Books on Greece
Area (sq km)
% of GDP
Update No: 090 - (27/10/04)
PM Karamanlis: "A new beginning for Greece"
The great event in Greece remains the Olympic Games this past summer, which has
changed it for good. The feared terrorist attack never materialised and the
Greeks got it about 'right on the night.'
In a television address to the nation on the night after the close of the Athens
Olympic Games, Prime Minister Costas Karamanlis said they had been a
"milestone in the country where they were born and revived, a new beginning
for Greece which had surprised the whole world and proved that it can forge
The outstanding success of Greece's effort, Mr. Karamanlis noted, is now being
recognized all over the world where, up to a few months ago, there were whispers
of concern and cries of doubt. "The international community now agrees that
Greece has distinguished itself for the high level of hospitality, culture and
security it provides for everyone, with complete respect for human rights. Greek
society has proved that it has great potential, abilities, and unquestionable
virtues . . . The success of the national effort fills all Greeks with a sense
of satisfaction and pride."
Mr. Karamanlis went on to congratulate "all the Greek citizens who made
these games a reality by their sacrifices." He had special words of praise
for the performance of Greek athletes, who won a record 16 Olympic medals, as
well as for all the athletes of the world. Congratulations were also due to the
IOC and to the Athens 2004 Organizing Committee. Also, he said, they must go to
"all the Greek and foreign volunteers who unselfishly gave their very best
both inside and outside the stadiums."
Drawing on the Success of the Games
In generous mood Karamanlis also noted the contribution of the previous Simitis
government and of the country's municipalities, often run by the opposition
Socialist Party-as well as of public agencies and the private sector. With
collective self-discipline and individual involvement, Greeks "not only
proved that they are good hosts, but also proved their readiness to turn a new
page, opening a new chapter for Greek society."
Looking to the future, Mr. Karamanlis said "we must draw on the success of
the Games internationally, projecting a Greece which achieves its goals. We must
attract tourism and investments; we must make use of the installations left
behind by the Olympics…because they are high-tech and high-cost projects which
Greek citizens paid for with their hard-earned money. We must prove that this
great Greek summer is not a parenthesis. We must prove that the success of such
a great and complex undertaking is not limited to two weeks of festivities. It
is the milestone of a new era…an investment in the new period that has opened
for Greece, and capital for the years to come."
Counting the costs
Nevertheless, despite all this high-flown rhetoric, it would be unwise not to
recognise the downside of the event. The cost of the Olympics, combined with
previously existing budgetary and economic problems, has left Greece with a
considerable burden. The General Accounts Office has been focusing on
determining the extent of the post-Olympics era inefficiencies and assigning an
actual cost size to the Games. The country is entering a period of
self-constraint, as financial figures balloon out of proportion.
Deputy Economy Minister, Petros Doukas, estimates that the cost of the Olympic
Games will surpass 7 billion euros. Most likely it will approach 8 billion
euros, as bills are piling up with no unified administration procedures.
The financial challenge Greece faces is illustrated by the increase in the
public debt, which has already surpassed last year's 195 billion euros, and is
expected to exceed 210 billion euros by the end of 2004. The rising numbers are
putting pressure on the government, which is being forced to place limits on
economic policy. Greece must present a reliable economic control plan, in the
face of its massive debt, to re-establish the country's creditability.
According to Doukas, the government should take specific initiatives that would
allow for the controllable rejuvenation of the public sector and at the same
time create an attractive environment for foreign investment.
The most serious problem with the public debt is the fact that a large portion
of the state budget is inelastic. Almost 40 per cent covers wages and pensions,
another 30 per cent goes towards interest, and 20 per cent to 25 per cent is
earmarked for financial aid grants. A mere 5 per cent to 10 per cent of the
budget can be influenced directly by governmental decisions. Annual wage and
pension increases, capped at 3 per cent, raise that portion of the budget by 5.5
per cent, further reducing the amount left for discretionary spending.
The large public debt increase rules out hopes of a decrease in service costs.
Under these circumstances, strategic actions are needed if Greece is to have any
hope of bringing its debt servicing expenses under control. One much-discussed
way of doing this is through the privatisation of large public organisations,
such as the phone company, the water company, and electricity provider.
Meanwhile, cost control programmes have been implemented in mass transportation
and all other public sectors that operate within a bank-debiting framework
supported by the Greek Public Office.
But upbeat prospects open up; the 'Post-Olympics' era
It is perfectly understandable, however, that at this turning point in the
world's perceptions of Greece the prevailing official tone is upbeat. Minister
of State and government spokesman Thodoris Roussopoulos on October 18th focused
on the extraordinary promotion in Greece's image in the wake of the successful
holding of the Athens Olympic and Paralympic Games.
In presenting results of a seven-nation, 7,000-person survey on Greece's image
to participants at a one-day, International Herald Tribune-sponsored conference
in the Greek capital, Roussopoulos said the categories of "safety",
"quality of services" and "creativity", among others, all
rose in ranking.
Roussopoulos also more-or-less defined the Karamanlis government's communication
strategy vis-a-vis international public opinion, saying Greece must exude a
unified image abroad, instead of the piecemeal and often amateurish campaigns
that were recorded over the past two decades.
"Our emphasis should be on tourism, we want to attract more tourists,
knowing that the competition in the Mediterranean is very stiff," he said,
adding that "natural beauty", "culture" and "family
values" still remained the most identifiable traits that foreign
respondents associated with Greece.
