07GreekEconomy&Markets

Economic lift comesfrom Brussels

Greece, Turkey team up on energy front

Green tourism leads the way

Plan set to build on FDI success

6th issue - November 2007

(20.4*)

4

Themes

Gas pipeline forms important link in international energy chainThe pipeline will figure importantly in upgrading Greece's geostrategic role, making it a natgas transit route. (pages 7 to 8)

'Green' tourism to assist with modernisation of vital sectorWith tourism receipts exceeding 11.5 billion euros per year, the sector contributes around 18 percent to economic growth. (pages 11 to 12)

Greece to build on record year as inflows reach 4.2 bln eurosThe Hellenic Center for Investment (ELKE) is promoting the numerous investmentopportunities that Greece offers and is proactively supporting the path of economic growth that emanates from Greece. (pages 44 to 45)

Companies

Nine month earnings (pages 34 to 39)

Piraeus port on development route as financial results improve (pages 40 to 41)

Greek Economy & Markets 07A publication of the “Agora Ideon” forum.

Project manager: BusinessOnMedia118 Kremou str, Kallithea, 17675

Athens, Greece

tel: +30-210.953.3095

fax: +30-210.953.3096

Greek Economy & Markets 07 is also distrib-

uted along with the International Herald Tribune

(IHT) and Kathimerini English Edition newspa-

pers in Greece, Cyprus and Albania. The content

of the magazine does not involve the reporting or

the editorial departments of the IHT.

Cover Story

Yiannis Papathanassiou40 bln euros to fund development and real convergence with EU (page 14)

Panagiotis DrossosReshaping the future: NSRF seen as key to Greece’s development (page 16)

Alexandros Kontos Competitiveness and environment protection top target list (page 22-23)

Dex AgouridesMOUs inject know-how, avoid inflexibilities (page 24-25)

Dimitrios KontosHuman capital: Driving force for growth and social cohesion (page 26)

Contents

6th issue - November 2007

5

Facts & figures

In October, the unemployment rate decreased by 1 percent incomparison to same period last year. However, the Consumer Price

Index increased by 3.1 percent. Also in the second quarter grossdomestic product expanded by 4.1 percent, whereas in the third quarter

the growth rate decreased to 3.6 percent. Finally, the Producer PriceIndex in Industry increased by 4.0 percent in September compared to

1.6 percent last July.

Period Value

Consumer Price Index (CPI)1 October 07/October 06 3.1

Harmonized Index of Consumer Prices (HICP)1 October 07/October 06 3.0

Producer Price Index in Industry1 September 07/September 06 4.0

Industrial Production Index (excluding construction)3 September 07/September 06 2.3

Turnover Index in Retail Trade1 August 07/August 06 7.7

Gross Domestic Product (provisional data)1 Q3 2007 3.6

Unemployment Rate2 Q2 2007 8.1

Population (2001 Census)4 2001 -

Building Activity)3 August 07/August 06 -1.3

1Annual rate of Change, 2Rate, 3Periodical rate of change, 4Value

Latest Statistical Data

The profile of the Greek economy

6

Facts & figures

NSRF’s 20.42 bln injection

The budget for the European Union’s contribution to the National Strategic Reference Framework(NSRF) amounts to 20.42 billion euros, including the Cohesion Fund.Budget allocations, although expressed as a package for each country, are calculated per region. Thetotal budget, which includes Greece’s national contribution, reaches 31.9 billion euros. The Finance Ministry has said that 80 percent of EU-backed funding programs for the 2007-2013period will be aimed at regions other than Attica. The programs will aim at boosting the extroversionof the economy, improving competitiveness and helping diversify the country’s vital tourism product.Other areas that funds will be poured into include securing energy efficiency, digital convergence andimproving the health system.In comparison with the previous funding program, the third Community Support Framework (CSF),the NSRF will focus more on Lisbon-oriented goals by earmarking 67 percent of funds for relatedactions. The respective percentage in the CSF stood at 55 percent.

7

The Turkey-Greece Interconnector inaugu-

rated by prime ministers Costas Karaman-

lis and Recep Tayyip Erdogan on November

18 is part of a larger project that will link

Turkey and Greece with Italy, supplying

Western markets with natural gas from the Caspi-

an basin. This partially EU-funded and US-sup-

ported project is the first that will bypass Russia —

at least in the present phase — and is aimed at

transporting 11.6 billion cubic meters of Azeri nat-

ural gas annually by 2012-2014, when the ITGI

(Interconnector Turkey-Greece-Italy) will become

fully operational.

Through the creation of this pipeline, Karaman-

lis and Erdogan — who have invested heavily in

economic diplomacy, with particular emphasis on

the energy sector — hope to achieve closer rela-

tions in the political, social and cultural sectors as

well. The realization of this project, in combination

with other projects under way, in fact goes a long

way toward establishing not only their energy secu-

rity, but also that of the region (though ultimately

this will require the settlement of certain pending

problems in the region, such as that of Kosovo). At

the same time, the horizontal corridor taking shape

and bearing on most of Southeast Europe — with

a number of projects coming from regional players

— is expected to create development prospects

and investment opportunities for the region as a

whole.

The Greek dimensionThe ITG pipeline will also figure importantly in

upgrading Greece's geostrategic role, making it a

natgas transit route and, in combination with the

Burgas-Alexandroupolis oil pipeline and South

Stream, a vital link in the chain supplying Europe

with hydrocarbons from the Caspian and, poten-

tially, the Middle East and Africa. Meeting the

European and Western need for diversification of

energy sources and transit routes, the ITG will

enhance Greece's role in Europe and give it a

stronger voice in the broader region and on energy

and trade issues in general.

But the 'extroversion' Greece's energy policy

has been undergoing in recent years needs to be

continued and broadened if Athens is to avoid

being caught in the Russian-Western energy cross-

fire. To this end, Greece can enter into direct, bilat-

eral agreements with hydrocarbon-rich states

(whether in the Caspian basin, the Middle East or

North Africa), fortifying its position and optimizing

its latitude, while also maximizing the commercial

benefits to be gained from energy transiting its ter-

ritory. Assuming adequate storage facilities and

infrastructure are created, this would lead to bene-

fits beyond mere transit duties: There is money to

be made — and leverage to be gained — from the

resale of natural gas, oil and petroleum products.

It is reasonable to expect that Greek-Turkish

bilateral relations will become more ‘predictable,'

mainly because any crisis hotspots will be less like-

ly to flare up in the future if this means losses for

both sides. A Greek-Turkish crisis would not only

damage the credibility of both states as transit

routes, but might also impact the flow of energy to

Central Europe, raising energy prices for European

consumers, with a possible backlash for those

responsible.

So the ITG should bring the two countries clos-

er together, given that such an endeavor requires

consistency, stability and commitment, and will

thus force the two countries to find common

ground on which they can both build a profitable

future. This pipeline will also serve as a bridge for

better understanding between Athens and Ankara:

It is, in effect, a joint, Greek-Turkish commitment

to Europe.

