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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 No: 058

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 government in Greece, re-elected last year, is socialist, at least in name. There is no country more politically correct than Greece.
Premier Costas Simitis heads the Socialist Party of Greece. Socialism means a lot in Greece, where a bitter civil war raged in the late 1940s between the communists and the pro-Western opposition, resolved in favour of the West. Greece has remained torn between the West and its opponents ever since, at least as regards foreign policy.
There has previously been a simple solution to that conundrum, anti-Americanism. Any government in Athens knows perfectly well that it can go far blaming everything on the US.
The present government, to its credit, is avoiding that route. But it is still not avoiding strictures levelled at it by the Americans of being too soft on terrorism. The Greeks have their own long established and still unpunished terrorists, November 17th, as they call themselves, who assassinated a British diplomat two years ago, the military attaché.
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.
The Greeks and Turks are at last talking about, not just Cyprus, but a whole range of disputed issues. A new rapprochement between them would be most welcome to everyone in the EU, as well as the US.
Their foreign ministers, George Papandreou and Ismail Cem, who get on very well personally, met on the sidelines of a big international conference in Istanbul on February 12th, where the important developments often occur. They discussed the thorny issue of the oil-rich seabed of the Aegean, which almost brought their two countries to war in 1987.
Subsequently fighter jets have engaged themselves in dangerous manoeuvres over the Aegean where Athens claims 10 nautical miles of airspace, which Ankara counters extends no more than six.
"Now that we have set up a climate of greater trust and the Cyprus talks are under way, we feel that the time is right and ripe to resolve some of the bigger, thornier issues," said an official at the Greek Foreign Ministry.
Cyprus is seen as the key to the EU's enlargement process. Greece has vowed to veto the adhesion of nine other states in Central Europe and the Baltic region if Cyprus's candidacy is rejected in December at the next EU summit. 
Turkey has threatened to annex the northern third of the island, where 35,000 Turkish troops are stationed if Cyprus enters the EU without a political solution - a move that would immediately put back Turkey's own bid to enter the EU and do so decisively.

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AVIATION

Greece delays sale of airline


Greece has extended its January 31st deadline to sell Olympic Airways by two weeks as worries mount that the carrier could run out of money before the sale goes through - and that the European Commission could be ill-disposed towards any further aid to the loss-making airline, The Financial Times reported on 5th February.
Athens is already examining alternative measures to rescue Olympic. These could include a possible emergency loan to keep it functioning. Under Commission rules, such aid is only granted if a company is in severe difficulties such as US chapter 11-style bankruptcy protection.
Brussels would also need to approve any aid that formed part of a sale of Olympic, whether in the form of tax incentives of the division of the airline into a "good company," to be bought by the investors, and an indebted "bad company," to be wound up by the state. This is the model the Greek government is proposing.
However, the Commission would need to satisfy itself that Olympic had complied with the conditions of previous aid packages. Olympic has a sizeable payment looming on half-a-dozen leased Boeings 737s that operate its European routes. Analysts say it is likely to run out of funds in February.
Povlosj Vrdinoyannis, head of a group of Greek investors, failed to meet the January 31st deadline to provide proof it had the €192m (US$62m) required for the deal to go through.
The consortium, launched last year by Integrated Airline Solutions, an Australian group placed third out of three bidders of Olympic, still needs to secure €10-20m in financing. Mr Vrdinoyannis is understood to have put up as much as €70m, while Olympic's pilots union came up with €11.5m from pension fund asserts.
The funding would cover a 51 per cent stake in "new" Olympic, a start-up venture that would have €200m in fresh capital. The Greek government - subject to approval fro the commission - would provide the remaining €98m and take a 49 per cent equity stake.

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CONSTRUCTION

Athens gears up for 2004 slow but steady


The Athens Olympic stadium complex will get a US$188m face lift to improve facilities for the 2004 Summer Games, the Greek culture ministry announced recently. The sports complex, located in a suburb north of the capital, is dominated by the Olympic stadium, which will host the opening and closing ceremonies and the athletics events of the Athens Games, reports New Europe.
A number of other competitions including swimming and cycling will also take place in the complex.
Greek Culture Minister, Evangelos Venizelos, said renovation of the 20-year-old Olympic stadium will be conducted by Spanish architect, Santiago Calatrava, at a cost of US$188m.
Calling the project his "Olympic Dream," Calatrava plans to unify the buildings now scattered around the sports complex and make them more accessible to spectators.
Changes include constructing two elegant steel and glass arcs over the sides of the arena and creating covered walkways. "We want to give an impression to the visitors of an unforgettable experience that will help rekindle the spirit of the Olympic Games," said Calatrava.
He said he was inspired by Byzantine architecture and Greece's natural landscape, namely the blue and white colours of the Aegean Sea islands. "I could not believe the blue of the sea, of the sky, of the flag. The whole stadium will be painted blue and white," he added.
Upgrading the 80,000-seat stadium is one of Greece's obligations in hosting the 2004 Games, but International Olympic Committee officials have expressed worries in the past whether the project can be completed in time. Venizelos said construction is to start by June 15th and the whole project is expected to be completed in April 2004. Renovation plans of the sports complex also include improved road access.