"Greece Doing Wonders" was the general promotional moniker unveiled at
the conference, entitled "Investment & Business Prospects in Greece's
Arapoglou highlights NBG's moves to enhance growth
National Bank of Greece Chairman, Takis Arapoglou, was recently in Santorini,
one of Greece's renowned islands to speak to 130 professional and businessmen
about the bank's plans to enhance growth for the country, New Europe has
In his speech, Arapoglou said the bank is particularly keen to serve small,
medium and large size businesses, as well as professionals, especially in
Santorini, where the bank has been active since 1842. "The region presents
considerable scope for further development. By developing infrastructure in
general, we can produce more favourable conditions and enhance the potential for
business and tourist development," the NBG chairman said. "The
Santorini branch manager and officers and National Bank of Greece in general,
with its long experience, are here to support the business community in its
efforts to achieve growth and development," he added.
Arapoglou also visited the archaeological site of Akrotiri, where he was guided
around the excavations by Professor C Doumas. It should be noted that National
Bank is a sponsor of the excavation works in Akrotiri, a bank statement said.
During his trip to the northern cities of Kaval and Drama, Arapoglou, along with
the deputy chairman and the deputy CEO of National Bank of Greece, met with 300
businessmen and professionals, and discussed matters of mutual concern. The
general managers of consumer banking and human resources, respectively, were
In his address to businessmen and professionals, Arapoglou reiterated that the
bank is particularly keen to serve small-, medium- and large-size businesses, as
well as professionals. Among other things, Arapoglou pointed out that:
Greece outlook cut to negative vs stable - S&P
International rating agency Standard & Poor's on September 13th said it had
revised its outlook on Greece to negative from stable, reflecting a deepening
deterioration of public finances and lack of progress in lowering the public
debt ratio as a share of national output, New Europe reported.
At the same time, Standard & Poor's affirmed its A+ long-term and A1
short-term sovereign credit ratings on the republic.
General government debt is forecast to reach 112% of GDP by the end of 2004, up
from 106% in 2000, which was on the eve of Greece's EMU entry, S&P said.
"Traditionally weak expenditure discipline has recently been exacerbated by
declining government revenues as a share of GDP," said Standard &
Poor's credit analyst Moritz Kraemer.
"Consequently, the general government deficit is expected to reach 5.4% of
GDP this year, with the cyclically adjusted balance close to 6.0% of GDP.
Approximately 1.0% of GDP of the 2004 deficit is related to nonrecurrent
spending on the Olympic Games.
"The negative outlook reflects the significant risks to fiscal
consolidation in Greece. "Fiscal performance is of paramount importance for
sovereigns taking part in monetary unions, as critical policy instruments to
respond to economic shocks have been surrendered to the multilateral
level," Kraemer said.
The new government enjoys a strong mandate and intends to reduce its deficit to
less than 3.0% of GDP in 2005, which is very ambitious, but not impossible if
the political will exists for forceful action to curtail current expenditures.
"Failure to address the fiscal imbalances with lasting structural measures,
and in particular to contain current expenditure, would lead to a lowering of
the ratings on Greece within one to two years," said Kraemer.
FOOD & DRINK
Coca-Cola HBC optimistic
Coca-Cola Hellenic Bottling Company recently announced it believes 2004 will
prove to be fruitful despite the current sentiment on the global market, New
Europe has reported.
"Given the prevailing uncertainty in the market conditions, we felt it
appropriate to update the investment community on current trading and full-year
expectations for 2004 ahead of an investor roadshow in the United States,"
said Doros Constantinou, managing director of Coca-Cola HBC. "As we come to
the end of the third quarter, we have become increasingly confident that our
strong operating performance has enabled us to overcome, to a large extent, the
adverse macroeconomic and weather related conditions influencing our established
and developing markets."
FOREIGN ECONOMIC RELATIONS
Greek, Turkish foreign ministers discuss bilateral relations
Greek Foreign Minister, Petros Molyviatis, met with Turkish counterpart,
Abdullah Gul, at the UN head-quarters in New York, and reviewed the countries'
bilateral relations during a 45-minuted meeting recently, ANA News Agency
In statements made to the press after the meeting, the two ministers expressed
satisfaction with the improvement of relations between Greece and Turkey.
Molyviatis confirmed "the good relations" that exist between the two
countries, citing the realisation of two meetings over recent days as a small
As an example of the "good climate" existing between the two
countries, the Greek minister emphasised that various military exercises had
been cancelled, most importantly a military exercise in Cyprus, which was
cancelled in consultation with the Cypriot government - "an indication of
the trust" that has developed between Greece and Turkey.
Gul said that the measures aimed at reinforcing trust between the two countries
were discussed and the two ministers decided that this process needs to be
Aside from the Greek-Turkish relations, the Turkish minister said that the
Cyprus issue was also discussed, as was Turkey's prospects for EU membership. He
said that he and Molyviatis reviewed the Cyprus issue and discussed the issue of
Additionally, Gul reiterated the invitation he has extended to Molyviatis for an
official visit to Ankara.
Finally, Gul said that the Iraq situation was also discussed and he presented
the Greek minister with Turkey's position on the matter.
Our analysts and
editorial staff have many years experience in analysing and reporting
events in these nations. This knowledge is available in the form of
geopolitical and/or economic country reports on any individual or grouping
of countries. Such reports may be bespoke to the specification of clients
or by access to one of our existing specialised reports.
For further information email: