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Greece

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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: 066 - (22/10/02)

The Greeks are in a special position in the Balkans. The one country in the region, apart from Turkey, to escape communism, although only after a bitter civil war in 1944-46, it is the only member of both the EU and NATO. It is, indeed, the natural leader of the Balkans, with of course a glorious history behind it in ancient times, the Athens of the Parthenon and the Acropolis, of Plato and Aristotle, Euclid and Euripedes. 
It is also the heir to the tradition of Mount Olympus and the Olympic Games. This is important today because it is hosting the next Olympic Games in 2004. Massive spending of Euro 27bn is under way in the construction and other sectors to prepare the way, most of the finance from the EU and the EBRD. The economy is being given a sustained boost, growing by 4% or so annually in GDP terms.

The role of the EU
The Greeks have benefited hugely from membership of the EU, receiving funds amounting to over 5% of GDP in certain years. The Common Agricultural Policy (CAP) of the EU could have been designed by Greek bureaucrats to help their farmers, so well does it respond to their claims for subsidies and quotas exemptions. But all good things come to an end and by the year 2004 most of the subsidies will have been withdrawn, partly to accommodate the inclusion of new entrants, notably the Central Europeans. Clearly, Greece needs to reinvent its role in the EU.
This is exactly what Greek businessmen are doing, becoming the leading investors in the other Balkan states and shepherding their moves to join the EU and the modern world. Macedonia, Serbia and Albania are receiving close attention from the Greeks. The natural capital of the Balkans is Athens.
There have been acrimonious disputes with Brussels about how finance for many public sector projects has gone astray. In the current build-up to the Olympic Games an attempt to make each project accountable is being made, with better supervision from the centre.
The authorities have made strenuous efforts to improve the public sector, notoriously lax and over-manned hitherto. Privatisation, or an injection of private capital as in the telecoms sector, is having a bracing impact here. The state telecoms operator, OTE, and its mobile-telephone offshoot, CosmOTE, are among the best performing stocks in Europe right now.

New deal for the young
Greece is a country with a remarkable lack of higher educational facilities, given that Ancient Greece invented the idea of the academy. Many students pursue their studies abroad, some 30,000 in Britain alone, also in the US and Germany.
Such a diaspora of young talent might seem advantageous to a country, broadening the minds of the young and teaching them foreign languages and ways. But the snag is a lot of them never come back.
An important deterrent here is military service for two years, which seems particularly futile to the young since none of them believe that their country is likely to go to war ever again. Turkey, the one adversary that has a real grievance, is not in a belligerent mood, keener to enter the EU than to flaunt its military power in the Aegean. The recent resignation of Ismail Cem, Turkey's foreign minister, is a blow to George Papandreou, the Greek foreign minister, and the results of November 3rd's elections in Turkey are eagerly awaited. But Greece's government under the control of PASOK, the Greek socialist party, is confident that it can forge a modus vivendi with whatever political forces come to the fore in Ankara, even with the Islamicists, if need be.

Triumph over terrorism
One undoubted plus that could clear the way for a new security regime, such as a professional army and an end to conscription, is the routing of the terrorist organisation, November 17, which has been responsible for 23 deaths in 27 years, mostly top security personnel from the US, the UK and Greece itself, plus leading Greek business figures.
The post-9:11 scene made it imperative that the Greeks did something against the terrorists and some 16 of them have been put behind bars, with their Athens headquarters seized.
Things are looking up for the Greeks generally. The coming Olympic Games should be a celebration not just of athletics, but of success in what is after all the cradle of democracy, the rule of law and what goes to make Western civilisation, the arts and sciences and a gracious way of life.