However, despite rendering Greek-Turkish rela-

tions more ‘predictable' and engendering positive

developments in certain low-policy areas, the ITG

will not resolve the thornier issues in their rela-

tions.

Western options on the ‘nationality’ of natgas

With regard to the sustainability and operabili-

ty of the ITG pipeline and future projects — pro-

vided we want them to be more competitive, work-

ing at capacity in the mid-term — there are, real-

istically, three alternative solutions: Turkmenistan,

Russia and Iran.

In the case of Turkmenistan, the upside for the

West is that potential energy agreements with Ash-

gabat (presumably accompanied by corresponding

investments) would go some way toward loosening

Gas pipeline forms important link in international energy chain

The pipeline will figure importantly in upgrading Greece's geostrategic role, making ita natgas transit route and, in combination with the Burgas-Alexandroupolis oilpipeline and South Stream, a vital link in the chain supplying Europe withhydrocarbons from the Caspian and, potentially, the Middle East and Africa.

1If the ITG is to be 'filled,' Azerbaijan will have to more than double its production in the coming years, which in practicalterms means huge new investments, new infrastructure and, consequently, fresh capital.

by Dr Constantinos FilisHead, Russia and Eurasia Center,

Institute of International Relations,

Panteion University

www.cere.gr

�

8

Themes

Russia's hold on the country. At the same time,

Russia would be bypassed, fulfilling the ardent

desire of both Washington and Brussels. Of course,

an agreement of this kind would depend to a great

extent on the Russian state and the energy colos-

sus Gazprom, which holds the rights to 80 percent

of Turkmenistan's current energy reserves and has

closed exploration deals for new natgas fields.

What is more, Moscow controls the pipeline net-

work on which — for the time being — Turk-

menistan's natgas exports to the West depend.

Consequently, with a relatively unpredictable polit-

ical regime, with the legal status of the Caspian

still unresolved, with neighboring countries raising

environmental objections to the undersea pipeline

to Azerbaijan, and with the country's reserves

under dispute, Turkmenistan doesn't appear to be

the best of alternatives.

However, there is always the mega-producer

Russia, which can and wants to satisfy the

pipeline's supply needs, despite the fact that it is

also promoting South Stream, a project that would

compete with the ITG. Just last year, the pipeline

was the focus of Russian interest for the transport

of Gazprom natgas. In fact, Russia offered to con-

struct the Greece-Italy pipeline, arguing that it is

the only country that can actually fill it with gas.

This brought a strong reaction from Washington

and Brussels, which are pursuing both diversifica-

tion of Europe's energy supplies and limited

dependence on Gazprom. So Russia may look like

the ideal solution in terms of its being able to sup-

ply the necessary quantities of natural gas, but

there are two major obstacles that would be diffi-

cult to overcome. The first — and less critical — is

resistance from the powerful American camp. The

second — and much more intractable — is that

Europe and the West in general do not want to be

hostage to Moscow's energy and strategic wiles.

Iran, on the other hand, has the quantities of

natural gas required to supply the pipeline. Opting

for Iran would enhance diversification of suppliers

and routes, while also helping to supplant Russia.

Iran is, after all, the only country that can compete

with Russia to the extent of threatening Russian

dominance. Moreover, Tehran is anxious to put its

natural gas on the global market — and at a com-

petitive price — in pursuit of a badly needed cur-

rency injection. However, the US embargo on Iran,

the unpredictable regime of the mullahs and

Ahmadinejad, and the latter's nuclear program all

stand in the way of Iran's supplying the pipeline in

question or other energy projects directed at

Western markets.

Based on the above observations we can con-

clude that — all things being equal, and provided

the serious issues in Iran's relations with the West

are resolved — Tehran is the least problematic alter-

native as far as Western strategic planning is con-

cerned. Regardless of the pending issues that exist,

Iran should by no means be prompted toward more

extreme actions. In fact, in the present state of

affairs, Iran is the more attractive of the three alter-

natives, given that Russia — which, by the way, due

to its interdependence, does not have the room to

maneuver that some incorrectly credit it with — will

be bypassed; suppliers and transit routes will

increase in number; and new pipelines will be more

economically and commercially viable thanks to

increased competition. Iranian-Western energy

cooperation would also bring Tehran closer to us,

setting relations within a new, more predictable

framework. And this is why we may well see Europe

put pressure on the US in the midterm future to lift

its embargo on Iran and come to terms with the fact

that a marginalized Iran does not facilitate diversifi-

cation of energy suppliers. By the same token,

Tehran will have to change its tack if it wants the

West to see it as a potentially reliable supplier.

Regardless of any Western preferences as to

who will supply the ITG, if the pipeline is to oper-

ate competitively — that is, at or close to its full

capacity of 11.6 billion cubic meters — it will have

to carry either Russian or Iranian gas; otherwise,

profitable operation will have to be postponed.

It is hard to predict the ‘nationality' of the nat-

gas that will fill the pipeline. And it is equally dif-

ficult to foresee whether Western energy independ-

ence from Russia — so strongly desired in some

circles — will be achieved, and what developments

we will see from here on in on the global energy

map. One thing is certain: Energy-related issues,

with all of their intricate and profound strategic

implications, will continue to be high on the inter-

national relations agenda.

�

9

Greece and Turkey inaugurated a pipeline

transporting natural gas from the Caspian

Sea area to the continent in a move seen

bringing the two rivals closer together and

boosting the region's presence on Europe's

energy map.

The opening of the natural gas project comes at a

time when steps also appear to have been made on

the Burgas-Alexandroupolis oil pipeline and Greece is

laying the groundwork to have a second natural gas

network passing through its territory.

The opening of the Greek-Turkish connection

involved a high-profile ceremony in which Greek

Prime Minister Costas Karamanlis and his Turkish

counterpart Recep Tayyip Erdogan shook hands at a

symbolic meeting on a bridge over the Evros River.

‘It is a great step forward for relations between

the two countries and for stability in the region. By

cooperating we can build a better future for all,’

Karamanlis said. ‘This pipeline is the first in a series

of important energy pipelines which are transforming

Greece into an international energy hub,’ he added.

The pipeline will provide the European Union

with its first supply of gas from the Caspian region,

bypassing Russia and the volatile Middle East. It will

carry up to 400,000 cubic meters of Azeri gas this

year to help cover increased demand in Greece's

recently liberalized electricity market.

This will rise gradually to 115 billion cubic

meters annually after a planned extension to south-

ern Italy is completed in 2012. Greece will take up

3.5 billion cubic meters annually, with the remainder

going to Italy.

Greece's Public Gas Corporation (DEPA) has

signed a 600-million-euro deal with Italy's Edison

Group to build the extension beneath the Adriatic

Sea. The project is expected to help boost Greece's

position on the European energy map and act as a

deterrent for any future crisis with Turkey.

Karamanlis repeated Greece's support for

Turkey's bid to join the European Union and said the

pipeline would improve stability in the region. ‘The

pipeline adds energy not only for development but

also to strengthen Greek-Turkish ties. It acts benefi-

cially for ties between us. It transforms the two coun-

tries into a transport hub toward Central Europe,’ the

Greek prime minister added.

