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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: 096 - (26/04/05)

Chill between Athens and Ankara 9
A new chilliness between Turkey and Greece grew frosty when a Turkish flag was recently defiled by unidentified people during a seminar held at the Greek Army's Military Academy in Athens. The seminar was attended by several Turkish military officers and soldiers on a goodwill mission as part of confidence-building measures between the two neighbours. 
The flag crisis, following a mini-crisis over Kardak-Imia, resulted in Turkish Foreign Minister Abdullah Gul cancelling his visit to Greece to attend a Black Sea Economic Cooperation Organization (BSEC) Summit. According to Turkish sources, Gul instead chose to go Lefkosa to attend the swearing-in ceremony of Turkish Republic of Northern Cyprus (TRNC) President-elect Mehmet Ali Talat the same day. A pointed snub.
Afterwards Athens realized the implications of Turkey's message and modified its attitude towards Ankara. Ankara's veiled diplomatic message in cancelling Gul's trip to Greece was well understood by Athens. The Greek government, which has yet to make an official apology for the flag incident despite Ankara's obvious sensitivity on the issue, has changed its attitude towards Turkey. 
Signalling the change in attitude, Greek Prime Minister Costas Karamanlis, a lawyer who was elected in March 2004, stated Greece's support for Turkey's European Union membership bid using very clear and powerful language on April 19th. 
Turkey and Greece were previously close to military conflict in the 1990s on the sovereignty dispute over Aegean islands. 

Greece declares support for Turkey's EU bid 
Karamanlis statement that Athens supported and continues to support Turkey's EU membership bid was made at a dinner organized by the UK weekly magazine, The Economist, in honour of participants at a conference in Athens. In his speech Karamanlis touched upon Turkish-EU relations and the Cyprus issue. 
"We sincerely support an advancement in bilateral relations and cooperation with our neighbour, Turkey," said Karamanlis, adding that Athens supported and will continue to support Turkey's EU membership bid. "All steps taken by our neighbour will depend on not only international laws, rules, and conventions, but also on their respect for religious freedoms, human and minority rights," Karamanlis said. "This process also depends on Turkey's establishment of good relations with its neighbours and its attitude towards the Greek Cypriot administration," he added. 
He stated that Athens wants a solution to the Cyprus problem, and said that Athens wishes to see a permanent and fair peace in Cyprus, based on the Annan plan and EU acquis communautaire. 

Valinakis: Turkey's membership is good for both EU and Turkey 
The overriding importance of Greek-Turkish relations is well understood in the Greek Foreign Office. Greek Deputy Foreign Minister Yannis Valinakis recently stressed the importance of bilateral relations between Turkey and Greece in recent years, adding that the new European framework has created new opportunities and occasions for countries to develop their bilateral relations. 
He said that negative issues that have harmed relations between Ankara and Athens for over 30 years will be solved as a matter of course in the era of developing relations and cooperation. He went on to say, "Turkey's EU membership will be positive for both EU and Turkish interests."

Counting on Post-Olympic Boom, Greece Now Faces Tourism Bust 
The Greek economy has not fared as well from the aftermath of hosting the Olympic Games in 2004, as was hoped. Greece's economy went into overdrive after it was picked to host the Games. Since 1996, a year before Greece was chosen, the economy has expanded an average of 3.8 percent a year, the third- highest rate in the EU after Ireland and Luxembourg, according to EU figures. Spending to prepare for the Games helped boost economic growth to 4.2 percent last year, while swelling the country's budget deficit to 6.1 percent of GDP and increasing its total debt to 111 percent of GDP, both the highest in the European Union.
But GDP growth will slow to 2.9 percent this year, according to the European Commission, the EU's economic overseer. This is due not least to the failure of a post-Olympics boom to materialise.
George Tsakiris, who owns three hotels in Athens, says he and other hoteliers spent 1.5 billion euros ($2 billion) to renovate and supply rooms with new furniture, televisions and Internet connections on a bet the 2004 Olympic Games last summer would power tourism for years to come. The Greek government spent 10 billion euros on a new airport, subway and rail system and venues to prepare for the Games. 
Instead, hotel occupancy plunged 7 percent in the fourth quarter to 57 percent, the lowest among 11 of Europe's biggest cities, according to a study by Athens-based consulting firm JBR Hellas Ltd. London had the highest occupancy, at 77 percent. The number of visitors to Greece fell 3 percent last year, according to the Association of Greek Tourist Enterprises. 
While Greece was gearing up for the Games, hotels and other travel businesses increased their prices. The average rate for a room for one night in Athens rose 33 percent in 2004 to 167 euros, the highest among six cities in a survey by accounting firm Deloitte & Touche LLP. The average rate in Rome, the next-most-expensive city, fell 1 percent to 157 euros. In Istanbul, the least expensive city in the survey, the average room rate rose less than 1 percent to 99 euros. 

