Books on Greece
Area (sq km)
% of GDP
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
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
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
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
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.
''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
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.
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.
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
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.''
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.
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
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
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
"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.
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
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.
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.
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
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