Greece and Turkey, still divided over territorial

disputes in the Aegean Sea and Cyprus, agreed in

2004 to build the 285-kilometer natural gas

pipeline between Karacabey in northern Turkey

and Komotini in Greece.

Commercial ties between the two nations in the

last few years have improved considerably, with

cross-border deals becoming larger and more fre-

quent. According to industry data, Turkish exports to

Greece more than doubled between 2000 and 2006

to reach 1.3 billion euros — a rise from 1.18 to 2.62

percent of Greece's total imports.

Greek businesses on the other hand have been

expanding into Turkey as a means of tapping the

country's strong growth prospects while putting aside

political concerns. In the biggest foreign investment

made by a Greek bank, National Bank, Greece's

largest lender, has purchased a majority stake in

Turkey's Finansbank for more than 2 billion euros.

After the inauguration of the natural gas pipeline,

it was announced that Karamanlis will make an offi-

cial visit to Turkey early next year, a trip originally

slated for 2005 that would be the first of its kind in

nearly 50 years.

Foreign supportThe EU supports the project as it looks to diversi-

fy its energy suppliers and reduce its dependence on

Russia, from where it buys about a quarter of its gas.

The US is also promoting the energy-rich Caspian

nation as an alternative gas supplier for Europe fol-

lowing the recent commissioning of the south Cauca-

sus pipeline to Georgia and Turkey, which will even-

tually carry 20 billion cubic meters annually.

Political commentators said it is no coincidence

the opening ceremony was attended by US Energy

Secretary Samuel W. Bodman and the new US

ambassador in Athens, Daniel Speckhard, in his first

public engagement since arriving in Greece.

Bodman described the new energy supply link as

a ‘significant development, one that builds a critical

new energy bridge between the East and West.’

‘This project is remarkable in many ways, not

least of which is the technical and financial com-

plexity involved in its construction,’ said the US ener-

gy secretary.

‘Building this pipeline also required a regional

consensus, complex environmental analyses, and a

lengthy and productive dialogue with all of the com-

munities along the entire route,’ he added.

Bodman described the pipeline as a ‘critical first

step in a new energy supply chain; and it comes on

line at a critically important time. The European

Union is the world's biggest gas import market —

and one of the world's fastest growing. It is reason-

able to expect that Europe's dependence on energy

imports will continue to grow over the next 25 years

Old rivals Greece and Turkey team up on natural gas pipeline

The Greek and Turkish prime ministers opened the new pipeline in a high-profileevent. The project is seen as helping to diversify European energy supplies andboosting the region’s presence on Europe’s energy map. Karamanlis repeated Greece’ssupport for Turkey’s bid to join the European Union and said the pipeline wouldimprove stability in the region.

By Stelios Bouras

ANA

�

10

Themes

— meaning that Azerbaijan and the rest of Central

Asia is poised to become Europe's newest main

source of supply, alongside the North Sea region,

Russia and North Africa.’

Petrol deal followsThe recent signing of the oil pipeline deal link-

ing Bulgaria's Black Sea port of Burgas with

Alexandroupolis in northeastern Greece is also seen

as boosting Greece's energy profile while prying

open the door of new business opportunities for the

region.

The Thrace region is one of Greece's poorest

and the government has high hopes for economic

development stemming from the pipeline projects.

The deal, which will involve pumping mostly

Russian crude to the Mediterranean, will take

Greece a step closer to transforming into an energy

hub at a time of soaring petrol prices and a growing

world appetite for power. Construction of the 280-

kilometer pipeline is scheduled to start at the end of

2008 with a completion date set for the start of

2011. Once completed, the pipeline will be able to

transport around 35 million tons of oil per year.

This amount could increase to 50 million tons

at a later stage, according to officials involved in

the project.

Politicians have repeatedly called the signing of

the deal an ‘historic occasion' as they point to the

fact that it is Europe's first major pipeline project

in the last 40 years. The signing of the deal

between the three countries — Greece, Russia and

Bulgaria — took 14 years to complete.

Earlier this month, the three countries signed a

key protocol which will open the way for the real-

ization of the long-delayed oil pipeline, according

to Greek Development Minister Christos Folias.

‘A major and encouraging step has been made

that will allow us to move forward. There remain,

of course, several issues for discussion, but we are

on the right track,’ he said in an interview with

daily newspaper Kathimerini.

The protocol provides for the setting up of a

joint international company which will build the

pipeline from Burgas to Alexandroupolis, carrying

Russian oil and bypassing the congested Bosporus.

Folias said he found an excellent spirit of coop-

eration during his recent visit to Moscow.

‘Loose ends are being tied up on the basis of a

specific timetable and we are ready to take sure,

steady and, above all, quick steps. Already, on my

own initiative, representatives of the three national

consortia participating in the scheme met in

Athens and concluded the signing of a protocol

which opens the way for the setting up of the inter-

national company,’ he said.

‘With the implementation of these major energy

projects, Greece is being transformed into an ener-

gy hub and an attractive pillar of investment in the

energy sector,’ the minister added.

South Stream projectGreece's decision to take part in the construction of

a natural gas pipeline to run under the Black Sea, link-

ing Russia with Europe, will further upgrade the coun-

try's role as an energy player, according to senior gov-

ernment officials.

Karamanlis has stated that Greece will be part of

the South Stream pipeline after he met with Russian

President Vladimir Putin.

Italian energy company Eni SpA and Russia's state-

controlled OAO Gazprom have signed a memorandum

of understanding on the possibility of supplying Russian

gas to European Union countries through the South

Stream pipeline.Under the plan, more than 900 kilo-

meters of pipeline could be laid under the sea and

across Bulgaria before splitting off into two directions,

north through Hungary to reach Austria and south

through Greece and on to Otranto, a port near the

southeastern tip of Italy.

Improved ties with international energy networks

are needed to help satisfy Greece's growing energy

thirst — a trend likely to keep growing in the future

given the country's strong growth rates. According to

figures from the International Energy Agency (IEA), final

energy consumption in Greece reached 23.5 million

tons of oil equivalent in 2004, about 50 percent high-

er than levels recorded in 1990.

Experts estimate that this growth rate indicates that

Greece will be required to double its current energy

supply within the next eight years.

�

11

'Green' tourism to assist with modernisation of vital sector

Tourism comprises a national priority for a

very simple reason: It attributes a tangible

and countable result to Greek economy. It is

not abstract or mutable. Its development is

perceptible through the rhythms of our econ-

omy, outlining an important aspect of the country's

general profile. Tourism receipts alone, for example,

exceed 11.5 billion euros. This means that the sec-

tor contributes 18.2 percent to the GNP. On the

other hand, it serves for the creation of new employ-

ment posts as well. Just think, tourism development

in Greece has offered the country, and especially the

new generation, thousands of employment posts over

the past few years, to the point where we can proud-

ly say that the tourism sector has provided jobs -

directly or indirectly - to more than 850,000 people.

