Books on Greece
Area (sq km)
% of GDP
Update No: 109 - (29/06/06)
The eternal Turkish foil
The most important foreign country for Greece by far is Turkey, its one time
imperial master. The main events of the Greek War of Independence (1821-31), of
the intervention in the Morea of Mehmet Ali, the Albanian ruler of Egypt,
formally subject to the Sultan in Istanbul, in the 1830s and the 1840s and the
war of 1922-23, which saw Ataturk evict the Greeks from Asia Minor, are all
etched deeply into the Greek psyche. They are rapidly made known to every Greek
Things have long since been patched up. Nowadays Greek-Turkish relations revolve
around two axes, namely the effort to resolve sovereignty issues such as seabed
rights and territorial waters in the Aegean Sea and the effort to find a federal
constitutional settlement in Cyprus that preserves the unity of the island.
Recent troubles sour relations
Various events have conspired to put Greek-Turkish relations under strain, a
midair collision between a Greek and a Turkish fighter jet and Cypriot threats
to veto Turkey's European Union accession talks.
Greece continues to support Turkish entry into the EU as the best means of
resolving disputes in the Aegean and over Cyprus, but it has warned Ankara that
its support is not unconditional.
Since 1999, the Greek government has promoted Turkish entry into the EU in the
hope that it will lead to a commonly acceptable solution to the two core issues,
in the Aegean and Cyprus. In parallel, it has engaged in a process of bilateral
contacts on non-contentious issues such as the promotion of trade and
investment, the improvement of transport and energy interconnections and the
development of common policies to combat crime.
This process of rapprochement has had significant results and led to an improved
political climate with frequent ministerial level visits between the two
governments. However, the generally positive climate waxes hot and cold.
Cyprus, which has entered the EU with considerable Greek support, is frequently
the trigger for a cooling in relations; its near-stalling of Turkey's EU
accession negotiations last week could act as a step backward in the process of
The strength of the relations between the two countries was illustrated last
month, after a midair collision on May 23rd between a Greek and a Turkish
fighter jet in which the Greek pilot died. Rapid and expert diplomacy by Greek
Foreign Minister Dora Bakoyannis and her Turkish counterpart, Abdullah Gul, led
to a calming of domestic public and press opinion.
Bakoyannis, at some considerable domestic political cost, went ahead with a
planned visit to Istanbul on June 10, expressing the wish that Greece and Turkey
solve their bilateral problems "just like France and Germany had managed to
Gul, for his part, said Greece, Turkey and a unified Cyprus should form a common
pillar within the EU "akin to that formed by the Scandinavian states."
Despite the incident, the two sides signed eight new agreements under the
rapprochement process, including one to build a second bridge across the river
Evros, which constitutes the two countries' land border. They also agreed to
joint exercises by emergency services to deal with natural disasters.
There was no progress on the substantive Aegean issues, although the two sides
did agree a moratorium on summer military exercises until mid-September, to
establish a hotline between Greek and Turkish military headquarters and to step
up contacts between the two countries' coast guards.
The benefits of the effort were dissipated when Cyprus threatened June 12th to
veto the opening of the negotiations on the first chapter of Turkey's accession
negotiations unless the EU reiterated Ankara's obligations to recognize the
government in Nicosia - an obligation that Turkey faces if it is to become a
full member of the EU.
The compromise position settled upon by the 25 EU member states was a 31-page
"common position" that called on Turkey to "commit itself to good
neighbourly relations" and "to address any source of friction with its
neighbours and refrain from any threat or action which could negatively affect
good neighbourly relations and the process of peaceful settlement of border
disputes". Such disputes, the common position states, should be settled in
accord with the U.N. charter "including, if necessary, jurisdiction of the
International Court of Justice."
This relatively harsh stand was encouraged not only by Cyprus's own demands but
also by widespread resistance to Turkish entry in many other EU member states.
German Chancellor Angela Merkel, for example, has called for the country to be
given a "privileged partnership" with the EU that falls short of full
membership, while last week's summit of EU leaders focused on the cost of
absorption of candidate countries, as government leaders respond to popular
qualms about the candidacy of such a large and poor state as Turkey.
This conjunction of events has led to a backlash in Turkey. Prime Minister Recep
Tayyip Erdogan said over the weekend that Turkey will not recognize Cyprus until
there is a federal government in place that incorporates the Turkish Cypriot
northern half of the island. Until Nicosia lifts the trade blockade of Northern
Cyprus, Ankara will continue to ban Cypriot ships and planes from its ports and
With Erdogan apparently willing to employ the same brinkmanship as the Greek
Cypriots, Turkey's EU accession talks may stall earlier than anticipated unless
the diplomatic temperature cools again.