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FINANCIAL NEWS

PM says competitiveness key to improving new business setting


Greek Prime Minister, Costas Simitis, speaking at the inauguration of operations of a steel mill in Volos, Greece recently, said the economy should increasingly be based on the improvement of competitiveness of Greek businesses.
At the Athens Stock Exchange (ASE) on the occasion of Viochalco Group SOVEL plant's inauguration, the premier emphasised that in the new economic environment businesses are required to plan and build their own independent course, to face the dangers and make choices with full knowledge of all conditions and data, Athens News Agency reported.
He underlined the fact that the new business environment will allow the country's economy to use important funds which the government secured from the EU - funds allowing for the completion of the modernisation effort, to better effect. Sovel was created by Sidenor and Viochalco.
The initial investment was that of 150m Euro in a plant with an annual production capacity of 600,000 tonnes of steel semis, a rolling mill with an annual capacity of 530,000 tonnes, a pipe mill producing 135,000 tonnes annually and a unit producing construction steel rods (130,000 tonnes yearly).

2001 economy doubles, will stay strong - say FPDSavils

FPDSavils, a Greek subsidiary of leading international property services group Savills, issued its latest report on the "Athens Open Market." The report outlines how the Greek economy increased two-fold on the European average last year, while it is expected to remain stable in 2002. In the first half, GDP growth reached 5.5 per cent primarily because of buoyant investment and consumer spending, New Europe reported recently.
FPDSavils said in its report that there are three reasons why the Greek economy was less affected by global economic condition: an interest rate cut after Greece entered the Eurozone, contribution of exports to GDP, and importance of the US as a customer market shrank. Demand for new Grade A office space in the Greek capital was stable last year, both in the private and public sector. Last year's annual take-up should top 120,000 sq. m. Rental growth increased to 22 per cent in 2001, FPDSavils said, adding though that the figure should drop to about one-tenth by the end of 2002.
Since 2000, increased letting activity has drained the Grade A accommodation market, which is in short supply in Athens, the report noted. With more demand, the market saw more development activity. FPDSavils said the vacancy rate is less than five per cent. Positive changes in the legislative framework as regards property investment companies will help boost the investment market. Institutional investors will be able to participate more in the market. According to the report, Greece is now the fastest-growing economy in Europe. The country should report strong figures within the next five years. EU funds inflow and the 2004 Summer Olympic Games will play a key role in its development.

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STOCKS & SHARES

Pireaus Port Authority to launch IPO for ASE entry


Merchant Marine Minister, George Anomeritis, has announced that the Piraeus Port Authority will hold an initial public offer (IPO) for entry into the Athens Stock Exchange's main market, New Europe has reported.
He advised that 6,375,000 shares currently belonging to the state will be available. This represents 25.5 per cent of the company's share capital, at a nominal value of two Euros. At 20 per cent less than the price to be set in the IPO, 303,000 stocks are also on sale to the port authority's staff.
Furthermore, incentives will be provided for retail investors to hold stock, with two free stocks to be given for each 10 held for six months. The ceiling is 2000 free shares per investor, the minister was quoted as saying by the Athens News Agency.
Anomeritis and other ministers decided to proceed with the IPO as part of Greece's privatisation programme.

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TOURISM

Kastellorizo Group wins Lycabettus development tender


The Kastellorizo Group announced recently that it had secured a state development tender for central Athens' Lycabettus Hill. The tender was called by Hellenic Tourism Real Estate, offering a 25-year lease for the area, Athens News Agency (ANA) reported. According to the contract, the winner will spend over GRD one billion in tourism investments scheduled for completion by the end of April. The Kastellorizo Groups owns five restaurants located in Varkiza, Glyfada, Tzitzifies, Kifissia and Ioannina and is also involved in fish farming.

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TRANSPORT

Themeliodomi to extend metro towards airport


Athens-quoted engineering contractor, Themoliodomi SA, has been chosen for the extension of an Athens metro line towards the city's international airport. 
This will take the metro's third line stretch further towards the airport from the Ethniki Amyna station to the city's outskirts. The company was the lowerst bidder in a tender called by the network's operator, Attiko Metro, Athens news Agency has reported.
The project is budgeted at GRD 4.6bn.

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