What does all this mean? First of all, it means

that tourism development is a bet of national impor-

tance which should be based on quality, entrepre-

neurship and investments. Secondly, we ought to be

realists, willing to comprehend that nothing can yield

fruit if we haven't sown the seeds of investment first.

The crucial starting block is promotion abroad. This

involves not only investment in our international

image abroad, but dealing with its reformation as

well, mostly after the devastating fires in August. The

country's promotion abroad should be inspired by

vision, imagination and inventiveness.

And so far we have presented the modern image

of Greece, the image of a country with four seasons,

where everyone can live the true experience. The sec-

ond step is our steady orientation toward the contin-

uous upgrade of our infrastructures and services,

with respect to the natural environment, highlighting

our country's inexhaustible and unique wealth. One

of the newest forms of tourism, having today an

exceptional and competitive position worldwide, is

ecological tourism, or 'green' tourism, as I call it. I

often speak about 'green' tourism because I think

that if we want to win the bet on profitable tourism

development, we should vitiate the point of view

which holds that development - and in this specific

case tourism development - has to be against the

environment.

Actually, that is not entirely correct. What I

believe is that the new era's creation could be carried

out in perfect harmony with the protection and uti-

lization of the natural environment. For this reason,

we aim to establish green tourism at our tourist des-

tinations using pilot programs, in cooperation with

the local authorities. Some of the first moves in this

matter have to do with the creation of various places

for ecological campsites and ecological marinas.

These interventions are important not only for the

environmental consciousness that should govern the

tourist development of this country; they actually

show us the way that will help us to change Greece

into a more human, qualitative and multidimension-

al country. In order to achieve the above, we are do

ing our best and raising the framework of tourism

politics to a national venture.

The modernization of the tourist product is our

main target. Attention, though: Tourism investment

is a multidimensional affair. It consists of various ini-

tiatives, which are public infrastructures, big private

investments in tourist installations, promotion,

human resources and, without doubt, technological

applications. Hence, we support entrepreneurship

that leads to the modernization of the tourism prod-

uct, keeping in mind that the general image does not

emerge from indiscriminate management but from

small and very important investment activities that

develop the product systematically, paying attention

to the details and being steadfast to the end.

Moreover, through the investments under way, as

well as through all those that are to be announced in

the next few years, we desire a kind of alteration of

our tourist product, so as to become more competi-

tive internationally and claim our consolidation

among the most popular destinations worldwide.

How? By the development of special forms of

tourism. By the application of natural resources man-

agement models.

By the formation of the staff. And, of course, by

the projection of tourism models via digital applica-

tions, new technologies and the media. The fact that

we are in the position to increase investments is not

something new. We are already doing it. In total, up

to June 30, 2007, 1,057 tourism investments have

come under the Development Law, a total budget of

3.8 billion euros, while public expenditure is up to

1.5 billion euros. With regard to the development of

Community resources by the Operational Program

'Competitiveness' (OP), up to October 25, 2007, the

percentage of absorption for the tourism sector was

73.37 percent. The total amount that we managed

for the OP was 719.7 million euros. The numbers

say it all.

So, it is clear that Greece has turned a page and

is struggling with all its might to impose its own

vision of tourism, a vision that will give the country a

social and cultural characterization within the 21st

century. And, step by step, it is succeeding in mak-

ing its mark. For example, according to Greek Nation-

By ArisSpiliotopoulos,Minister of Tourism

www.mintour.gr�

With tourism receipts exceeding 11.5 billion euros per year, the sector contributes around 18 percent to economic growth. On the other hand, it serves for the creation of newemployment posts as well. A crucial starting block for the industry is its promotion abroad.

12

Themes

al Tourism Organization (GNTO) data, during the first

nine months of 2007, 93 opinions regarding the

establishment or extension of hotels were issued for

insertion into the Development Law. Twenty-five of

them concern five-star hotels of a total capacity of

5,000 beds. And while the current activities are tak-

ing place, all the necessary initiatives are being pro-

moted in order to reinforce tourism development

within the framework of the OP for the 4th program

period 2007-2013 while respecting environmental

protection. In total, the ministry is preparing to put to

use 550 million euros in tourism. Of this amount,

300 million is connected to the OP 2 framework, to

be shared between the eight non-transitional districts

of the country.

Also, it would be interesting to mention the

enhancement of the Districts of Transitional Support,

mostly by the Regional Operational Programs. Our

target is to create the necessary conditions to pro-

mote Greek culture based on the special and multi-

form features of every region. This way, we motivate

every district, every destination to promote its very

own cultural identity. The total amount of these inter-

ventions comes to 250 million euros.

As a representative example, I could highlight

some basic axes that are under the intervention

framework of the program period 2007-2013. For

the modernization of the operational infrastructures,

the rearrangement of the tourist sector includes the

enhancement of the tourism investments through the

Development Law, the development of the special

tourism forms and the additional business reinforce-

ment programs that don't come under the Develop-

ment Law, total quality activities, models of environ-

ment and energy management applications and sup-

plementary activities for the enrichment, the skills

upgrade and the augmentation of the human

resources mobility.

The last one will be effectuated by the use of a 10

percent provision. With regard to the infrastructures

completeness and upgrade, aiming at the utilization

of the country's natural and cultural resources, the

pilot program includes projects for sea-tourism devel-

opment, reception centers at commercial ports, the

construction of tourist centers focusing on thematic,

cultural, environmental, ecotourism and historical

activities of national importance, pilot programs that

promote tourism development in ecologically vulner-

able regions, improvement of the administrative sup-

port by new technologies and, overall, the construc-

tion of information centers that will promote both

products and services.

Bearing in mind all the above, we are focusing on

the tourism sector's enhancement so as to achieve

the target that has set every single intervention that

has to do with the tourist product promotion: the cre-

ation of a new image for our country, a modern and

competitive one, laying emphasis on culture and the

environment, an image of beautiful places and beau-

tiful people, far from one-dimensional sun-and-sea

cliches which nowadays sound as obsolete as the

concept that tourism is something occasional that

should be left to its fate, like the decisions one makes

depending on whether there will be rain or sun.

Well, it's not. Tourism is actually a creative and

multidimensional life science which demands, in order

to be proved profitable for a country, what a field

demands, too, in order to bear fruit, that is, care and

persistence. It demands, in other words, solid philoso-

phy, consistent goal-setting, ideas and visions.

Only in this way will Greece be able to play a

leading role.

�

13

European Union funds have helped provide a massive change to the

country’s infrastructure in recent years by part-financing projects such as

road and public transport. The funds are also helping to make the econo-

my more competitive in a fast-changing environment, through human

resources training and farming schemes.

The Third Community Support Framework (CSF) for the 2000-2006 period

is winding up while the government is preparing to absorb funds from

the National Strategic Reference Framework (NSRF) for 2007-2013.

A breakdown of the CSF and NSRF will help give readers a more concise

picture of goals and policies adopted in projects changing the country.