Instead, there are signs that it is heating up:
· Despite the Gul-Bakoyannis meeting earlier this month, the Turkish military
has decided to go ahead with Aegean manoeuvres before the end of June, flouting
the agreed moratorium.
· The Turkish Foreign Ministry has also stated it may now seek compensation for
its lost warplane.
· Former Turkish foreign minister Yasar Yakis, while leading a Turkish
parliamentary delegation to Thrace, referred to the Muslim minority there as a
"Turkish" minority - something that is anathema in Greece - and
suggested they take the Greek government to the European Court of Justice if
they had complaints about their treatment.
· On the Greek side, the conjunction of incidents has led to a serious
rethinking of relations with Turkey:
· In a recent public opinion poll, 64 percent of respondents felt that Greece
should actively block Turkey's EU accession.
· President Karolos Papoulias has said that while the Greek establishment
supports Turkey's EU perspective it does not consider it "a historical
· Former President Costis Stephanopoulos argued earlier this month that Greece
should refer the entire gamut of outstanding issues with Turkey in the Aegean to
the International Court of Justice, as high-level diplomatic contacts had
produced insufficient results. Meanwhile, the leader of Greece's opposition
Panhellenic Socialist Movement, George Papandreou, has suggested that Greece
extend its territorial waters, despite the long-standing Turkish assertion that
this would be a cause for war.
· Prime Minister Costas Karamanlis has warned that Turkey should not consider
his government's strategic support of its EU accession bid to be a "blank
· Greece's overarching policy is to continue to support Turkish accession to
the EU, as a key to finding common ground on disputes over the Aegean and
Cyprus. However, any further disputes concerning the Aegean and Cyprus are
likely to inflict heavy damage on bilateral relations.
Government optimistic over economy
Prime Minister Karamanlis, head of New Democracy, received Economy and
Finance Minister George Alogoskoufis on June 21st for talks focusing squarely on
preparations to absorb 4th Community Support Framework (CSF) funds between
2007-2013. Greece is due to receive 20.1 billion euros in CSF support over the
period, with Alogoskoufis reiterating that the emphasis will be placed on
developing human resources and new technologies.
"We'll be ready to exploit 4th CSF funds from the very first day," he
told reporters, adding that whatever mistakes and delays recorded in absorbing
previous CSF funding will be corrected in cooperation with the European Union.
Afterwards, Alogoskoufis expressed his optimism over the country's economic
prospects. He stressed that over the previous two years the government has
introduced significant reforms in taxation, development, privatisations,
cooperation between the public and private sectors, reducing red tape,
tax-evasion, promoting a "digital society" and reviewing the 3rd
Community Support Framework programme.
Addressing a meeting on a National Strategic Framework Benchmark for the period
2007-2013, the Greek minister said he expected a series of business programmes,
certified agencies and the operation of five wider regional programmes to be
agreed this summer.
New Democracy ahead in latest poll
Meanwhile, the Karamanlis-Alogoskoufis meeting preceded the latest opinion
poll results to be released recently, with ruling New Democracy (ND) continuing
to lead main opposition PASOK in a poll conducted by the Athens-based MRB firm,
garnering 36.6 per cent of respondents' preferences to PASOK's 34.1 per cent --
a lead of 2.5 percentage points.
In terms of other parties, the Communist Party of Greece (KKE) is favoured by
7.3 per cent of respondents; 3.1 per cent picked the Coalition of the Left (Synaspismos)
and the out-of-Parliament LA.OS party garnered 3.9 per cent.
Favourable opinions of Karamanlis totalled 42.6 per cent; 37.3 per cent for
rival PASOK leader and former foreign minister George Papandreou. Additionally,
Karamanlis holds a 9.1-percentage point lead over Papandreou on the question of
"who is better suited for the prime minister's post."
NBG reports 59% growth in net profit…
The National Bank of Greece (NBG) announced recently that its net profit in the
first quarter of 2006 amounted to 250 million Euro, a historic result, New
"It is notable that this performance was achieved in a three-month period
that is a seasonal low in comparison with the other quarters of the year. This
achievement stems both from the continued dynamic performance of income and the
impressive restraint in expenses reflecting that administrative expenses
remained virtually unchanged on the previous year," Takis Arapoglou, NBG
chairman and CEO, said in a statement posted on the bank's website. "The
implementation of the various actions set out in our Business Plan has radically
changed the way in which the Bank operates, benefiting the Bank but even more so
our customers. Today we are beginning to reap the benefits to realise the
substantial, as yet unmaterialised, synergies contained within the Group, with
notable examples being the mutual funds and insurance business. Furthermore, our
rapid growth in Southeast Europe means that 10 per cent of our profits now
derives from this region."
