0509 Bulletin by t1mYG7


									SEPTEMBER 2005
    September 2005; Vol. 11 No. 9

    1   At 70th International Trade Fair in Thessaloniki Prime Minister Karamanlis Reviews State of
        the Nation
    2   A Call for a Stronger United Nations
    3   Challenges and Opportunities in the Eurozone
    4   In Brief . . .

1. At 70th International Trade Fair in Thessaloniki
Prime Minister Karamanlis Reviews State of the Nation

The opening of the 70th International Trade Fair in Thessaloniki on September 9 was the occasion
for the traditional prime minister’s wide-ranging review of the Greek economy and the government’s
plans for the future.
The address of Prime Minister Costas Karamanlis on the opening night of the Fair was devoted
mainly to plans for the development of northern Greece. A plan, providing for the “internal cohesion
and an outward-looking orientation” of a competitive regional economy for Thessaloniki, Macedonia
and Thrace, will be ready by the end of this year. These areas, Mr. Karamanlis said, “are acquiring
increasing geopolitical importance and a new momentum of development.” He pointed out that the
importance of northern Greece will be further enhanced by the next EU enlargement which will link
Greece geographically to the European Union.
The prime minister referred also to recent developments of particular importance to northern
Greece: the agreements signed with Russia and Bulgaria for the construction of the Burgas
Alexandroupolis oil pipeline, and for the beginning of work on the Greece-Turkey natural gas
pipeline; the planned undersea pipeline to convey natural gas from Greece to Italy, and from there
to the center of Europe; and the speeding of rail links between Thessaloniki, Sofia and Istanbul.
Earlier in the day, Mr. Karamanlis visited the museum at the city’s Center for Research and
Technological Development and spoke of his aim to establish Thessaloniki as a base attracting
scientists from south-east Europe to promote new technologies and new enterprises. On a visit to
the city’s concert hall, the prime minister was shown the plans for the new hall, to be built next
door on the coastal road, designed by Japanese architect Arata Isozaki, at a cost of !36 million.

“The World Is Changing”
A more comprehensive nation-wide review of the economy was provided on the following day in the
prime minister’s customary speech to representatives of the business sector and trade
Mr. Karamanlis spoke of the new era of high-speed changes—“a revolution in knowledge and
technology is changing social and economic conditions very rapidly. We live in an era of
globalization, which is not just something to do with trade, market and the economy. It is also a
political, social and cultural phenomenon that creates new possibilities and opportunities, but also
new uncertainties.”
The world map, Mr. Karamanlis continued, is taking another shape, with the vast and populous
countries of Asia—such as India and China—offering low-cost products and services. He referred
also to the new “dynamic and competitive liberal economies” developing in eastern Europe, and to
the uncertainties created by the rejection of the proposed European Constitution by France and the
Netherlands, as well as disagreements over the EU’s future budget.
While the EU seeks to respond to its citizens’ concerns over economic growth, employment, health
and the environment, global uncertainties, Mr. Karamanlis said, are increasing as a result of
international terrorism and the skyrocketing price of oil, with major consequences for economies,
state budgets and price stability.
Greece, the prime minister said, is particularly affected by these problems. The country has lagged
behind its EU partners in many areas: competitiveness, oil dependency, direct foreign investment,
trade deficits, per capita income, regional and social imbalances, unemployment, fiscal deficits and
public debt. “We know the reality and we hear the citizens’ needs,” Mr. Karamanlis said, referring to
his government’s “gradual but effective” policies to resolve problems and create “a healthy basis for
a better life for us all.”
In pursuing “a strategy of bold reforms with the consent of the people,” the government’s policy
during the 18 months since its election in March 2004 has been “to simplify procedures, promote
electronic governance, and combat corruption and bureaucracy.” We are committed, Mr. Karamanlis
said, “to re-inventing the state and seek a more productive public sector, strengthening the central
administration’s executive and controlling roles, promoting a fundamental strengthening of local
authorities, and introducing a new immigration policy.”