Benefiting from EU funds in the future is certain to change now that the

single bloc has expanded to 27 countries. The conservative government

has said the country’s regional areas will benefit from the NSRF as some

of these areas still rank among the poorest in the EU.

EU-backed programs include human resource schemes that will encour-

age innovative business practices and boost sea transport links, a vital

sector of the country’s economy.

European Union funds have helped provide a massive change to the

country’s infrastructure in recent years by part-financing projects such as

road and public transport. The funds are also helping to make the econo-

my more competitive in a fast-changing environment, through human

resources training and farming schemes.

The Third Community Support Framework (CSF) for the 2000-2006 period

is winding up while the government is preparing to absorb funds from

the National Strategic Reference Framework (NSRF) for 2007-2013.

A breakdown of the CSF and NSRF will help give readers a more concise

picture of goals and policies adopted in projects changing the country.

Benefiting from EU funds in the future is certain to change now that the

single bloc has expanded to 27 countries. The conservative government

has said the country’s regional areas will benefit from the NSRF as some

of these areas still rank among the poorest in the EU.

EU-backed programs include human resource schemes that will encour-

age innovative business practices and boost sea transport links, a vital

sector of the country’s economy.

Funding for regional growthFunding for regional growth

14

Cover

Greece is beginning to exploit the

vital resources amounting to

20.1 billion euros (constant

prices 2004) secured during

the European Council meeting

in December 2005. The summit's

agreement was reached following labori-

ous negotiations on a political and tech-

nical level and, despite the restrictions of

the Cohesion resources, Greece man-

aged to augment its share among the

total of the old member states (EU-15)

for the current period (2000-2006) from

11.7 percent to 12.04 percent. These

resources, together with national and

private sector contributions, are expect-

ed to reach the sum of 39.5 billion euros

and to fuel the development and the real

convergence of Greece during the period

2007-2013.

The rational, efficient and effective

exploitation of the resources constitutes

our main political choice so that the

country can maximize the benefits dur-

ing the procedure for real convergence

with the European Union. During the fol-

lowing years, the course of the Greek

economy will be determined to a large

extent by its ability to adjust to the inter-

national environment and the entire

improvement of its position through the

powerful and constant thrust of its com-

petitiveness.

The approval of the National Strate-

gic Reference Framework (NSRF) and

the Operational Programs for the period

2007-2013 constitute the starting point

of a long course during which the Euro-

pean Union will contribute in many ways

in the constant effort of the country to

benefit from the great opportunities

offered by globalization and the digital

revolution. Today, 12 out of the 13

Operational Programs have already been

approved and we are shortly expecting

the approval of the 13th Operational

Program.

The reforms promoted, which are

already bearing fruit, are playing a very

important role in the country's effort.

The Greek economy is constantly recov-

ering, presenting encouraging signs of

dynamism. Growth has been accelerat-

ed, marking higher rates than those of

the other eurozone countries. Unemploy-

ment is decreasing. Exports are growing.

Services are increasing. Private invest-

ment is multiplying. More than 4,000

Greek enterprises have extended their

activities in the broader region of South-

eastern Europe.

The development policy applied per-

mits the gradual creation of an attractive

investment environment which provides

new opportunities for entrepreneurial ini-

tiatives in general and especially in cer-

tain fields such as the energy infrastruc-

tures, the renewable energy sources,

tourism, banking, commerce, transport,

communications and shipping.

Significant effort has also been

applied during the last three-and-a-half

years in the macroeconomic field. We

certainly still have a long itinerary to

cover but we are proud because our pol-

icy resulted in the improvement of eco-

nomic indices. We reduced the high

financial deficits, while preserving simul-

taneously the high development rates

after the end of the 2004 Olympic

Games. Our corporate tax scheme was

reduced by up to 10 percentage points.

We enacted new fiscal measures to sup-

port private investment. The new Invest-

ment Law for development and regional

convergence and the Law for Public-Pri-

vate Sector Cooperation were also rati-

fied by Parliament.

Political choices, which initially pro-

voked resentment and negative reac-

tions, have proved fair in practice and

today offer new investment opportuni-

ties, new jobs and new income for the

entire country. Through the sector poli-

cies for the period 2007-2013, Greece

will focus on the development of quality

manpower, the promotion of continuous

training, in-house business training,

active employment measures as well as

equal opportunities in the labor market.

Particular support will be given to

research and technology by promoting

the knowledge economy. We are pro-

moting innovative entrepreneurial initia-

tives and networking. We are supporting

productive, high-added-value invest-

ment with objective resources. We are

upgrading the institutional environment

and dramatically reducing bureaucracy

by modernizing and re-organizing the

public administration in order to be able

to plan strategically and thoroughly, to

operate professionally and to effectively

schedule actions and resources. We are

investing in the capitalization of infra-

structures with the completion of all

projects and the exploitation of those

already materialized. We are moderniz-

ing our energy infrastructures and finish-

ing the environmental ones. We are giv-

ing priority to the fields of water

resources and waste management by

promoting in parallel ‘green entrepre-

neurship.’

In contrast to the management of the

resources of the 3rd Community Support

Framework, the government decided for

the National Strategic Reference Frame-

work (NSRF) 2007-2013 to exploit pri-

vate sector contributions to a greater

extent. Consequently, the strategic tar-

geting of NSRF has to focus on the

appropriate policy mix which on the one

hand will ensure the necessary

resources to complete the infrastruc-

tures, but also has to achieve an

increase of the share of resources which

serving the Lisbon Strategy, from 55

percent to at least 67 percent in NSRF.

This is the main qualitative difference

between CSFIII and NSRF.

At the same time, we are investing in

the competitiveness of the regions. Our

new policy focuses on the formation of

competitive regions on the basis of new

Regional Operational Programs as well

as on the creation of five spatial unities

in order to strengthen their financial

functionality and to stimulate their extro-

version, enabling them to better face the

challenges of the international environ-

ment. Greece is proceeding to the

implementation of the government's pro-

gram platform with careful strategy and

the vision to create an economy with a

sound international presence, with com-

petitive and extrovert regions and enter-

prises and an improved quality of life

and prosperity for all.

40 bln euros to fund developmentand real convergence with EU

The rational, efficient and effective exploitation of the resources constitutes Greece’smain political choice so the country can maximize the benefits during the procedurefor real convergence with the European Union.

YiannisPapathanassiouDeputy Minister

of Economy and Finance

www.mnec.gr

16

Cover

The National Strategic Refer-

ence Framework (NSRF)

2007-2013, known in Greece

as ESPA, was instructed by

the Ministry of Economy and

Finance on the basis of the new

approach to Cohesion Policy and

constitutes one of the vital new tools

for the developmental course of

Greece. The total public expenditure

for NSRF programs amounts to

31.93 billion euros, constituting a

major development project for the

country, which promotes economic

and social convergence in line with

the Lisbon Strategy.