Cheaper Destinations 
The increased rates deterred some tourists, who chose cheaper destinations instead. ``Greece was among the losers last year,'' says Anja Braun, a spokeswoman for TUI Deutschland, the German division of Hanover, Germany-based TUI AG, Europe's largest tour operator. ``People were put off by negative reporting about price hikes.'' 
Greece's post-Olympic experience stands in contrast to that of Australia, which hosted the Summer Olympics in 2000. 
Australian tourism rose 11 percent in 2000, according to a 2001 study by Jones Lang LaSalle Inc., a Chicago-based commercial real estate broker and management company that evaluated the impact of the Olympics on regional property markets. The number of visitors peaked in December 2000, three months after the Games ended. 
Greece, birthplace of the ancient Olympics, did reap some lasting gains from the Games. EU funds helped pay for a 2.6 billion euro subway system in Athens, easing the capital's legendary traffic jams. Some EU money was also used to finance the city's new international airport, permitting more flights. 

Accommodating Tourists
''The change in infrastructure has been very important,'' says Christos Avramides, an economist at and general manager of Athens-based Proton Asset Management SA, with more than 180 million euros under management. ``The issue now is to capitalize on this experience.'' 
Considering tourism's importance to the economy, Greece isn't the most accommodating of destinations. The government determines when shops can open; department stores have to close by 3 p.m. on Saturdays and all day on Sundays. Museums don't have evening hours. 
The new Eleftherios Venizelos International Airport in Athens charged the third-highest fees and taxes among international airports, after Newark, New Jersey, and Osaka, Japan, according to U.K.-based Transport Research Laboratory, a transportation research organization.
The decline in tourism after the Games is a blow to a nation that relies on spending by tourists for about 6 percent of its gross domestic product. Tourism is one of Greece's three biggest industries, along with construction and shipping; the latter accounted for about 8 percent of GDP last year. About 6.4 percent of Greece's workforce of 4.3 million, or about 275,000 people, is employed in the tourism trade. 
''The advantage of the Olympics is over and finished,'' says Bart Daenekindt, who manages about 30 million euros in Greek stocks at KBC Asset Management in Brussels. 

Not Enough 
That gives the government until next year to tame the deficit and reduce debt, both of which are about double EU guidelines. Karamanlis has responded with a plan to cut spending, boost certain taxes and sell state-owned assets. The European Commission said in a statement in April that those efforts may not go far enough. 
Even so, investors have bid up Greek shares and bonds, lured by the country's growth and the prospect of sales of state-owned companies. 
The ASE General Index gained 23 percent in 2004, led by Athens-based Opap SA, Europe's third-biggest publicly traded gambling company. Opap, 51 percent owned by the government, is among the enterprises that may be sold. The company's shares rose 79 percent last year and have gained 4.8 percent this year to 21.34 euros yesterday. The ASE increased 4 percent this year to 2896.40. 
''There was some relief that the Olympic games were a success, nothing bad happened, there were no bombs,'' says Panagiotis Antonopoulos, who helps oversee the equivalent of $6.5 billion at Athens-based Alpha Asset Management SA. 

EU Laggard
Though the economy has been expanding, Greece's 11 million people are still the second-poorest among the 12 EU nations that have adopted the euro. Last year, GDP was 15,000 euros a person, higher only than Portugal's 12,850, euros according to EU figures. 
Of the 15 nations in the EU at the start of last year, Greece ranked 14th in competitiveness, according to the Geneva- based World Economic Forum, which surveyed 8,700 business leaders in 104 countries. 

Budgetary problems 
Karamanlis's plan to cut the budget deficit by more than half next year to less than 3 percent of GDP may prove hard to fulfil. 
Karamanlis said the government will raise 1.6 billion euros from selling state assets, including a stake in the Athens airport, which is 40 percent owned by Hochtief AG, Germany's largest builder. He has imposed higher alcohol, cigarette and value-added taxes and is pushing for curbs on wage increases for government workers. 
The EU told Greece on April 6 that those efforts may not go far enough. ``Greece appears to be at serious risk with regard to the long-term sustainability of public finances,'' the European Commission said in a statement from Brussels. 
Karamanlis, whose New Democracy party ousted the Socialists, blames the deficit on his predecessors and said his proposals will sustain expansion. ``We are aiming for high growth,'' he said at a news conference in Athens on March 8. ``It can't be based only, as in the past, on Olympic projects or European funds. Greece needs dynamic, self-created growth. Greece can't stay in last position.'' 