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BANKING

Greece reassessing involvement in banks after major meetings

Although the Greek government no longer has majority control of the National Bank of Greece and Commercial Bank, its current minority stakes still grant the major say in operations. As a minority shareholder, until recently a law allowed the government to control the votes of the pension funds, which are stockholders, New Europe reported recently.
Now, a change in all that may be on the books. Media speculation following a series of meetings recently points to the likelihood that Greece's government is reassessing its involvement in the future of these institutions, following which a change of status is certain to have profound consequences on the country's economy. National Bank Governor, Theodoros Karatzas, met with Prime Minister, Costas Simitis, while commercial Bank Chairman, Yiannis Stournaras, met with Economy and Finance Minister, Nikos Christodoulakis. The latter also held talks with one of National's Deputy Governors, Apostolos Tamvakakis.
The only information released following the Simitis-Karatzas meeting was that, in his capacity as president of the Hellenic Banks' Association, Karatzas had briefed the premier on the state of the domestic banking system. No statement was released with regard to the Christodoulakis-Stournaras meeting.
At present, the state holds 13.5% of National Bank, and another 5.5% indirectly through the Postal Savings Bank, which also owns a 9.9% stake in Commercial Bank. Sources say the government is seriously looking into selling this stake to French Credit, Agricole Indosuez, which in turn already holds around 11% of Commercial Bank.
In the near future, parliament will debate a bill that would transform the Postal Savings Bank into a societe anonyme, in preparation for its privatisation, and transfer shares in National to state portfolio management company, DEKA.
While pension funds are now officially independent of the state, their management still relies heavily on state guidance. Thanks to Karatzas's policy of restructuring the bank's portfolio of shares and off-loading subsidiaries, such as the Industrial Development Bank (ETBA), a messy situation of cross-ownerships and subsidiaries, especially true for the National Bank, has in recent years started to clear up.
Since, for all practical purposes, these banks are now a part of the private sector, there appears almost no reason for the state to retain such important stakes, worth several billion Euro, in either banking group. Selling the stakes would actually help in Greece's fiscal struggle where debt is persistently high and the state is still unable to slash spending so as to create greater budget surpluses.

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ENERGY

Edison, TotalFinaElf, ENI, others tender for 35% of Greek gas operator 

Nine foreign companies have expressed interest in acquiring 35% of Greek natural gas operator, DEPA, following a tender to seek a "strategic investor" launched last month by the government, DEPA said, AFX News reported on 2nd October.
Candidates come from consortia including Edison SpA, Electricite de France, TotalFinaElf, ENI SpA, ENEL SpA, Ruhrgas AG, Prometheus-Gas, Sonatrach, OAO Gazprom, Gaz de France and Gaz Natural SDG SA.

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FOOD & DRINK

Starbucks in cradle of civilisation

Hoping to challenge the well-established Greek coffee house, Starbucks Coffee Co has recently opened its first branch in a country gradually developing new tastes beyond the traditional brew.
Starbucks has some 5,790 locations throughout North America, Europe, the Middle East and the Pacific Rim, in light of which Peter Maslen, president of Starbucks Coffee International, said "this is historically such an important country. We couldn't really be in Europe unless we were in the cradle of civilisation."
American-style filtered coffee, once rare in Greece but now gaining ground, adorns the Starbucks menu, which wouldn't be complete without the classic Greek coffee with its froth lining small cups. However, the list of beverages does not include the highly popular frappe - a cold, frothy concoction of instant coffee and sugar, AP reported. Starbucks entered Greece in a joint venture with Marinopoulos Brothers Sa, whose Marinopoulos Coffee Company SA president, Panos Marinopoulos, has noted plans to expand Starbucks around the country

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TELECOMMUNICATIONS

OTE set to do battle over Romtelecom restructuring

Lefteris Antonakopoulos, CEO of Greek national operator OTE, and OTE International head, George Skarpelis, will visit Bucharest to discuss plans for the restructuring of Romtelecom, reports New Europe. 
OTE presently holds 35% in the Romanian national operator and has pre-emption rights over another 16%. The battle is over the amount of money OTE would have to pay for these shares, with OTE having earlier said it would prefer a share capital increase - for about 205m Euro, OTE would diminish the Romanian state's Romtelecom share to well below 50%. Although authorities in Romania have not issued an official denial, they do not agree with such a plan. Radu Sarbu, former head of the State Ownership Fund (SOF) issued a warning on OTE's plans for the national operator. "Now that the final term for complete privatisation is coming to an end, the Greeks in Romtelecom have begun a fierce campaign against the Romanian national operator's performances in the last four years."

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TRANSPORT

South Korean firms to supply Athens subway trains

Rotem Co. and Hanwha Corp. have jointly won a 199m Euro subway train deal in Greece. The South Korean firms will by 2004 supply 21, six-car subway trains to Attiko Metro, which operates the subway systems in the Greek capital, Athens. Formerly known as Korea Rolling Stock Corp., Rotem is a leading rolling stock manufacturer, while Hanwha is a major conglomerate whose main business is the manufacture of dynamites and other explosives, AP reported.

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