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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%

  

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: 075 - (28/07/03)

Greece is still experiencing the after-effects of the trauma involved with the Iraqi war. The Pasok government of Premier Costas Simitis cooperated with the Americans all along the line, giving them access to air bases on islands in the Aegean. Their one condition was simple: "please don't thank us publicly."
This is very understandable. There is no country in Europe where the war was more unpopular, more than 90% against in opinion polls, on a par with Turkey and Spain.

The war splits Pasok
While the government covertly backed the war, it did not take an openly pro-war stance, as did the UK and Spain. As one can see from Spanish Premier Aznar's current difficulties (his days are numbered), this was a wise move.
But there was one key figure who took a strongly anti-war line, even being the organiser of the demonstrations against it, the former Pasok Secretary-General, Costas Laliotis. Firing him was part of an obvious move to modernise the party, which since the 1960s has, as a Socialist Party, peddled to left-wing nostrums and trade union interests as well as virtual anti-Americanism. Simitis announced a new cabinet there in early July and, in a bid to end patronage, ordered new ministers to choose between party and government posts. The chief event is undoubtedly the sacking of Laliotis.
He has been the symbol for a long time of the hard-left party nomenklatura and of various "grass roots movements" that clamoured for a return to Pasok's original roots, fertilised by long-standing anti-Americanism, such as of former Pasok premier Andreas Papandreou. The present Pasok member associated with a more moderate image is, ironically, his son George.
Laliotis predictably blamed his dismissal on the Americans. This is the custom in Greece; the composer Mikis Theodorakis, for instance described developments as the "Americanisation" of Pasok.

The coming elections
The event has to be put into an electoral context. Elections are due next spring. In the summer Greece hosts the Olympic Games. They will bring, indeed already have, a massive boost to the economy, giving the next government a terrific start to its term, not to speak of representing Greece in the centre of world-wide media attention. Clearly the stakes are very high.
Polls indicate that Pasok is losing middle-class voters, who are flocking to the opposition New Democracy Party. The sacking of Laliotis and the modernisation of the party are a part of averting their defection.

Greece still deeply conservative
The modernisation of Pasok is one thing; that of Greece itself another. There are vested interests everywhere in Greek society, the state bureaucracy, the big companies in infrastructure and elsewhere dependent on state contracts, the trade unions, the pensions sector and the huge social security apparatus.
It is unlikely that any party would tackle these seriously with structural pro-market reform in a post-Olympic Games euphoria and boom. Economic prosperity creates an opportunity for less painful reforms, but removes the incentive for them. 
Greece is facing an alarming report by the International Monetary Fund (IMF) on its economy. The IMF annual report on Greece, amongst other things has urged the government to liberalise the country's economic policy from the political ballast and costs and to revise its insurance system policy 
Although the report affirmed the continuation of high growth rates it stressed that it would be a challenge for the country's economic policy makers to improve and support competitiveness in basic sectors of the economy. Concerning Greece's insurance system, the IMF report was strict in its recommendations noting that the 2002 reformation of the system in no way mandates to the retention of pension expenditures at their present level. On the contrary, the IMF deems that an increase of pension costs would make future evaluations of the country's public deficit uncertain. According to the Fund, Greece's insurance expenditures will represent 22 per cent of GDP in 2005 whilst the same expenditures in the rest of the Eurozone will reach only 13.3 per cent of GDP.
Among the key points of the report the IMF recorded unsatisfactory results in the labour market during the last year; requested sensible use of opportunities to achieve reduction in defence expenditures; highlighted the necessity of avoiding early government elections; noted the urgency for banks to adopt a more sensible credit policy, expressing its concern over high volumes in lending; underlined the need to continue privatisation procedures; stressed the need for a stricter fiscal policy, restriction of state expenditure and faster reduction of the public deficit and viewed that limited increases in salaries would contribute greatly to the reduction of production costs.
As regards the country's economic growth rate, the IMF predicted a 3.6% of increase of GDP for the current year, whilst the inflation rate will be established in the range of 3.8%. The year's unemployment rate is expected to settle at 9.8%. 

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BANKING

Eurobank wins Banc Post majority control


EFG Eurobank Ergasias SA (Eurobank) has announced an agreement with the Portuguese bank Banco BPI, SA (BBPI) of the acquisition of the shares owned by BBPI in the Romanian Banc Post SA. 
By acquiring these shares, which amount to 17 per cent of the share capital of Banc Post, Eurobank's participation in Banc Post will increase to 53.25 per cent, thus gaining majority control.
A bank press release further informed that Eurobank holds an option for the acquisition of the shares currently owned by General Electric Capital Corp, which - when exercised - would raise the Greek bank's participation in Banc Post to 62 per cent. According to the bank's statement, the new increased majority will enable procedures towards Banc Post's restructuring, which is already in progress, and turn the Romanian institution into a key provider of quality products and services.

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TELECOMMUNICATIONS

Cosmofon, Germanos team up

Cosmofon, the subsidiary of Greek telco OTE, and Macedonia's newly arrived second mobile operator, has teamed up with Greek electronics retailer, Germanos, to unveil a set of discounted packaged, the company said in late June.
This alliance with Gemanos - a company that already sells about half of all mobiles in Macedonia - has expedited Cosmofon's successful entrance to the market against its established competitor MobiMak. Customers are offered two packages comprising a Cosmofon SIM card together with a Germanos cell phone. Cosmofon's initial offer was for the Nokia 2100 and Siemens A50, worth 164 Euro and 91 Euro respectively. These packages also include a 15 Euro call credit.
However, Gemanos is expanding its pre-paid offer in the Balkan country. Customers can now buy just a SIM card for 25 Euro, with 10 Euro credit. Post-paid uses are offered a SIM card for no charge and pay six Euro a month in fees. 

Telepassport Hellas sets ambitious revenue target

Telepassport Hellas, one of 12 alternative carriers in the Greek telecommunications market, recently set an ambitious revenue target for this year and disclosed its interest in expanding in the Balkans. 
According to the company's press release, revenues are expected to soar above 50m Euro in the current year, a near four-fold increase from the 13.4m Euro posted a year ago. 
Telepassport is a joint venture set up by German and Greek investors five years ago. The bold target came as the company unveiled the massive gains it has made in both subscribers and earnings in the first five months of the year. 

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TOURISM

Athens, Sofia boost tourism in the Balkans

Greece's National Tourist Organisation (GNTO) chairman, Yiannis Patellis, recently met with visiting Bulgarian Deputy Finance Minister, Dimitar Hatzinikolov, and discussed ways of jointly promoting, gastronomy, cultural and farm tourism in the Balkans, in the framework of a recently signed agreement for interBalkan tourist development and cooperation.
The two men agreed, among others, to include all Balkan states and the World Tourism Organisation in an international conference to be held by the Ionian islands region on "Interbalkan Tourist-Cultural Development and Promoting Cultural Tourism" on September 18th, ANA News Agency has reported. 

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TRANSPORT

Piraeus port gets a heliport too

Greece's Merchant Marine Minister, George Anomeritis, said recently that a heliport would be built in the port of Pireaus. The heliport is to be located in the tourist section of the port as a link to the Athens international airport, the minister said in a statement. "The facility will also serve shipping companies based in Piraeus," he said. 

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