchanged dividend of 0.7043 Euros per share for 2001, to be approved by the annual general meeting of June 19th 2002. The dividend for 2000 amounted to GRD 240 per share.
In 2001 OTE recorded net income of 573.3m Euros, in comparison to 628.8m Euros for the previous year. This includes the proceeds of COSMOTE's IPO. Earnings per share (primary) amounted to 1.17 Euros, against 1.26 Euros in 2000, a press release informed.
The proposed dividend for 2001 represents a payout ratio of approximately 60 per cent of primary EPS. On the basis of the current OTE share price, this represents a yield of approximately 3.9 per cent. The company is also reportedly planning to take part in the privatisation of the Bulgarian Telecommunications Company (BTC). The Greek concern has hopes of increasing its presence in the Balks through a bid for a 65 per cent stake in the Bulgarian telecoms monopoly, Info Radio reported. 
The Privatisation Agency's executive director, Apostol Apostolov, said they have received six offers for BTC. Bulgarian officials had earlier extended the deadline to submit bids for its stake in BTC to June 10th.
The BTC sale is part of the country's mass sell-off of state-owned firms to pay off foreign debts in the hope of gaining EU membership. BTC's fixed line monopoly ends in 2003. The second stage of the two-part tender, in which short-listed competitors will submit final bids, was due to begin in early June with the tender slated for completion in July. The winning bidder will also be permitted to buy the country's third GSM licence. BTC reported a net profit of 123m Euros last year, representing a 43 per cent increase from 2000.

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