A Road Map of Reforms
He named “parallel actions” in 14 specific sectors to chart a “road map” of reforms “free of past
dogma and ideas, with social responsibility and effectiveness.” These included:
Privatizations to include Athens International Airport, Post Office Savings Bank, and state-owned
ports. The privatization program has already exceeded its revenue goals by 30 percent, totaling !2.1
billion this year ($2.5 billion).
Joint ventures between public and private sector companies in major national projects.
Deregulation of the domestic electricity and natural gas markets, combined with policies to reduce
dependency on oil.
A national plan for renewable energy sources, tourism, industry, mountain regions and Greek
shorelines, aimed to facilitate investment decisions.
Reform of bankruptcy legislation and new rules to facilitate setting up businesses.
Stricter inspections of public sector spending and new rules for defense contracts. Defense spending
to be reduced from 4.1 percent of GDP in the period 1999-2003 to 3 percent in 2005-2006.
Opening a long-term dialogue on the reform of the country’s pension system.
War on smuggling and tax evasion.
Mr. Karamanlis spoke of the government’s aim to promote high-level education and to create the
“information society” using new technologies. “It is obvious that there is more work ahead. We need
time to overcome past problems and for new policies to yield results. But early signs are already
visible. The fiscal deficit will fall below 3.0 percent of GDP by the end of 2006, unemployment is
down, growth rates are the highest in the Eurozone, investment activity is starting up, foreign
investors are showing increased confidence in the Greek economy, and tourist arrivals rose along
with Greek exports . . . Greeks did not just choose another government. They chose reform for the
reinvention of the state, for economic growth focused on people, for a society of cohesion and trust.
I know that Greeks and I share the same vision.”

2. A Call for a Stronger United Nations
At a historic summit of world leaders to mark the 60th anniversary of the founding of the United
Nations, Greece, a member of the UN Security Council for the two-year period 20052006, was
represented by Prime Minister Costas Karamanlis.
In a statement to the Security Council on September 14, he urged the United Nations to play a
stronger role in the fight against terrorism and in the protection of human rights and fundamental
freedoms. The objectives are not mutually exclusive, he noted, subscribing to a recent statement by
Secretary-General Kofi Annan that “in the long term, we shall find that human rights, along with
democracy and social justice, are the best protections against terrorism.”
After the end of the Cold War threat of military confrontation between the two power blocs, the
world community, Mr. Karamanlis said, “still faces violent internal conflicts, civil wars, genocide and
other large-scale atrocities, causing immense suffering to millions of people. Terrorism is undeniably
one of the most serious threats to peace and security, menacing the very foundation of our
democratic societies.”

Mr. Karamanlis welcomed the signing, during the summit meeting, of the International Convention
for the Suppression of Acts of Nuclear Terrorism and a Comprehensive Anti-terrorist Convention
adopted by the General Assembly which, he said, should not affect established principles
safeguarding freedom of expression.
“The UN,” Mr. Karamanlis continued, “should be strengthened in managing, resolving and
preventing conflicts and their recurrence. Early, comprehensive and coherent prevention of conflict
lies at the heart of the mandate of the United Nations for the maintenance of international peace
and security. Integrated and long-term strategies to address the root causes of conflicts are
A more comprehensive concept of collective security and a stronger United Nations are needed, Mr.
Karamanlis said, to confront the “new threats and challenges” which are no longer confined to
conflicts within and between states. “Extreme poverty in many parts of the world, deadly infectious
diseases and environmental degradation have devastating consequences. Proliferation of weapons
of mass destruction is potentially the greatest threat to our societies. Organized crime is another
threat which can have destabilizing effects and fuel civil wars.”
“We believe,” the prime minister concluded, “that this Summit offers a unique opportunity to bring
about the changes required for a more peaceful and stable world in the 21st century.”

Greece Pursuing the Millennium Declaration Goals
Following his address to the Security Council, Mr. Karamanlis spoke on September 16 at the 60th
session of the UN General Assembly which discussed progress in attaining the objectives of the
Millennium Declaration which, adopted by the world leaders five years ago, envisaged, “a world
united by common values and striving with renewed determination to achieve peace and decent
standards of living for every man, woman and child.”
In its contribution to this effort, Mr. Karamanlis said, Greece has significantly increased its
development aid program, along with its EU partners, to reach 0.56 percent of its GDP by the year
2010, with special emphasis on aid to Africa. Describing extreme poverty and hunger as "the
disgrace of our century," Mr. Karamanlis called for improved implementation of the Millennium’s
goals, an objective "considerably reinforced," he said, by a new Declaration adopted by 170 heads
of state and government.
The new Declaration, Mr. Karamanlis concluded, is "a good beginning in the long path of necessary
reforms…a strong political call encompassing most of the suggested ideas in development, peace-
building, human rights, peace-keeping and UN institutions."

