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GREECE


 

 

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: 113 - (26/10/06)

A conservative semi-triumph?
To qualify as a triumph there must surely be no qualification of one's victory. A semi-triumph is an oxymoron, a contradiction in terms.
Nevertheless, maybe that is just what has happened in Greece. The conservatives have emerged relatively unscathed from nationwide municipal elections in mid-October widely perceived to be a midterm test of confidence for their governing party. It could be just the event they needed.
The vote was widely regarded as a mid-term test of strength for New Democracy, two and a half years after it returned to power following more than a decade in opposition.
The party has led opinion polls since its March 2004 victory, but was battered recently by corruption allegations and an ongoing teachers' strike. 
The elections were also seen as the first real political test for Socialist party leader George Papandreou, whose father and grandfather both served as prime minister, but who has consistently lagged behind Karamanlis in popularity. 

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Candidates supported by Prime Minister Costas Karamanlis' New Democracy party won seats to run Greece's two largest cities, as well as the largest share of the country's 54 regional governorships - or prefectures - in the first round. 
Voters also had to chose who would fill 1,000 mayoral posts. Greece's next national elections are set for early 2008, and with his party strengthened from the vote, Karamanlis ruled out any possibility of early general elections. 
A second round of voting was held the next Sunday in 244 towns and cities - as well as in seven prefectures - where no candidate won more than 42 per cent of votes, the proportion required to be elected outright. 
The conservatives won 28 of the 54 regional prefectures, while the Socialists won an outright majority in 17. The smaller Left Coalition and Communist party took one each, the country's electoral commission said. 
Total turnout was around 72 per cent, the country's electoral authorities said. 

Papendreou tolled the tocsin
Papandreou remained defiant, insisting that "the sooner we have national elections, the better it will be for the country." 
Foreign Minister Dora Bakoyannis cautioned not to read too much into the results. "In these elections it is evident that personalities played a very important role," she said. 
In Athens, former Health Minister Nikos Kaklamanis, a doctor specializing in treating cancer, celebrated his widely expected win over former Socialist Party chairman Costas Skandalidis, keeping the 2004 Olympic host city in New Democracy's hands - as it has been for nearly two decades. 
In Thessaloniki, the country's second largest city, conservative mayor Vassilis Papageorgopoulos was re-elected to a second four-year term, defeating former Olympic gold medallist, Voula Patoulidou. Flamboyant conservative, Panagiotis Psomiadis, also won a second term as the region's prefect, or governor. 
But the country's main port of Piraeus returned to the Socialist fold after 18 years, with a comfortable win by former basketball star Panagiotis Fasoulas. 
Karamanlis vowed that his government - elected in 2004 after nearly 20 years of Socialist rule - would continue its efforts to liberalize Greece's economy. 
"Our strategy is leading the country out of the crisis inherited from the past," he said. "We will stick to it until the 2008 general elections." 

Eurostat warning about the budget
The EU statistics agency Eurostat warned on October 23rd that it will have to examine Greece's 2005 budget figures, which claim the country's GDP is a quarter larger than earlier estimates. It said it will send Greece an action plan for how it can improve budget calculations in the future after identifying "systemic" issues with the way Athens reports its public spending.
Eurostat said new information Athens handed over on October 1st would need "complete verification" to check if Greece was right to revise its economic statistics so radically. Eurostat will carry out a complete verification of GDP data once Greece has delivered a full inventory of the sources and methods used for the new calculations," it said.
Using data from April, Eurostat said Greece had a deficit of 5.2 per cent, warning that it was still discussing a number of accounting issues.
Greece had hoped that these measures and two years of an austerity package would help bring it closer to the 3 per cent limit set by EU budget rules. It plans to bring the deficit down to 2.6 per cent this year and 2.4 per cent in 2007.
But Eurostat's criticisms of Athens' bookkeeping come after it sent experts to Greece to tackle wide problems with accounting. It revised Greece's 2004 deficit upward to 7.8 per cent from 6.9 per cent, inflated by government spending on the Athens Olympics.

Government cites 22% increase in first-half 2006 exports
Greek exports increased by more than 13 per cent last year, while the rate of increase exceeds 22 per cent in the first half of 2006, Economy and Finance Minister George Alogoskoufis announced, following an Inner Cabinet meeting that focused on the country's export policy, a meeting chaired by Prime Minister Kostas Karamanlis.
Alogoskoufis briefed the Inner Cabinet on the course of exports and, speaking to reporters after the meeting, referred to a "satisfactory performance," adding that exports had a positive contribution to the national economy.
In 2005, exports increased by more than 13 per cent, while in the first half of 2006 the rate of growth exceeded 22 per cent, he said.
Alogoskoufis said Greek products were exported to all countries, but added that 17 countries and major markets were being particularly targeted with modern policies and advertising techniques.
On the role of the Hellenic Exports Promotion Organization (HEPO) and the Exports Council, the Minister stressed that in today's era, "where commerce played a significant role in the global economy, exports was an important sector."
He also stressed that the country must become extroverted, adding that efforts to that end would be intensified.
Replying to a question regarding public sector corruption, Alogoskoufis said specific procedures have been instituted and, in cooperation with the interior and public administration Ministry, a provision was recently advanced for stricter inspections of source of wealth statements of the Ministry department directors.
Government spokesman Theodoros Roussopoulos later echoed the FinMin's statements during a regular press briefing. According to Roussopoulos, one of the factors contributing to the rise in exports was a robust promotions campaign in various overseas markets and international trade exhibitions.

