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Books on Greece
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Update No: 115 - (21/12/06)
The leader of the Balkans
Greece sees itself as the natural leader of the Balkans. It is not as big of
course as Romania or Turkey, but it is the most developed and central to the
region's history, indeed to that of the Western world.
The Greeks love to hark back to Ancient Greece, which is rather absurd. They
mostly are the descendants of the Slavs who flooded Europe and came to the
Balkans in the Dark Ages plus a Mediterranean admixture of millennia gone by.
A more genuine claim to lead the Balkans as a whole is that they led the way
against the Turks in the Greek War of Independence, in 1822-31. This captured
the imagination of Europe, Byron and all that. The cradle of Western
civilisation was at stake. The French and British buried the hatchet and, with
the Russians, beat the Turkish fleet at Navarino in 1827, paving the way to
victory.
The Greek example inspired the Serbs and others to throw off the Turkish yoke,
that was confirmed at the Congress of Berlin in 1878, ratifying the Independence
of Serbia and that of Bulgaria and Romania, but leaving Bosnia under Austrian
rule, as also Slovenia and Croatia. The leading German statesman, Bismarck, who
hosted the conference, had a foreboding about it all. He said in the 1890s:
"Europe is sitting on a powder-keg. A single spark could blow it up. I
can't tell you when it will happen. But I can tell you where. Some damn stupid
affair in the Balkans will set it off." Spot on.
After the turbulence of the First World War the victors made a frightful hash of
the peace, as is well-known. It took seventy-five years to show what an
untenable entity was Yugoslavia, set up then. The latest secession from its
rump, Serbia, is Montenegro. Athens is extending it a protective hand.
Greece, Montenegro Form Establish Formal Relations
Greece and Montenegro on December 18th signed a protocol formally establishing
diplomatic relations between the two southeastern European countries.
The agreement, signed by Montenegrin Foreign Minister Milan Rocen and his Greek
counterpart Dora Bakoyannis at a brief ceremony at the Greek Foreign Ministry,
paves the way for an exchange of ambassadors and establishment of embassies in
Athens and Podgorica. Ten countries have so far opened embassies in the
Montenegrin capital.
Last week Montenegro, along with Serbia and Bosnia, was invited to join the
North Atlantic Treaty Organization's Partnership for Peace programme, considered
a stepping stone to membership. In October it signed a Stabilization and
Association Agreement with the European Union, which it also aspires to join.
Greece is a member of both NATO and the E.U.
Bakoyannis said she hoped the agreement would lead to "further development
of relations, including economic relations, between the two countries."
Rocen also met with Prime Minister Costas Karamanlis and Development Minister
Dimitris Sioufas on his one-day visit, his first to Greece since independence.
Montenegro voted for independence from the union of Serbia and Montenegro
-itself a political remnant of Yugoslavia - in May 2006. The country was
admitted into the U.N. in June as its 192nd member.
Protecting Cyprus
An example of Greek protection is that of the Greek Cypriots, The Treaty of
Berlin was momentous here too in that it made Cyprus a crown colony of Great
Britain, which it remained until after the Second World War, The Greeks at the
time offered the Cypriots 'enosis,' union with Greece. They preferred to remain
independent, which some may have come to regret after 1974 when Turkey invaded
Cyprus, carving out the self-styled Turkish Republic of Northern Cyprus, which
nobody but Ankara recognizes. It was in fact a reaction to an Athens organised
coup of the time of the 'Colonels' regime in main land Greece.
A mutual embargo between the northern and southern entities on the island
prevails to this day and holds back the economies of both. Turkey champions the
north and Greece the south. Turkish hopes of joining the EU depend on resolution
of this face-off, a reason why Athens supports EU entry for Turkey. It gives
Brussels and so Athens leverage. Also, everyone knows that Greek Cyprus behaved
badly in wrecking the UN-led plan to re-unite the island.
At the moment the Turks are demanding a non-starter of a quid pro quo, that the
EU lifts its embargo on Turkish Cypriot ports in exchange for the Turks doing so
theirs on Greek Cypriot ports. It would involve de facto recognition of the
northern entity, quite unacceptable while Turkey militarily occupies a portion
of the territory of a member state, which Cyprus now is. Athens is watching with
interest what comes next. That depends on Ankara and Brussels.
A Serious Cabinet Crisis Because of OTE Privatisation
The public contradiction between two cabinet ministers from the Kostas
Karamanlis government is growing into a serious cabinet crisis, the Greek
newspaper Elevteros Tipos reports.
The Minister of Finance and Economy George Alogoskoufis and the Minister of
Environment George Souflias moved their argument for the privatisation of OTE
further in the public space. Souflias disagrees with the intention of the
economic team to transfer the management of the telecom company to the foreign
investor who will buy the state's share. He insists that the state should
preserve control over the management of the company.