Ratings Cut 
Failure to meet the 3 percent deficit ceiling by 2006 may put the country's credit rating at risk. 
In December, Fitch Ratings cut Greece's rating, joining Standard & Poor's, after the country revised budget figures to show that deficits since 1997 were higher than initially reported. Fitch reduced its grade to A from A+. Moody's Investors Service rates Greece's debt A1, the fifth-highest investment grade, while S&P rates it a step lower, at A. 
''The reduction of the deficit to below 3 percent of GDP is achievable by 2006 but would require the government to exercise significant control over public expenditures,'' says Trevor Cullinan, a ratings analyst at S&P in London.

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AVIATION

BA launches Thessalonica-London direct flights

British Airways inaugurated regular direct flights between Thessalonica, in northern Greece, and London recently, New Europe reported.
Company representatives organised a reception at a hotel in the city and then went to Macedonia Airport with their guests to welcome passengers arriving on the first flight from Britain. British Airways will link Thessalonica to London four times a week (Monday, Wednesday, Saturday and Sunday) with 140-seat Boeing 737 aircraft. Flights leave Macedonia Airport at 16:25 and arrive at Gatwick at 17:50.

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BANKING

NBG to extend its presence in Balkans

Thessalonica will become the target of the National Bank of Greece's presentation about its increased presence in the Balkans. On March 22-23, at Greece's second city, NBG launched talks between leading executives of NBG units in Albania, Bulgaria, Serbia, Romania and FYROM and the heads of 45 leading businesses that are NBG clients in northern Greece, New Europe reported.
Talks focused on the need for banking partnerships and investments in these Balkan states since a lot of these businessmen are interested in investing but haven't followed through yet. NBG President, Takis Arapoglou addressed the businessmen during a dinner reception. The NBG president highlighted the leading edge that his bank has in the Balkans and he said that it will follow a number of initiatives to strengthen its role in the region. He said NBG would back Thessalonica's efforts to become the centre of the banks activities in the Balkans.

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ENERGY

Go-ahead for 900m Euro pipeline to ease pressure on the Bosphorus

Bulgaria, Greece and Russia signed an agreement recently to build an oil pipeline from the Black Sea to the north Aegean, providing a new outlet for Caspian oil, The Financial Times reported.
The 300km pipeline, linking the ports of Burgas and Alexandroupolis at a cost of 900m Euro (US$1.1bn), would relieve pressure on the over-crowded Bosphorus Strait, where oil tankers face lengthening delays. The pipeline is due to start operating in 2008.
With an annual capacity of 35m-50m tonnes, the pipeline would also offer greater flexibility to oil exporters, while reducing the environmental risk of transporting oil out of the Black Sea.
The project was first mooted 11 years ago, but failed to make headway until this year because of disputes between the three countries over the pipeline's ownership and financing.
"Agreement came after we shifted from a geopolitical to a market approach," Valentin Cerovski, the Bulgarian regional development minister, said. "This is a project for companies that extract oil in Russia and Kazakstan and export via the Black Sea."
At least a third of Russian oil exports are moved out of the Black Sea, the country's main conduit to Mediterranean markets. But tankers have to compete for space on the waterway with rising numbers of ships carrying industrial exports from Russia and Ukraine.
The accord called for TNK-BP, the Russian-UK oil joint venture company, to act as informal co-ordinator, advising the three governments on commercial aspects of the deal, a BP spokesman said.
A project development company for the pipeline, which would include Bulgarian, Greek and other Russian shareholders approved by the respective governments, would carry out a final engineering study and arrange financing with international institutions.
"This complex project is finally viable because it will be financed by users of the pipeline, not out of state budgets," said George Salagoudis, the Greek Energy Minister.
Technoexportstroi, Bulgarian's state-owned contractor, would be a shareholder in the development company, together with Hellenic Petroleum, the Greek state-controlled refiner and distributor, and Latsis, the Greek family-owned oil and shipping group that launched the pipeline project in 1994.
BP does not envisage using the new pipeline for its growing Caspian production, given that a 1m barrel-a-day pipeline linking Baku in Azerbaijan with Ceyhan, on Turkey's Mediterranean coast, will start up this year, bypassing the Bosphorus.
LUKoil, Russia's biggest producer, which controls an existing refinery at Burgas, is not expected to participate.
But Caspian producers in Kazakstan may opt to divert exports that now move through the Bosphorus to Alexandroupolis.
Bulgaria would build a 50m tonnes storage facility near Burgas, the landing point for oil shipped across the Black Seaa from Russia and Georgia, while Greece would build an offshore tanker loading facility at Alexandroupolis but would not invest heavily in tank farms because the area is a tourist zone.
Construction of the Burgas pipeline would not rule out another Balkan pipeline project, Bulgarian officials said.
The US-based AMBO group plans to construct a 900km pipeline running from east-west from Burgas through Macedonia to Albania's port of Vlora.