NBG moves closer to Finansbank purchase
National Bank of Greece (NBG) shareholders approved an approximately three
billion Euro share capital increase to allow the purchase of Istanbul-based
Finansbank, during a repeat general meeting held in Athens, New Europe reported.
Addressing the tense meeting, NBG chairman and chief executive, Takis Arapoglou,
sought to reassure shareholders that National Bank would remain independent and
continue its autonomous course, while at the same time stressing that it was not
becoming "less Greek." He said the share capital increase would fully
cover NBG's needs for the purchase of the Turkish bank and leave funds to spare
for further "selective acquisitions" in SE Europe.
Alpha Bank reports Q1 2006 results up 50%
Alpha Bank, Greece's second-largest bank by assets, recently reported a 50 per
cent rise in first-quarter net profit, boosted by the continuing robust
performance of its retail banking activities. The increased contribution from
the bank's southeast European subsidiaries also supported the bottom line.
"The year has started very well despite intense competition. The
implementation of our expansion plan, Agenda 2010, is on track. In all areas of
our operations, especially in Greece in retail banking and in Southeastern
Europe, where we continue to grow profitably, progress has been substantial.
Based on our strong market positions, committed team and competitive operating
platform, we are confident of continuing to create value for our
shareholders," Chairman, Yannis S. Costopoulos, was quoted as saying in a
press release, New Europe reported.
Managing Director, Demetrios P. Mantzounis, said: "In the first quarter of
2006, we are pleased to report that all business segments have performed well.
This reflects the continuing success of our target driven market focussed
strategy, in particular in product innovation and customer satisfaction. In the
event, net profits are up 50 per cent. Retail banking business in Greece is
strong and we continue to gain market share. Profits from our operations in
Southeastern Europe are growing rapidly, despite increasing costs associated
with our expansion in the region. At the same time, we continue to benefit from
productivity gains in the group as a whole as a result of operational
restructuring. Overall, our performance makes us confident about achieving our
targets in 2006 and the coming years."
FinMin hails Greek economy forecasts
Greek Economy and Finance Minister, George Alogoskoufis, recently expressed his
satisfaction over the developments and prospects of the country's economy.
Speaking to reporters, after an ECOFIN meeting in Brussels, the Greek minister
said according to the European Commission's spring economic forecasts the
country's fiscal deficit would shrink to three per cent of GDP this year.
"The Commission's forecast was a very positive development,"
Alogoskoufis said, although he stressed that according to the Greek Economy
ministry's forecasts the fiscal deficit would fall to 2.6 per cent of GDP in
2006, ANA News Agency reported.
The EU's executive also forecast that economic growth in Greece would reach 3.5
per cent this year and 3.4 per cent in 2007, almost identical with Greek
Alogoskoufis said any measures necessary to stabilise the country's fiscal
deficit below 3.0 per cent of GDP would be included in the 2007 budget. The
Greek minister, commenting on the intention of the European Commission to
forecast that Greece's fiscal deficit would rise to 3.6 per cent of GDP in 2007,
said the Commission was not fully aware of the Greek government's planning on
economic policy for 2007.
Alogoskoufis sounded optimistic over international developments in oil prices,
saying that despite a significant increase in prices the European economy was
not expected to face any big problems and that the Eurozone was able to easily
absorb any turbulence from rising oil prices. The Greek minister said a
Eurogroup meeting recently agreed to a closer coordination of economic policies
in the Euro currency area. Greece suffered losses in competitiveness in the
period from 2000 to 2004 and recorded a slight improvement in 2005, Alogoskoufis
said, adding it was important to maintain strong growth rates.
The Greek minister said a planned expansion of the European Union to the Balkans
would have a significantly positive effect on Greece. He presented to his EU
counterparts an economic analysis on the accession of Bulgaria and Romania in
the European Union.
Commenting on news that Cosmote was in advanced talks for the takeover of
Germanos, Alogoskoufis said adjustments and takeovers of enterprises were
factors supporting the improvement of economic competitiveness.
Greece, Egypt examine routes for gas supply
Athens and Cairo are examining three alternative routes for the transport of
natural gas from Egypt to Greece, Greek Development Minister, Dimitris Sioufas,
said recently, New Europe reported.
Speaking to reporters after completing an official visit to Saudi Arabia, Qatar,
Bahrain and Egypt, the Greek Minister said he saw increased interest for
investments in Greece by Arab interests and major opportunities for Greek
enterprises in the Arab world, currently in a phase of strong economic growth.
Sioufas said a sea line between Alexandria with Crete and Piraeus would be
announced in the near future.