Opposition parties criticise
Main opposition PASOK party economy sector chief Vasso Papandreou criticised statements made by Finance and Economy Minister Alogoskoufis, saying that "he is the only satisfied Greek."
"Mr. Alogoskoufis is the only satisfied Greek. According to data that he publicized himself, over a period of 18 months 1,456 investment plans amounting to 2.3 billion euros have been approved and only 70 million euros have been disbursed. The investments, in other words, are only on paper," she said.
"At the same time, the Public Investments Programme is being drastically reduced and huge funds from the 3rd Community Support Framework are in danger of being lost. Also due to the lack of understanding between the jointly responsible Ministers the implementation plan for the 4th Community Support Framework, which must begin to 'run' as of January 2007, remains 'up in the air'," Papandreou added.
In another development on the occasion of the National Statistical Service's announcement on the inflation rate in August, PASOK's Development, Competitiveness and Consumer Policy Sector chief Theodoros Pangalos and the party's Development Sector coordinator Christos Protopapas pointed out that the relevant announcement "not only highlights the major issue of the high cost of living, but also overturns the government's claim that 'the international price of oil is to blame for everything'."
The Political Bureau member responsible for the economic and social policy of the Coalition of the Left, Movements and Ecology, Panayiotis Lafazanis, said on the occasion of Alogoskoufis's address to the inner cabinet on exports that "Mr. Alogoskoufis might appear to be enthusiastic over the increase in exports in 2005 and the first six months in 2006, but he is concealing the fact that, despite this increase, the trade deficit and the deficit in the balance of payments have soared to new heights during the first six months of the current year."
Also referring to the inflation rate for August, Lafazanis said that "it is a social tragedy at a time when, according to official data, the profits of listed companies are increasing by 50 per cent during the first six months and the increase in GDP is running at a rate of 4.1 per cent, the salary-earners and pensioners are surviving with increases below inflation that are crumbs."

PM Karamanlis meets with S. Korean president Roh
Greece and South Korea have more in common than one might think. Both are maritime powers with long traditions of shipbuilding.
Visiting South Korean president Roh Moo-Hyun recently invited Prime Minister Karamanlis to visit Korea, during a meeting at the Maxmimos Mansion. Speaking to reporters after the meeting, Karamanlis described the relations between the two countries as excellent, noting that the discussion had focused particularly on issues of shipping, investments, tourism, air transports and commerce, but also in the academic sector. He said the two sides shared the view that cooperation in the sector of shipyards and sea borne transports would be beneficial for both countries.
The premier noted that Greece was the biggest investor in the S. Korean shipyards and, in that context, invited similar investments from Korea in Greece, stressing "we have opportunities for joint action in the region." Roh further said that Korea could transfer know-how in the sector of informatics, and on matters concerning ports, transports and equipment.
The South Korean president stressed that Greek experience in the maritime sector and also tourism, due to the Aegean islands, would be utilized, adding that it had also been agreed that Greece will advise South Korea on such matters. Roh Moo-Hyun met with Nikos Efthymiou, president of the Union of Greek Ship-owners. Talks focused on cooperation between the two countries in the maritime sector.
President Roh expressed appreciation for his warm welcome, adding that his first meeting with Karamanlis had taken place 16 years ago, in 1990, adding that the meeting constituted a landmark in the important cooperation between the two countries, which exists since the Korean War.

Cooperation memo by Greek, Korean firms. 
Small and medium-sized companies from Greece and South Korea signed a memorandum of cooperation in a move to close business ties between the two countries. Through the pact, the two sides hope to create and evolve infrastructure to promote cooperation in industry.
Signing the pact in Athens were the Athens Chamber of Light Industry and Korea's Union of Small and Medium Enterprises (SBC). SBC implements the government's policy for the sector, also providing financing, education and advisory services.

