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GREECE


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 173,000 132,834 117,200 27
         
GNI per capita
 US $ 13,720 11,660 11,430 45
Ranking is given out of 208 nations - (data from the World Bank)

Books on Greece

REPUBLICAN REFERENCE

Area (sq km)
131,940

Population 
10,647,529

Capital 
Athens

Currency 
Euro

President 
Costas 
Stephanopoulos

Private sector 
% of GDP
over 60%



Update No: 100 - (25/08/05)

OECD report positive
The OECD has just issued its annual report on Greece. It takes a long view and is generally positive.
The Greek economy grew rapidly in the last four years, in the 3-4.5% range per annum, well above the EU average. But inflation and unemployment remain stubbornly high, while income per head lags behind the EU average. The current account is deeply in deficit.
Living standards would rise more quickly, the OECD asseverates, if the government reformed product markets, to promote competition, and labour markets, to make wages more flexible. The immediate objective, however, should be the reduction of budget deficit, which at 6% of GDP in 2004 is far too high, double the amount permitted in Euroland. This is important, not only to comply with fiscal rules of the euro zone, but to meet the growing demands for pensions of an ageing population.
The OECD predicts that GDP growth will be 2.8% this year and rise to 3.2% in 2006.

Greece joins the flat-tax brigade
Greece is set to become the next European nation to introduce a flat rate of income tax, according to speculation in Athens triggered by the finance minister, Giorgios Alogoskoufis.
The prime minister, Costas Karamanlis could announce the proposal at September's Thessaloniki International Fair. A flat rate of income tax, which abolishes all bands and exemptions and replaces them with a single rate and a high personal allowance, is all the rage among free-market thinkers and the idea is sweeping across eastern Europe.
The Greek government's precarious finances were thrown into a massive deficit of nearly 7% of GDP last year by the Olympics, and Finance Minister Alogoskoufis has promised to bring the deficit down to 3% of GDP. The fiscal crisis helped propel the New Democracy government into power.
Mr Alogoskoufis believes a flat tax rate, by discouraging evasion and corruption and also boosting incentives for high earners, would help narrow the deficit. Currently, the first 11,000 Euro of income is tax exempt in Greece and there are then three bands: 15%, 30% and 40%.
The finance minister has said that, from 2007, he would like to replace this system with a single 13,000 Euro personal allowance and a single 25% band for both corporate and personal income. He has already started to cut corporation tax from 35%.
The flat tax idea was first proposed in America, notably by former presidential candidate Steve Forbes. But it was Russia which first introduced one at 13%, resulting in higher tax revenues as evasion was cut and economic growth improved. So far, it has been introduced successfully in Poland, Slovakia, Latvia, Lithuania and Estonia.

Greece's harsh post-party reality 
A year after Greece staged its lavish Olympiad, memories are still fresh, reported the International Herald Tribune on August 10th.
The din of applause has shifted to sound of the wind at many of the more than 30 Olympics sites where 16 days of Games were staged last August. In the meantime, yearly maintenance costs have soared to almost US$100 million, along with a total Olympics bill estimated at 9 billion to 13 billion, a staggering price that has resulted in new political clashes. 
One of the smallest countries to host the global event, Greece spent on the Games with the abandon of Hermes, the Greek god of commerce and speed, in order to overcome construction delays and finish more than 30 Olympics sites on time. Now the country is facing the post-party reality: a tally of economic benefits and costs that pressed public borrowing to 43 billion last year and prompted a warning from European Union finance ministers to reduce a 6.1% deficit. 
"We had a vision," Tourism Minister Dimitrius Avrampoulos, the former Athens mayor who pressed the winning game bid, said in an interview. "We believed that the Olympics would be a vehicle for transformation and change. "The fact that we organized a safe Olympics game is practical proof of what the Greeks represent today." Athens was indeed transformed, with a new airport, state-of-the-art suburban trains, trams and a ring of urban highways that carry commuters into a city determined to press on with improvements. The clouds of pollution that used to hover over Athens have vanished. New paint, subsidized by the city in a façade program that has become a Harvard case study, brought colour to barren grey concrete high-rise apartments. 
Tourism, a critical element of the Greek economy, also showed a sharp increase, with air passenger traffic rising more than 7 per cent in the first half of the year to 6.6 million, according to Athens International Airport. International tourism grew even more, but that trend has not filled all the rooms in city hotels, which spent heavily to remodel in advance of the Olympics. More tourists are apparently doubling up and bunking together. "It's not really the boom or boost that we were hoping for," said Aris Ikkos, director of JBR Hellas, an Athens business consulting firm that tracks hotel occupancy for the Athens Hotel Association. From January to June, the overall rate remained virtually the same as last year: 60%. 
"The truth of the matter is that we still don't really now the full cost of the Games," Ikkos said. "The Olympics definitely created the foundations to make Athens a very good destination, but without knowing details of how much was spent it's very difficult to say it was worth it or not." Most of the cost of the Olympics was absorbed by Greek taxpayers, who paid for sparkling new sports venues that in many cases now stand virtually deserted except for lonely security guards. The diving pool is dry, and the velodrome empty of bicycles. The northern town of Volos, population 85,000, has been unable to fill its 22,000-seat stadium when the local soccer team plays. 
In contrast to past Olympics, all of the structures built this time were permanent - even the baseball stadium, which was supposed to be temporary because of tepid Greek interest in the game. Some stadiums have been rented out on short-term leases for pop concerts, a "Holiday on Ice" show and a travelling performance of "Cats." But such events have generated less than about 5 million, not enough to pay for hefty maintenance costs. 
There are about two dozen Olympics sites that the government is advertising in hopes that international investors will sign long-term leases, enhancing Greece's critical tourist economy, which accounts for more than 18 percent of the country's gross national product. On the first day of a recent slalom race, Olympic Properties, which was set up to manage the sites, started accepting bids for the kayak course, a badminton arena and a building that housed an international broadcasting centre. Beginning in late August, government officials plan to seek bids for a beach volleyball centre and tae kwon do and fencing facilities. 
But the more difficult buildings are still to come. "The toughest sites are the peripheral stadiums in the small cities," said Christos Hadjiemmanuil, president of Olympic Properties, who suspects there is also little hope of finding a use for the existing baseball stadium. "The Greek government is not going to start on some quixote campaign to create demand for a new sport." Palli-Petralia, who has taken charge of the sites, said in an interview that there has been considerable interest in the kayak site from theme park developers and investors. 
The strategy is to maintain ownership of the Olympics structures, with an eye on the bottom line. "It's very costly to maintain," she said. "What we want is to reduce the costs and to develop all these complexes to improve the quality of life." 
In some ways, the Olympic legacy of concrete has become a political burden that has sharpened differences between the New Democracy party, which swept to power in elections in March last year, five months before the Games, and the previous governing party, the Socialists. The two sides have been trading charges about who squandered opportunities. "We didn't find a plan for the post-Olympics development of the venues," said Palli-Petralia, who is part of the New Democracy administration. "What we found was a rough draft from one of the Greek universities. It was really not a master plan. "When a city gets the Games it should make a business plan for big changes and then decide what the country needs for the day after the Olympics. This did not happen." 