Discussions with U.N. Secretary-General Annan
Among the many meetings with other world leaders at the UN, Mr. Karamanlis had discussions with
Mexican President Vincente Fox, Saudi Prince Abd al-Aziz Al Saud, the King of Jordan Abdullah II,
recently-elected Albanian Prime Minister Sali Berisha and his Belgian colleague, Prime Minister Guy
The prime minister's first meeting after arriving in New York was with UN Secretary-General Kofi
Annan with whom he discussed new efforts for the reunification of Cyprus, the outstanding problem
of a mutually-acceptable name for the Former Yugoslav Republic of Macedonia (FYROM), and other
issues related to UN reform—a subject later discussed at a round-table meeting of the world
Among his contacts with the US media, Mr. Karamanlis was interviewed by Charlie Rose in his
widely-viewed PBS program.

Foreign Minister Molyviatis Urges Multilateral Cooperation
In his address to the General Assembly on September 19, Foreign Minister Petros Molyviatis urged
the reinforcement of international multilateralism to confront the inevitable challenges of poverty,
hunger and catastrophic epidemics.
The wide range of topics addressed by the foreign minister included terrorism, Kosovo, Cyprus,
Turkey’s European prospects, and the peace effort in the Middle East. He described Africa as being
situated at the focal point of the challenge to remedy the world’s inequalities.
Mr. Molyviatis spoke of Greece’s role in its own neighborhood, the Balkans, where, he said, “peace,
stability and prosperity have not yet fully prevailed.” In Kosovo, he said, the wounds created by
past oppression and inter-ethnic violence have not yet healed, and a settlement, based on the
international legality represented by the UN and European values, will strengthen regional stability.

On the Cyprus issue, Mr. Molyviatis expressed Greece’s strong support for every effort of the UN to
achieve a comprehensive solution, and its help to find the common ground needed for the
resumption of substantive negotiations leading to the reunification of the island. As for Greece’s
“constantly improving” relations with Turkey, Mr. Molyviatis said that they will become broader and
deeper as a result of Turkey’s European prospect.
The foreign minister expressed the hope, following Israel’s recent withdrawal from Gaza, that the
opportunity will be taken to revive the Road Map as the path to a comprehensive Middle East peace.
He also expressed concern over the continuing violence in Iraq, making it all the more important to
keep to the timetable of a political process leading the country to normality. Finally, he spoke of the
historical ties between Greece and the African continent and of his country’s support and respect for
the leading role played by the African Union in confronting the various crises in the continent.