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BANKING

NBG to acquire Vojvodjanska Banka


National Bank of Greece (NBG) and the Republic of Serbia entered into a definitive agreement for the acquisition of Vojvodjanska Banka a.d. Novi Sad (Vojvodjanska) by NBG, New Europe reported. 
The disposal of Vojvodjanska is the largest and most significant sale of a state controlled bank in Serbia to date and follows a nine-months tender process in which 11 European banks expressed interest originally. "With the acquisition of Vojvodjanska, we complete one more step in deepening our regional footprint. Vojvodjanska's extensive network, its leading position in Dinar deposits and its wide customer base, together with NBG's leading position in retail banking in Serbia, will make the combined group a recognised leader in providing financial services in the fast growing Serbian market," Arapoglou said.

Greek banks embark on expansion odyssey

Greeks have been seeking adventure and profits beyond the shores of their country - population, 11 million - for centuries, the International Herald Tribune reported recently.
Takis Arapoglou, chief executive of national Bank of Greece, is keeping up the tradition. In August, the bank closed a US$2.8bn deal for a controlling 46 per cent stake in Finansbank of Turkey, the biggest takeover ever by a Greek company outside its home market.
But Greek banks have been a force in Southeastern Europe for more than a decade, buying up financial assets for low prices in Balkan countries like Bulgaria, Romania and Serbia. Now, with growth expected to slow at home, they are ranging farther afield, with the Finansbank investment by National Bank just the latest example, National Bank is the largest Greek financial institution, with US$77.5bn in assets.
All four of the top Greek banks have made overseas acquisitions recently. EFG Eurobank Ergasias, the No 2 bank, acquired Tekfenbank of Turkey for US$182m in May and bought a Ukrainian lender in July. It is also opening branches in Poland. Alpha Bank, the third-largest, is looking at Turkey and Ukraine, while Piraeus Bank bought Egyptian Commercial Bank last year, the first Greek banking purchase in the most populous Arab country.
Greek banks have plenty of cash to spend after years of rapid growth at home. Borrowing by Greek households increased more than 30 per cent a year over the past five years as consumers took out more auto, credit card and home loans, according to figures compiled by ING Groep, the Dutch bank.
Low interest rates and economic growth that has averaged 3.9 per cent a year for the past decade, twice the euro-zone average, have given Greek consumers confidence. But growth fell to 3.7 per cent last year, so bankers are moving into faster-growing markets like Turkey, where gross domestic product has risen at an annual average of 7 per cent over the past four years.
Investors like the strategy. In June, National bank offered stockholders 3bn Euro, worth of new shares to pay for the Finansbank deal; according to the bank, they signed up to buy almost twice as many. And National Bank's stock has surged since Arapoglou took charge two and a half years ago.
But the European Union has threatened Athens with financial penalties unless it trims its budget deficit to less than 3 per cent, the maximum allowed under EU rules. Greece has promised to push the deficit down to 2.6 per cent this year from 4.5 per cent in 2005 and 6.9 per cent in 2004. Cutting spending or raising taxes to meet that target could crimp consumer spending. At home, the Bank of Greece says that inflexible labour laws have helped keep unemployment high. In addition, public-sector unions' ability to wring concessions from the government through the threat of strikes has helped force wages and other labour costs up, contributing to an average annual inflation rate for the past five years of 3.5 per cent, the highest in the euro zone.
Cheaper labour, more flexible work rules and fast growth make other Southeast European markets attractive. Romania's economy grew 4.1 per cent last year, while Bulgaria expanded 5.5 per cent. Michalis Colakides, deputy managing director at Piraeus Bank, said Greek bankers were well equipped to deal with the growing pains of Balkan institutions.
"These countries are at a stage of development Western banks are often unfamiliar with," he said. "They have a high number of small or family businesses and weak government institutions. Greek banks know how to operate in such an environment."
The newest development is the move by Greek banks into Turkey, where bank loans add up to just 31 per cent of GDP, compared with 80 per cent in Greece and 117 per cent in the entire euro zone, according to estimates by Deutsche Bank.
Greece had virtually no economic investment in Turkey seven years ago. Relations were tense, fuelled by border disputes and the risk of armed conflict over the divided island of Cyprus. That changed in 1999, when each country rushed to the other's aid after earthquakes hit Istanbul and then Athens.