The situation is complicated further by the statements that both ministers
exchanged and from the absence of Souflias on the first day from the discussion
of the draft budget for 2007 in Parliament.
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BANKING
Prospects good for Greek banking
A series of reforms and privatisations undertaken by the government have created
the right conditions for a better banking system in Greece, Economy and Finance
Minister, George Alogoskoufis, claimed on December 5th while addressing the
International Banking Forum organised by the Economist in Athens, ANA reported.
According to the minister, banking was a healthy, productive sector and banks
were introducing innovative services. Noting increasing competition within the
sector that benefited businesses and households, he said this progress was
largely due to the sector's heightened competitiveness. He attributed this to
structural changes and reforms, a series of privatisations and the restructuring
of the Agricultural Bank of Greece (ATE). He also pledge to continue reforms
with the further privatisation of the Post Offices Savings Fund and ATE, while
pointing to the government's support of National Bank of Greece (NBG) in its
expansion to Turkey, which he described as an historic event.
Austrian, Greek banks plan for major Ukraine investment
Two leading Central European banks - one Austrian and one Greek - announced on
December 5th plans for major expansions into the Ukrainian market, news reports
said. The news came one day after Ukrainian President, Viktor Yushchenko, signed
laws allowing foreign banks to operate branch offices for the first time in the
former Soviet republic.
Austria's Erste Bank AG will open up to 400 branch offices in Ukraine in a net
investment worth US$397 million, Interfax news agency reported.
Greece's Alpha Bank intends to open 100-150 branch offices, but the cash value
of that investment has not been announced, according to an Ekonomicheskie
Izvestia magazine report.
The move by Erste Bank, Austria's second-largest, into the Ukrainian market will
build a nationwide network of 400 branch offices over three years in cooperation
with Ukraine's Prestizh bank, in which Erste holds a controlling stake. Aside
from Erste, other Prestizh shareholders will assist in the expansion programme
to the tune of US$153 million over four years, according to the Interfax report.
The project, if completed, would be one of the largest Ukrainian bank expansions
in a decade. Erste Bank bought a controlling 50.5 per cent stake in Prestizh
earlier this year. Prior to the Erste Bank takeover, Prestizh was a mid-level
player in Ukraine's banking market, rated 72nd out of 164 banks operating in the
country.
Athens-headquartered Alpha Bank, Greece's second-largest, will, by contrast,
finance its expansion into Ukraine without a Ukrainian partner. The 100 to 150
office expansion programme will begin immediately, and end in 2008, Izvestia
cited Alpha Chairman Jannis Kostopoulos as saying.
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ENERGY
Athens and Moscow agree to begin pipeline construction
Greece and Russia agreed on December 6th to begin construction by the end of
the year on a long delayed oil pipeline linking the Black Sea to the Aegean.
Greek Prime Minister, Costas Karamanlis, met with visiting Russian Deputy Prime
Minister and Defence Minister, Sergei Ivanov, and the two men expressed their
political willingness to advance the project by the end of the year, Deutsche-Presse-Agentur
(dpa) reported.
Ivanov, also met with Greek Foreign Minister, Dora Bakoyiannis, and President
Karolos Papoulias.
Greece, Russia and Bulgaria agreed on the deadline for the construction of the
oil pipeline, which will run from the Bulgarian port of Burgas to the Greek
Aegean Sea port of Alexandroupolis, during a trilateral summit in September 2006
in Athens.
The 280-kilometre pipeline has been repeatedly stalled since it was first drawn
up 13 years ago, namely because the Russians did not believe it could be
economically viable.
Experts now believe that with the rise in oil prices, the project could at last
become a reality by bringing cheaper Russian crude to the Mediterranean and
ensure Moscow's hold on the region's energy market.
For years the three countries have also disagreed on other key issues, namely
who would be responsible for building the pipeline, transit fees and ownership
of the terminals.
All sides have agreed to speed up the creation of an international project team
and to sign an intergovernmental agreement to support the pipeline project by
year's end.
At a cost of 900 million Euro, the Burgas-Alexandroupolis pipeline is designed
to reduce the cost and time of transporting Russian oil from the Caspian Sea to
Europe and the United States.
Currently thousands of tankers transport crude oil across the Bosphorus Straits,
but increasing congested traffic over the years has made the task
environmentally unsafe. Once completed, the pipeline would be able to transport
some 35 million tons of crude oil a year.
Greece is also participating in a Turkish-Greek-Italian pipeline deal which will
pump natural gas from the Caspian Sea and the Middle East to Europe by early
next year.
The project also stands to include many of the top oil companies in the world,
including the US Chevron Texas, Russian-British TKK-BP, Russian Rosneft,
Bulgargaz and Universal Terminal Bourgas from Bulgaria, and Greece's Hellenic
Petroleum, Promitheas Gas and Petrola.