3. Challenges and Opportunities in the Eurozone
A positive outlook on the Greek economy was the keynote of an address by the Economy and
Finance Minister George Alogoskoufis at the European Institute in Washington on September 22.
After discussing the effects of the introduction of the euro in twelve countries four years ago, which
he judged to be largely positive, Mr. Alogoskoufis turned to Greece’s experience as a member of the
European Monetary Union (EMU) in which, he said, monetary stability and low interest rates
associated with the euro have given a boost to private consumption and investment, as well as
facilitating the servicing of the public debt.
In its effort to contain budget deficits, to make the economy more competitive, and to effect long-
needed structural changes, the government introduced multiple reforms affecting taxation,
investment incentives, and a privatization agenda which is already ahead of its ambitious goal, with
revenues already reaching $2.5 billion—exceeding the estimated total of $1.9 billion, 1 percent of
GDP—in 2005.
In line with Greece’s commitment to the EU, its fiscal deficit will fall from over 6 percent of GDP in
2004 to 3.6 percent this year, and is expected to fall below the 3 percent EU-imposed ceiling next
year. Other reforms have been introduced in the banking system, the labor market, and to cut red
tape in the public sector.
He reported a very satisfactory response to these reforms. Despite high energy costs, the growth
rate of the Greek economy will remain among the highest in the EU at 3.6 percent this year. He
cited a 7.3 percent increase in exports over last year’s performance, a 13 percent increase in the
number of tourists, and a decline in unemployment despite the end of work associated with last
year’s Olympics.
The minister further gave details of Greece’s important role in the economic development of its
Balkan neighbors, where Greek direct investment has exceeded $10 billion in less than 10 years. He
concluded with a recital of the many factors which make Greece attractive for business and private
investment: stable political and financial environment; one of the most attractive tourist
destinations on earth; the only EU and EMU member in the wider region, with the stability of the
euro providing foreign investors with monetary stability; a high rate of growth providing a growing
domestic market; the most sophisticated and well-trained workforce in the region; and one of the
largest commercial shipping fleets in the world, contributing more than $15 billion to the Greek
economy last year.
 A basically optimistic view of the Greek economy was conveyed by Mr. Alogoskoufis to the 2005
World Bank-IMF annual meeting in Washington on September 25.
Reporting the “exceptionally strong” growth of the economy last year, supported by Olympic Games
construction and low interest rates, labor market conditions also improved, he said, as the rate of
unemployment fell by almost a full percentage point to 10.4 percent early this year.
Although inflation continued above the euro-area average, growth is expected to remain strong at
3.6 percent this year and slightly more in 2006, despite the high price of oil and weak economic
activity in the EU. Structural reforms in the product and labor markets,he said, have helped to boost
private consumption and investment, exports and tourism.

4. In Brief . . .
 In addition to the formal messages of sympathy from the leadership, Greece has offered
substantial material and humanitarian aid following the devastating hurricane which hit New Orleans
and the Gulf Coast on August 31. In addition to supplies of food and other emergency needs
through the EU, Greece offered to send emergency rescue teams and two cruise ships to provide
shelter in the coming months to homeless victims of the storm. Greece’s offer of aid was
immediately accepted by the US authorities. And warm thanks were offered by visiting US Deputy
Assistant Secretary of State Matthew Bryza and by US Ambassador to Greece, Charles Ries, who
said “this action proves precisely how deep a relationship of friendship binds the two countries.”
Prime Minister Karamanlis, in Thessaloniki for the opening of the International Fair (see lead story),
hosted a dinner for Russian President Vladimir Putin on September 8 after his arrival in northern
Greece on a private visit before proceeding next day to visit Mount Athos. Mr. Putin was the first
Russian leader to visit the monastic community, where he was received ceremonially in accordance
with Byzantine ritual. Both leaders spoke of the excellent bilateral relations of their countries and
cooperation on economic, Balkan and the Cyprus issues. The interest expressed by Mr. Putin in the
expansion of economic relations with Greece was followed at the end of September by the largest
delegation of Greek trade and business interests ever to visit Russia. One of the objectives of the
mission was to sign an agreement on avoidance of double taxation, paving the way for cooperation
on energy, tourism and agriculture.

Cooperation between Greece and the United States in business and energy activities was the focus
of discussions during a visit to Washington on September 28 by the Development Minister, Mr.
Dimitris Sioufas. In meetings with US administration officials and members of Congress, Mr. Sioufas
presented the emergence of Greece as an important energy hub in the Balkans and as a major
transit center for energy exports from the Caspian-Caucasus region to Europe. This follows from the
recent agreements for the construction of a new Burgas (Bulgaria)—Alexandroupolis (Greece) oil
pipeline carrying oil from the Black Sea; a natural gas pipeline linking Greece and Turkey; and an
underwater natural gas pipeline between Greece and Italy. After Washington Mr. Sioufas visited
Chicago where he was the keynote speaker on September 29 at a business conference on
“Technology and Investments in Greece,” which will highlight Greece as the economic engine of
Southeast Europe.
Greece’s national basketball team won the 34th European men’s basketball championship on
September 25, defeating Germany 78-62 in the final game, played in Belgrade. This victory brought
the Euro Basketball Cup to Greece for the second time since 1987, when it won the trophy in
Athens. Prime Minister Costas Karamanlis, in his message of congratulations, said that “one year
after the Athens 2004 Olympic Games, and the Greek national soccer team’s clinching of the
European Soccer Championship, the national basketball team which 18 years ago made all the
Greeks proud, has once again reached the highest peak in Europe.”

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