The development strategy of the

NSRF mainly includes: investing in

the productive sector of the economy

by increasing extroversion and for-

eign direct investment inflow; pro-

moting innovation, research and

entrepreneurship; investing in sus-

tainable infrastructure; investing in

human capital and upgrading the

institutional environment by simplify-

ing the regulatory framework. Fur-

thermore, the NSRF is fully in line

and complementary to the National

Reform Program, since it focuses pol-

icy on a national and regional level in

a way that will make the countryÅfs

regions _ as well as its major cities _

attractive business locations.

In order to achieve a rapid pace in

absorption of funds and to ensure

complete transparency, as well as

high profitability for the National

Strategic Reference Framework, the

government has already planned five

regional and eight sectoral programs.

With 80 percent of funds being allo-

cated for the countryÅfs regions, which

reaches approximately 20.4 billion

euros, it is more than certain that the

NSRF will make the difference in

GreeceÅfs regional development issue.

The entities of Macedonia-Thrace,

Western Greece, the Peloponnese

and the Ionian Islands, Crete and the

Aegean Islands, Thessaly, Central

Greece and Epirus, and Attica remain

central in focus and comprise tangi-

ble proof that the creation of a viable,

competitive, regional economy with

an intensive outward-looking orienta-

tion and internal socioeconomic, ter-

ritorial and administrative cohesion is

a vision that will soon be fulfilled.

At the same time, eight sectoral

programs form the basis for policies

aimed at protecting the environment

and the public health system,

improving citizensÅf quality of life

and enhancing the economyÅfs com-

petitiveness.

NSRF philosophy focuses on

human resource development, aiming

to develop peopleÅfs skills and abili-

ties more efficiently, upgrading their

knowledge basis and cultivating new

skills - vital assets for the support of

employment, competitiveness and

economic productivity, within the

framework of the globally emerging

Knowledge Economy.

The new Operational Program

ÅeCompetitiveness and Entrepreneur-

shipÅf focuses on small and medium-

size enterprises, incorporating meas-

ures focusing on cooperation

between enterprises, cooperation

between production units and

research and technology units, the

transformation of know-how into

innovative products, procedures and

services, as well as the support of

investments, contributing to the

advancement of entrepreneurial com-

petitiveness and extroversion.

New potential for development

across the country is expected to be

created through the Digital Cohesion

Program. With new infrastructure in

the area of information technology

and telecommunications infrastruc-

ture, Greece will be able to take the

digital leap that will enhance produc-

tivity, business activity as well as

everyday quality of life.

At the same time, the ÅeEnhanc-

ing AccessibilityÅf program aims at

improving access to various regions

of the country - both in terms of

Trans-European Transport Networks,

as well as the national/regional net-

work - and improving the quality of

offered transportation services.

The ÅePublic Administration

ReformÅf program targets the devel-

opment of a citizen-focused, effec-

tive, open and flexible public sector,

aiming at achieving the transition

from an administration geared toward

executing ordinary tasks and proce-

dures to the type of management that

produces political results and servic-

es. Moreover, the Greek government

has implemented new legislation

designed to make public enterprises

and entities operate according to

principles of profit and to generate

their own revenues, so as not to have

to rely on budget subventions.

New legislation regarding the

NSRF, which was recently passed by

Parliament, provides incentives for

the achievement of annual targets,

but also penalties in the event that

those targets are missed. The new

legislationÅfs main purposes are to

set up the new management and con-

trol system of Operational Programs

2007-2013, to simplify and acceler-

ate administrative procedures, to

enhance transparency and finally to

introduce measures to support imple-

mentation bodies and procedures.

Aiming to fully comply with EU

policies, the NSRF can support

Greece with the infrastructure it

needs and facilitate further improve-

ment of the new developmental

model, as well as the competitive-

ness and the extroversion of the

Greek economy.

The General Secretariat for

Investments and Development, oper-

ating under the auspices of the Min-

istry of Economy and Finance, coor-

dinates the effective implementation

of the policies set out in the NSRF; it

also supports the Public Investments

Programs by introducing measures

and institutes that guarantee the

effective use of national funds.

Reshaping the future: NSRF seen as key to Greece’s development

Total public expenditure for NSRF programs amounts to 32 billion euros, constitutinga major development project for the country, which promotes economic and socialconvergence in line with the Lisbon Strategy. Philosophy focuses on human resourcedevelopment, aiming to develop peoples’ skills and abilities more efficiently,upgrading their knowledge basis and cultivating new skills.

Panagiotis DrossosSecretary-General

for Investments & Development

www.gea.gr

17

Among the main scopes of the transport pol-

icy in Greece is to facilitate transport in a

way that economic activities are promoted

and to achieve well-balanced national and

regional development. Sea transport is

hereby of great importance for Greece, especially

in the light of the Trans-European Transport Net-

works and the Motorways of the Sea, and the

recent EU efforts regarding the formation of a new

maritime transport policy. It is obvious that ports

will play an increasingly crucial role, since they

represent an indispensable part of the transport

chain.

Facing dramatic challenges in a totally new and

very demanding environment for the port industry,

the policy of the ministry on port development

seeks to secure high-quality port services, maintain

and strengthen the comparative advantages of

Greek ports and enhance their productivity and

competitiveness.

In order to achieve these goals significant

investments are required. The ministry has

planned the modernization and development of the

infrastructure (piers, dredging works etc) and

superstructure (passenger reception buildings,

warehouses, equipment etc) of ports as well as

their hinterland connections as top priorities.

Taking into consideration the resources

required for this purpose, the ministry seeks to

take full advantage of the financial opportunities

offered for port development in Greece.

In this respect, the ministry considers the

National Strategic Support Framework 2007-2013

as an important financial basis. Within this con-

text, the General Secretariat of Ports & Port Policy

cooperated closely with the competent authority of

the Ministry of National Economy & Finance and

relevant provisions for ports have been incorporat-

ed in the final text of the Support Framework. In

cooperation with the Port Authorities, the needs of

ports have been identified and proposals for proj-

ects will be submitted to the calls that will follow.

Pursuing an integrated approach and synergies

between the various financial opportunities, the

policy adopted by the Ministry of Mercantile

Marine, Aegean & Island Policy combines the Sup-

port Framework 2007-2013 with the Financing

Protocol that has been signed between the ministry

and the European Investment Bank, according to

which the EIB will provide loans for investments in

ports up to the amount of 3 billion euros for proj-

ects up to 6 billion euros. Furthermore, strong par-

ticipation of the private sector in the port industry

is expected, which will follow on a public-private

partnership basis according to the recent legisla-

tion. Many big firms have already expressed their

interest in relevant projects and therefore we are

very optimistic about it. Last but not least, the

financial support through the Support Framework

2007-2013 is to be combined also with the oppor-

tunities opened up within the framework of the

Trans-European Transport Network and the Motor-

ways of the Sea. Greek ports can take advantage of

the development of the East Med Motorway of the

Sea and concrete steps have been made so far

toward this end.

Plan aims for high-quality services,boost to competitive advantage

Sea transport is of great importance for the country. It is obvious that ports will increasinglyplay a crucial role since they represent an indispensable part of the transport chain butfurther investments are needed to achieve goals.