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TELECOMMUNICATIONS
Greek telecom backers call off 3.5bn Euro sale
The private equity owners of TIM Hellas have abandoned the planned 3.5bn Euro
(US$4.6bn) sale for the Greek telecommunications business after prospective
bidders failed to meet their reserve price, the Financial Times reported on
December 8th.
Texas Pacific Group and Apax, TIM Hellas's backers have instead chosen to
undertake a leveraged recapitalisation of the business from which they expect to
yield a large capital repayment.
TIM Hellas plans a 1.4bn Euro debt offering, with marketing started on the 15th
December. The funds will be used to repay debt and return capital to TPG and
Apax.
It plans to add 100m Euro to its 2012 floating-rate note, issue 1.1bn of senior
notes, and sell a 200m Euro payment-in-kind note. The refinancing had been a
possibility from the outset of the auction.
Private equity groups can choose from a range of options when realising an
investment, including a sale to rival private equity group or corporate suitor,
an initial public offering or refinancing.
Highly favourable conditions in Europe's leveraged loan market in recent years
have created attractive alternatives for sellers, such as a refinancing, in the
process removing the sting from a collapsed auction.
In the final stages of the auction, TIM Hellas had three suitors: Turkcell,
Turkey's mobile phone operator; Providence Equity, the US buy-out group; and
Etisalat, the United Arab Emirates-based telecoms group.
However, TPG and Apax felt offers for the business did not fully reflect
prospects from TIM Hellas's future trading performance growth profile in the
Greek market and its robust cash flows. Lehman Brothers and Morgan Stanley were
appointed to sell the business. Those two banks, as well as Deutsche Bank and
JPMorgan, are lead managers for the debt offering.
TPG and Apax have already refinanced TIM Hellas, in the process repaying
themselves their original equity investment. In 2005 they acquired a controlling
stake in the Greek phone business from Telecom Italia, its then majority owner,
before making an offer for the minorities. Taken together, the buy-out duo paid
1.36bn Euro for TIM Hellas. They subsequently bought Q-Telecom, Greece's
fourth-biggest wireless carrier, in a deal worth 3320m Euro.
A second refinancing is expected to result in TPG and Apax generating close to
three times their original equity investment without dilution to their current
shareholdings.
TPG this year raised a fund of more than US$14.5bn, one of the world's largest,
while Apax is due to launch its latest buy-out fund, of possibly 8bn-10bn Euro,
this year.
OTE reports net profit
Hellenic Telecommunications Organisation (OTE) on November 29th reported a 5.6
per cent increase in its consolidated turnover in the January-September period
this year to 4.302 billion Euro, while net profits rose to 445.5 million Euro
from a loss of 296.7 million Euro in the same period last year, New Europe
reported.
Operating expenses fell by 19 per cent to 3.433 billion Euro, the organisation
said. Parent turnover rose 1.8 per cent to 2.057 billion Euro, operating
expenses fell by 37.6 per cent, while net profits rose to 331 million Euro from
a loss of 233.8 million Euro in 2005. OTE said its nine-month results showed a
general improvement of its financial situation with both fixed telephony and
broadband services steadily expanding, while Romtelecom remained an "open
wound" to the organisation.
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TOURISM
Greek industry officials optimistic over tourism
Tourist arrivals are expected to rise by 8.0-10 per cent this year, while
revenues are projected to total 13.7 billion Euro, up 10 per cent from 2005,
Stavros Andreadis, the president of the Association of Hellenic Tourism
Enterprises, said on November 14th.
Speaking to reporters during a news conference on the occasion of the 22nd
Philoxenia tourism fair in Thessaloniki, Andreadis stressed that Greek tourism
did not have room for complacency, New Europe reported.
"I fear this feeling of happy inactivity," he said, adding that Greece
"sells as an idea and we must build on this by strengthening the country's
tourism profile with "high added value products."
Andreas Andreadis, president of the national association of hoteliers, said that
40-50 per cent of new investments in Greece covered hotel projects, while he
noted that it was equally important to build new five-star hotels and to upgrade
the existing 7,000 hotel units around the country.
Andreadis said the association was developing cooperation with large Internet
tour operators and noted that Expedia's turnover from Greek hotels was expected
to reach 300 million Euro in the next three years.
Tourist arrivals from Russia and Ukraine - arriving by airplane - to central
Macedonia grew by 16 per cent and 100 per cent in the 10-month period from
January to October this year, compared with the same period 2005, while the
Association of Thessaloniki Hoteliers reported a rebound in room occupancy rates
in the first half of 2006, after a steady decline in the previous three years.
Average occupancy rate reached 54 per cent in the city of Thessaloniki.
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