Renewable energy market draws investments

Three foreign energy companies, Iberdrola (Spain), EdF New Energies (France) and CESA Eolica Corporation (Spain) summed up their entry into the Greek renewable energy sources' market over the last 12 months, committing 85m Euro in foreign direct investments in the country, Development Deputy Minister, George Salagoudis, said recently, New Europe reported.
Speaking to reporters, to present a review of the ministry's actions during his first year in office, Salagoudis said that in December 2004 Greece ranked sixth in a world list of countries attractive for investments on wind power parks, and eighth on the world composite index for renewable Energy Sources, according to a list by Ernst & Young. The Greek minister said that the ministry significantly accelerated licensing procedures for building renewable energy stations in the country. 
"These facts show that something is changing. The international investment community is looking at Greece with confidence once again. It is our responsibility to continue this trend," Salagoudis said.

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FOOD & DRINK

Coca-Cola HBC homes in on Serbia's Vlasinka

The Coca-Cola Hellinic Bottling Company SA (CCHBC) announced recently its intention to acquire jointly with the Coca-Cola Company 100 per cent of one of the leading Serbian mineral water companies, Vlasinka, New Europe reported.
The acquisition involves production facilities at Surdulica in southern Serbia and the mineral water brand Rosa, the company said.
"This acquisition is a significant further commitment to our operations in Serbia. Rosa has great potential for growth as we incorporate it into the CCHBC organisation. We have had a strong track record in integrating new water businesses into the group as part of our water strategy, and we are very pleased to welcome another high quality local brand," Doros Constantinou, managing director of CCHBC remarked.
Dragen Tomic, Chairman of Vlasinka, commented, "This transaction provides Simpo, the parent company of Vlasinka, with funding to assist its broader corporate objectives. We are pleased to transfer Rosa to an investor with strong local presence that will only take the brand from strength to strength."
CCHBC is one of the world's largest bottlers of products of the Coca-Cola Company and has operations in 26 countries serving a population of more than 500m people.
CCHBC shares are listed on the Athens Exchange with secondary listings on the London and Australian Stock Exchanges. CCHBC's American Depositary Receipts (ADRs) are listed on the New York Stock Exchange.

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FOREIGN COOPERATION

Albania and Greece talk ties

Albania and Greece held the 9th Greek-Albanian inter-ministerial committee meeting at Ioannina, Greece recently. Greece is the top foreign investor in Albania, with US$400m in invested capital, and it is also Albania's second largest trade partner. The main items on the agenda of the meeting were the promotion of bilateral relations between the two countries in sectors like exchange of electricity and natural gas, telecoms and road network links. The discussions also covered protection of the Greek minority in Albania. Albanian Economics Minister, Anastas Angjeli, and Greek Deputy Foreign Minister, Evripidis Stylianidis headed the meeting, New Europe reported.

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TOURISM

Greece anticipates tourism boom

Tourist arrivals to Greece are expected to rise this year, Tourism Development Minister, Dimitris Avramopoulos said recently, New Europe reported.
Addressing the first meeting of a National Tourism Council, Avramopoulos, stressed that tourist arrivals were expected to rise despite an expected decline in other south European major tourist destinations (Spain, Portugal, Italy) this year. The Greek minister added that incoming tourism would also include higher quality standards, higher foreign exchange inflows and higher budget revenues. "Tourism is a national issue," Avramopoulos said while he urged members of the Council to contribute with their recommendations. He said that the National Tourism Council will meet twice a year.
"We are sending a message to the world community that Greece is gradually changing, overcoming hurdles that blocked its development," the Greek minister said.
Avramopoulos reiterated the government's commitment to support the tourism industry in the country and announced a series of initiatives, to be taken in 2006, aimed to upgrade and expand the country's tourist product.
These measures will include amending a law on hotel licensing and location, withdrawal of old hotels, a new more flexible regulatory framework to support large-scale tourism investments, new laws on ship marinas, upgrading the country's airport and ports, use of military airports for commercial air flights during the tourist season, upgrading facilities and extending opening hours of museums and archaeological sites.

Azerbaijan, Greece sign agreement on developing tourism

A ceremony to sign an agreement on cooperation in the sphere of tourism between Azerbaijan and Greece was held at the Yacht Club on 7th April. The document was signed by Greek Minister of Tourism, Dhimitrios Avromopoulos, who was paying a working visit to Azerbaijan, and Azerbaijani Minister of Youth, Sports and Tourism, Abulfaz Qarayev, Turan News Agency reeported.
Qarayev pointed out after the ceremony that the agreement opened a new page in Azerbaijani-Greek relations in the sphere of tourism and now a lot depends on the two countries' travel agencies. He said that Azerbaijan could make use of Greece's experience in developing the tourism industry. 
In turn, the Greek minister stressed the invaluable role of tourism in establishing peace and stability in the region and achieving economic progress. He also said that an Azerbaijani-Greek business forum will take place in Baku in October. It will be attended by representatives of the two countries' business circles, including managers of travel agencies and hotels, as well as artists and scientists.

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