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AVIATION

Greece to purchase F-16 planes, Leopard tanks 

The Greek Government Foreign Affairs and Defence Council (KYSEA) decided to purchase 30 F-16 Block-52 warplanes with the option of purchasing an additional 10 of this type to meet the air force's immediate operational needs, during its meeting chaired by Prime Minister Costas Karamanlis. It also approved the procurement of 333 Leopard tanks. The agreement for the purchase of the aircraft will be signed by the governments of Greece and the United States, while that for the tanks between the governments of Greece and Germany, as the defence minister clarified, New Europe reported.
The cost of the warplanes, in current prices according to the minister, amounts to 1.1 billion Euro but the final amount will depend on negotiations with the American side and offset benefits will concern infrastructures and support for the rest of the F-16s belonging to the Greek air force. As regards the new fighter aircraft, whose procurement lies in the year 2009, the minister said the proposal by the defence ministry is for the purchase of 30 new aircraft with an option for the purchase of another 10. The minister clarified that the type of aircraft has not been decided.
KYSEA also okayed the new structure of forces and the new structure for the armed forces' administration to enable them to become more flexible and effective and to have a greater rapid reaction ability, as the minister said, while he also appointed the new leadership of military justice.

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ENERGY

Karamanlis, Sioufas and DEH chief discuss firm's growth 

Greek Prime Minister, Costas Karamanlis, focused on the course and development of the Public Power Corporation (DEH) during his meeting with Development Minister, Dimitris Sioufas, and DEH President, Ioannis Paleokrassas, at Maximos Mansion recently, New Europe reported.
Sioufas underscored the fact that DEH has played and continues to play a significant role in the country's growth. He ruled out the possibility of DEH's privatisation, noting that the government has pledged that the state will maintain a 51 per cent share in the company. Sioufas and Paleokrassas also stressed that PPC's back-up system worked effectively during the heatwaves, thus preventing power outages, and thanked citizens for complying with requests to limit use of electricity as well as employees and associated authorities for their work and commitment.

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FOREIGN COOPERATION

Athens, Tripoli sign cooperation memorandum 

Greece and Libya recently signed a cooperation memorandum for regular consultations on matters of mutual interest between the Greek and Libyan foreign ministries, during a visit to the country by Greek Deputy Foreign Minister Yiannis Valynakis, ANA reported.
Valynakis expressed his satisfaction with the traditionally good ties between Greece and Libya, noting that his was the second visit by a Greek minister to Libya within the space of two months, and stressed that the Greek government was ready to further develop these ties on all levels. The Greek minister particularly praised Libya's decision to abandon programmes for the production of weapons of mass destruction, saying that this decision had set in motion a chain of events that had brought Libya into the forefront of international news and had earned it high respect in the international community.
Valynakis and his Libyan counterpart Said Hefyana also referred to policy for the Mediterranean Sea, noting that this should be an area of "peace and cooperation" and a "means of communication between neighbouring friendly states."

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FOREIGN RELATIONS

Voulgarakis announces agreement with China 

Greek Public Order Minister, George Voulgarakis, on August 7 announced the signing of a cooperation agreement with China, which will host the 2008 Olympic Games, "in an international environment, particularly fluid," with the purpose of exchanging experiences on security issues, in the course of his second visit to Beijing in September. Referring to the new anti-terrorist law which will be tabled in parliament, Voulgarakis called on the main opposition Panhellenic Socialist Movement (PASOK) to be "responsible, above partisanship and to maintain a consistent stance, as did the New Democracy as opposition three years ago." At the same time, Vima newspaper quoted Voulgarakis in an interview as saying that the new measures will maintain the balance between security policies and the protection of individual rights. Furthermore, referring to the Security Studies Centre, he observed: "Its operation does not only concern economic sizes and benefits. It is also connected with our country's image abroad and the role it can play as a nucleus of security and development in the broader region." Finally, commenting on the election of a candidate mayor who garners 42 per cent from the first Sunday, Voulgarakis said its safeguards the credibility of the system and rids the citizens of the hassle of them going successively to the ballot box.

 

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