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ECONOMY

Economic prospects remain favourable 

Greece's economic prospects remained favourable, Economy and Finance Minister George Alogoskoufis said on October 2nd after presenting the draft budget plan for 2007. Alogoskoufis added that the ministry was achieving its goal of reducing the fiscal deficit below 3.0 per cent of GDP, to 2.6 per cent this year and 2.4 per cent in 2007, ANA News Agency reported. 
"We have achieved a great fiscal adjustment in the last few years with deficit reducing and public debt falling significantly," ANA quoted him as saying.
The main goals of the government's economic policy for 2007 include further reducing the deficit and the public debt; improving competitiveness; lowering unemployment, supporting lower-income groups and boosting investments and development.
The draft budget envisages raises of 50 Euro and 35 Euro for pension payments to farmers and supplementary pension payments, respectively, as well as raising the tax exempt ceiling to 12,000 Euro.
Alogoskoufis said prospects remained favourable, adding that if there were not any surprise hikes in fuel prices the inflation rate would ebb in 2007 and average real wages would exceed the inflation rate.
Spending in a Public Investments Programme will total 8.750 billion Euro next year, up from 8.1 billion in 2006, to be covered by national funds (2.4 billion Euro) and co-financed funds (6.35 billion). The programme will be fixed at 4.2 per cent of the country's GDP.
Alogoskoufis said the draft budget did not include extra spending for elections, while he underlined higher spending on healthcare. The Greek minister said hiring by the public sector would be restrained and noted that the government intended to contain spending.
The draft budget also included a special chapter on revising the country's national accounts system based on the year 2000, whereas Alogoskoufis stressed that a decision to revise upwards the GDP was obligatory for Greece, as all other EU member-states have completed this procedure. Athens has asked for an extension to the deadline for this procedure by September 2006.
The revision was obligatory but was decided for fundamental reasons as well, since changes in the services sector should be considered, Alogoskoufis noted. The minister said the revised figures have been submitted to Eurotat and that a response was awaited in the next few weeks. The figures showed a 25.7 per cent higher revision of Greek GDP.
The labour, agriculture, public order and Aegean ministries are the ones with the largest percentage increase in funds from a new state budget, 13.9 per cent, 9.9 per cent, 8.3 per cent and 8.1 per cent, respectively. Funds earmarked for the education ministry are up 5.9 per cent, health 5.7 per cent, national defence 5.2 per cent, interior 6.0 per cent, merchant marine 6.3 per cent, economy and finance 0.1 per cent, justice 6.5 per cent, foreign affairs 6.6 per cent, transport 3.2 per cent, culture 4.5 per cent, public works 5.6 per cent, development 8.0 per cent, tourism 5.1 per cent and Macedonia-Thrace 7.1 per cent. 

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ENERGY

Russia, Greece discuss gas supply contract 

Russia and Greece are discussing options for a long-term contract on gas supplies after 2012, Anatoly Yanovsky, an Industry Ministry department chief, said on the eve of a Black Sea Economic Cooperation Organization energy ministers meeting. "Work is being carried out with Greece to sign a long-term contract after 2012 for supplies of Russian gas," Interfax quoted him as saying. Yanovsky did not specify the proposed volume of the contract, but said it was under discussion, Interfax News Agency reported.
Greek officials said earlier that they planned to extend their contract with Gazprom to 2040 or 2050. Ministers at the upcoming Black Sea Economic Cooperation Organization meeting will discuss the regional aspect of global energy security, Yanovsky said.
The Burgas-Alexandroupolis pipeline project will also be discussed at the meeting in Sochi, he said. "A three-sided meeting to prepare the intergovernmental agreement on this project will be carried out. 
Greece does not produce its own gas. Gazprom provides all of the country's pipeline gas imports, which make up 82 per cent of Greek consumption. Gazexport supplied about 2.5 billion cubic metres of gas to Greece in 2005. The remaining demand is covered by liquefied gas imports from Algeria, in accordance with a contract to 2016.

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FOREIGN RELATIONS

Indian parliamentary delegation to visit 

An Indian parliamentary delegation, headed by Speaker of the Lok Sabha (House of the People), Somnath Chatterjee, visited Greece recently, the Indian Embassy in Athens said, New Europe reported. 
The delegation arrived in Athens on September 24th for a five day visit, which aims to strengthen relations between the parliaments of India and Greece and mutual understanding on issues of common interest, an Indian Embassy press release said. "Democracy originated in Greece, while India is the largest democracy today. Both countries share common perspectives on important international issues," the press release said.
The Indian delegation, led by Chatterjee, includes six members of Parliament - four from the Lok Sabha (House of People), and two from the Rajya Sabha (Council of States), representing different parties - and senior officials of the Indian Parliament.
The delegation is scheduled to meet with the President of the Hellenic Parliament, the President of the Republic, and the leaders of the political parties represented in parliament, and also hold talks with the 13 member Indo-Hellenic Friendship Group of the Hellenic Parliament.
Indo-Greek exchanges have grown in trade, investment, information technology, tourism, and culture. Indian exports to Greece have risen considerably from US$113.5 million in 2000-01 to US$306.3 million in 2004-05 and are likely to reach US$480 million in 2005-06.
In January-May 2006, Indian exports increased to US$350 million, registering a growth of 80 per cent over the same period in 2005. 
Indian IT companies have secured IT service contracts with Greek banks. Investment flows are also picking up. There is good potential for increasing tourism flows in both directions. 
Some 12,000 Indian migrants mostly from Punjab, are in Greece, working in the agricultural sector, according to the press release.

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