The ministry seeks to take fulladvantage of the financialopportunities offered for portdevelopment in Greece.

by George VlachosGeneral Secretary

of Ports & Port Policy

Ministry of Mercantile Marine,

Aegean & Island Policy

www.yen.gr

Cover

18

CFS 2000 - 2006 NSRF 2007- 2013

Cover

1. What is the budget

at the EU level?

Community Support Framework

(CSF) 2000-2006

National Strategic Reference Framework

(NSRF) 2007-2013

258,656 million euros (2004 prices), representing

35 percent of the total EU budget for 2000-2006.

308,041 million euros (2004 prices), represent-

ing 35.6 percent of the total EU budget for

2007-2013.

2. How many countries? The 15 ‘old’ EU countries. As of May 2004, the

10 new member states are also receivers of aid in

the form of the various national Community Sup-

port Frameworks.

All 27 member states (the 15 ‘old,’ the 10 ‘new,’

plus Bulgaria and Romania since January 2007)

are eligible for funding from the Structural Funds.

3. What is the budget

for Greece?

EU contribution: 21.3 billion euros in Structural

Funds plus 3.3 billion euros in Cohesion Fund.

The total budget (EU + national contribution) is

39.56 billion euros.

The budget is expected to rise to 51.14 billion

euros, by adding the private financing.

Community Initiatives: (Interreg, Urban, Equal,

Leader+) 918 million euros is allocated to Greece

through the various (1.28 billion euros, including

the national contribution).

EU contribution: 20.42 billion euros, including

Cohesion Fund.

The total budget (EU + national contribution) is

31.9 billion euros.

The budget is expected to rise to 39.5 billion

euros, by adding the expected private financing.

The budget allocation, although expressed as a ‘package’ for each country, is in reality calculated per region,

following specific allocation criteria. Cohesion Fund allocations are calculated using each country’s GDP.

Regions with GDP/capita lower than 75 percent of the EU average belong to Objective 1 (‘Cohesion for

growth and employment’), whereas the rest belong to Objective 2 (‘Competitiveness for Growth and Employ-

ment’). The differences between the two consist of the aid intensity per capita and of the type of actions that

can be co-financed. All must earmark various percentages of their budget for Lisbon-type actions (‘Growth

and Jobs’). The country itself chooses the mix between Social and Regional Development Funds.

Whereas in 1999 the budget was mainly concentrated in the so-called ‘Cohesion Countries,’ some important

differences have arisen since:

1. Nine out of the 10 new member states (with the exception of Cyprus) are poorer in relative terms than

the rest of the EU countries. This means that their average GDP/capita, which is the main parameter for the

allocation of the Structural and the Cohesion Funds, is lower than the average GDP/capita of the old mem-

ber states. As a consequence, the EU GDP/capita average is lowered significantly, and new regions are now

beneficiaries of the Structural Funds.

2. Greek regions’ GDP/capita has risen, both in absolute terms (as compared with 1999 data), and in rela-

tive terms (as a result of the statistical effect of the lowering of the average EU GDP/capita, because of the

inclusion of the new members). As a consequence, two regions (the southern Aegean and mainland Greece)

are phasing into Objective 2 regions (those whose GDP/capita is above 75 percent of the EU-15 average).

Three regions — Attica and Central and Western Macedonia — are phasing out of Objective 1 (their

GDP/capita is above 75 percent of the EU-25 average, but below 75 percent of the EU-15 average). ‘Phas-

ing out’ and ‘phasing in’ are transitional aid schemes, within objectives 1 and 2 respectively. Also:

3. The Cohesion Fund and the Community initiatives are incorporated into the main policies.

4. The European Agriculture and Rural Development Fund (and the Fisheries Fund) is separated from the

Structural Funds.

For the period 2007-2013, Greece has ensured 12.04 percent of the total available budget for the old mem-

ber states, compared to 11.7 percent for 2000-2006.

vsA

t a

glan

ce

5. What are the specif-

ic development aims

for Greece?

Community Support Framework (CSF)

2000-2006

National Strategic Reference Framework (NSRF)

2007-2013

‘There are 7 development aims:

1. Investment in human and knowledge capital: Taking into

account the principle of equal opportunities, action focuses on

improving education and vocational training systems, diffus-

ing technological innovation, and promoting the Information

Society. The CSF also promotes job-matching services, certi-

fication, market-driven approaches and open tendering proce-

dures.

2. Investment in transport infrastructure, which is aimed at

reducing peripherality vis-a-vis the rest of Europe and at bring-

ing down transaction costs. Specific attention is also given to

investment for ensuring the rational management of environ-

mental resources.

3. As regards competitiveness, the intention is to modernize

and diversify the system of business support with a focus on

SMEs and business start-ups, putting tourism on a normal

business footing, introducing new types of financial products,

integrating training and education with investment in assets,

and finally supporting the liberalization of energy markets and

the achievement of the Kyoto targets.

4. Regarding agricultural and rural development and fisheries,

priority is given to overall rural competitiveness in a sustain-

able and balanced way, focusing on the promotion of quality,

improvements in manufacturing and marketing of the prod-

ucts. The protection of natural resources and the environment

is also a priority. For fisheries, priority is given to the reorgan-

ization of the fleet, aquaculture, and product processing.

5. Quality of life refers to environment, culture, health and

welfare. A reinforced effort is being made to fully meet EU

directives concerning drinking water quality and wastewater

treatment, and to promote proper management of solid and

toxic waste. Environmental actions are reformed to reflect the

‘polluter pays’ principle. In the field of culture, both preserv-

ing cultural heritage and the development of modern culture

is promoted. The involvement of private funding is actively

encouraged. In the health sector, the focus is on supporting

reform of the management system.

6. The development of Information Society in Greece is a key

factor to enhancing business competitiveness and public sec-

tor efficiency. This priority refers to several fields as a part of

a wider development strategy.

7. Regional development aims at sustainable regional devel-

opment by strengthening competitiveness, economic develop-

ment and employment in the regions. The regions themselves

have determined their strategy, while keeping in line with the

general guidelines established in the CSF. These guidelines

foresee a substantial effort in favor of rural areas, disadvan-

taged urban areas, and island and mountainous areas.

There are 17 development aims:

1. Improvement of the extroversion of the economy and of

the incoming foreign direct investments.

2. Development of entrepreneurship and increase of pro-

ductivity.

3. Diversification of the tourist product.

4. Improvement of quality and intensity of investments in

human capital and the educational system.

5. The strengthening of research and technology and the

promotion of innovation in all sectors, as a necessary con-

dition for the restructuring of the Hellenic economy and

its transformation into a knowledge economy.

6. Digital convergence and a systematic use of ICT in the

economic and social sectors.

7. Strengthening workers’ and businesses’ adaptability.

8. Facilitation of access to employment.

9. Promotion of social inclusion and equal opportunities.

10. A viable and compensative health system, providing

high-quality, personalized care. Focus on prevention.

11. Promotion of gender equality in connection with the

social and business environments.