The minister said the two countries were examining three alternative solutions
for the transport of natural gas from Egypt to Greece: first, through a pipeline
linking Egypt, Jordan, Syria and Turkey, currently under construction, second,
using LNG vessels and third, building an undersea pipeline linking Egypt with
Crete (the most remote solution). Sioufas said these discussions did not affect
relations with other countries, such as Russia and Algeria which have long-term
natural gas supply contracts. Sioufas met with Sahim Sawiries, owner of Italian
telecoms company, Wind, which owns 50 per cent plus one share and the management
Karamanlis meets with Wu Bangguo
Greek Prime Minister, Costas Karamanlis, held talks recently with China's
National People's Congress Standing Committee Chairman, Wu Bangguo, during a
meeting also attended by Foreign Minister, Dora Bakoyannis, and Deputy Foreign
Minister, Evripides Stylianidis, New Europe reported.
The two sides reaffirmed the good climate in bilateral relations following
Karamanlis' official visit to Beijing last January, and their desire to further
develop bilateral relations in the sectors of investments and trade. The
high-ranking Chinese official conveyed to Karamanlis greetings from the Chinese
prime minister, underlining the historical relations and ties between the two
countries. For his part, Karamanlis said he has instructed his Cabinet to
intensify efforts related to closer Greek-Chinese cooperation, while Wu Bangguo
cited his interest in expanded port facilities in Greece.
Cosmote to buy Germanos for 1.58bn Euro
Cosmote Mobile Telecommunications, Greece's biggest wireless operator, will pay
as much as 1.58bn Euro to buy Germanos, the country's biggest phone services
retailer, New Europe reported.
The acquisition "is of major strategic importance, adding in one go the
most efficient retail networks in four out of the five countries it operates
in," Cosmote said. The acquisition will consolidate Cosmote's dominance in
Greece and allow it to quickly reach clients that Germanos has through a network
of stores in countries like Romania and Bulgaria. Cosmote last year spent 610m
Euro buying wireless businesses in Bulgaria, Macedonia and Romania to tap demand
for mobile-phone services that is growing faster than in its home market.
Greek beaches and marinas awarded blue flags for 2006
Greece has the second-highest number of clean and well-maintained beaches out of
the 40 countries rated by the Blue Flag campaign in its annual awards, the
results of which were made public recently, New Europe reported.
The Hellenic Society for the Protection of Nature (HSPN), National Coordinator
for Greece of the international "Blue Flag" Programme, and Alpha Bank,
Programme Sponsor for Greece, announced this year's Blue Flags awarded to Greek
beaches and marinas.
The organisation awarded Blue Flags to 404 Greek beaches (21 more than last
year) as they fulfilled 29 criteria, including those for water quality,
environmental management and safety. With a total of 404 Greek beaches each
winning a Blue Flag this year, compared to 383 in 2005, Greece ranks second
among 40 countries, a result that represents a major improvement from last year.
Around the globe, 2549 beaches in total were awarded a Blue Flag: this means
that in 2006 one out of every six Blue Flags will fly in Greece, a press
statement posted on Alpha Bank website read.
The Blue Flag is an international quality symbol, probably the best-known
eco-label in the world, and has been awarded since 1987 to beaches and marinas
that meet strict qualification requirements.
Government eyes 2bn Euro for railway upgrades
Greek Transport and Communications Minister, Mihalis Liapis, recently said in
Sofia that the Greek government would earmark 10 per cent, or two billion Euro,
of fourth Community Support Framework funds for works to upgrade the railway
network in the east Mediterranean country. He clarified that the proposal, to be
submitted by the end of June, was dependent on approval by the Commission, ANA
News Agency reported.
Speaking to reporters on his way to Sofia for a meeting with his Bulgarian
counterpart, Peter Moutafchiev, the Greek minister stressed that the ministry's
priorities regarding the railway system were: operating a double
electric-powered high-speed rail line; expanding a suburban railway network in
Athens and Thessaloniki; upgrading the rail link to the northeastern border city
of Alexandroupoli and drafting a western Greece railway line.
ANA quoted Liapis as saying the Greek Railways Organisation will announce new
tenders for the supply of rolling stock, worth 750 million Euro, over the next
"Our aim is to bring European standards to the country's railway system,
since trains currently account for four per cent of mass transportation in
Greece, compared with 20 per cent in Europe," Liapis said, adding that
passenger traffic rose eight per cent last year, while international cargo
transport jumped 40 per cent and domestic cargo transport rose 12.5 per cent,
He also said train schedules grew 50 per cent over the 2002-2005 period, while
he announced the hiring of new train conductors and station personnel.