12. Improving the quality of public policies and their

impact on citizens and entrepreneurship.

13. Construction and modernization of transport infra-

structures.

14. Securing sustainable energy efficiency.

15. Sustainable use of natural resources.

16. Sustainable and effective environmental protection.

17. Highlighting cultural heritage as a vital element of

Greece’s economic development.

4. What is the strategic

aim of the country?

‘Contribute to Greece’s further integration in the EU and

in the knowledge-based world economy by promoting

structural change, higher productivity and employment.’

Productivity is the key factor determining a sustainable

long-term growth rate and thus the conditions for

improved living standards. CSF priorities are focused on

the types of investment in physical, human and knowl-

edge capital that are most conducive to increasing Greek

productivity.

‘Widen the development opportunities, sustain a high growth

rate, raise the productivity rate above the EU average, and

create employment opportunities, in order to achieve real con-

vergence and improve the standard of living for all citizens.’

Greece of 2013 will be a more extrovert economy with a

strong international presence. Emphasis will be placed on

education, youth, quality, innovation and technology, as well

as in the protection of the environment.

Concerning territorial development, there are three priorities:

sustainable urban development, rural development and inter-

national as well as inter-regional cooperation.

19

The NSRF is more Lisbon-oriented. While 55 percent of the CSF 2000-06 was earmarked for Lisbon actions, this percentage

rises to 67 percent in the NSRF 2007-13. Within the total NSRF budget, 27 percent is for the European Social Fund. Over-

all, 80 percent of the NSRF budget is directed toward regions other than Attica

20

Community Support Framework (CSF)

2000-2006

National Strategic Reference

Framework (NSRF) 2007-2013

6. How many opera-

tional programs

(OPs) are there?

There are 12 sectoral, 13 regional operational programs, and four Community ini-

tiatives.

‘Education’ is the Operational Program for Education and Initial Vocational Training

designed to aid Greece in meeting the challenges arising internationally due to the

development of innovative technologies. This program aims at turning these chal-

lenges into opportunities for development of infrastructures and improvement of

quality of life.

‘Employment and Life-Long Learning’: Investment in human capital, in order to

reduce unemployment and promote employability. Promotion of equal opportuni-

ties.

‘Health — Social Welfare’: Restructuring of health services, education of health per-

sonnel, mental health.

‘Competitiveness’ focuses on supporting entrepreneurship in the areas of energy,

industry, services, research and technology, tourism, commerce and human

resources.

‘Roads, Ports and Urban Development,’ and ‘Railroads, Airports and Urban Trans-

port’: The main aim is to further integrate Greece into the core of EU trans-European

Networks, reduce disadvantages due to peripheral position, open up to neighboring

areas, and reduce urban congestion, by further developing eco-friendly modes of

transport.

The ‘Rural Development’ program targets the improvement of competitiveness

of the Greek agricultural sector in the view of the challenges raised from a very

competitive international environment, the sustainable and integrated devel-

opment of the rural areas in order to improve their competitiveness and attrac-

tiveness as a living space which in turn will improve its social and financial

functions.

‘Fisheries’ is aiming at adjusting the fishing effort, renewing and modernizing fish-

ing vessels and the protection and development of aquatic resources.

‘Culture’ is financing cultural interventions (museums, archaeological sites, cultural

centers etc) which aim at improving the quality and at enforcing the overall devel-

opment of the cultural sector in Greece.

‘Environment’ is a program which promotes the environmental improvement of the

country, compliance with the relevant EU directives, and the creation of the neces-

sary conditions for sustainable development.

‘Information Society’ is the main level for implementing an overall national strategy

leading to the Information Society. Major institutional actions are being implement-

ed in parallel with supplementary measures, mainly addressed to the public sector.

‘Technical Assistance’ The 13 Regional Operational Programs correspond to

the regions of Greece: ‘Eastern Macedonia and Thrace,’ ‘Central Macedonia,’

‘Western Macedonia,’ ‘Epirus,’ ‘Thessaly,’ ‘the Ionian Islands,’ ‘Western

Greece,’ ‘Central Greece,’ ‘Attica,’ ‘the Peloponnese,’ ‘the Northern Aegean,’

‘the Southern Aegean.’

Their common focus is the boosting of local opportunities for economic and social

development, by creating the necessary infrastructure, applying soft measures and

supporting local entrepreneurship. Special provisions regard environmental protec-

tion and the minimizing of intra-peripheral inequalities, such as on the islands.

Beside the three priority objectives, the Structural Funds also provide financing

through four Community initiatives:

Interreg: promoting cross-border, transnational and interregional cooperation, with

a view to stimulating balanced development and spatial planning within Europe;

Urban: financing the economic and social regeneration of cities with serious struc-

tural problems, to promote sustainable urban development;

Leader: supporting rural development;

Equal: funding for transnational cooperation to promote new practices that guaran-

tee full equality of opportunity in access to the labor market.

There are 8 sectoral, 5 regional, and 12

European Territorial Cooperation opera-

tional programs.

‘Reinforcement of Public Administration

Efficiency’: Creating an effective, citi-

zen-centered public sector, an open

governance scheme and promoting bet-

ter policy design and deliverance.

‘Development of Human Resources’:

Creating the conditions for full

employment and better working con-

ditions and improving workers’

adaptability and responsiveness to

challenges. Special measures will be

applied for the more vulnerable

social groups.

‘Education and Life-Long Learning’:

Investing in the future; life-long learning

and a higher level of basic skills for all;

professional education.

‘Environment — Sustainable Devel-

opment’: Protection, upgrade and

sustainable development for the envi-

ronment, public health, with a view

to improving living conditions and

economic competitiveness.

‘Accessibility Improvement’: Develop-

ing and modernizing transport infra-

structures.

‘Competitiveness and Entrepreneur-

ship’: Improving the competitiveness

and extroversion of businesses,

strengthening the production system

and support innovation.

‘Digital Convergence’: Making a

strategic digital step toward better

quality of life.

‘Technical Assistance’: The Regional

Operational Programs correspond to

wider regional groupings:

1. ‘Macedonia and Thrace’

2. ‘Western Greece, the Peloponnese

and the Ionian Islands’

3. ‘Crete and the Aegean Islands’

4. ‘Thessaly, Mainland Greece and

Epirus’

5. ‘Attica’

As in the CSF, the regions them-

selves have determined their strate-

gy, while keeping in line with the

general guidelines established in the

NSRF.

The 12 European Territorial Coopera-

tion Programs are the successors of the

former Interreg Program.

In the period 2000-2006, each OP could include actions financed by various funds. For the new programming period 2007-

2013, there is an obligation in the regulations to set up programs that will only be financed by one fund (with the exception

of environment and transport OPs that can receive financing both from the European Regional Development Fund and the

Cohesion Fund). Therefore, all regional OPs are ERDF-financed. Sectoral OPs are divided according to type of actions, into

ESF-financed and ERDF-financed.

A second important difference for Greece is that, for the first time, five of its regions do not qualify for financing under Objec-

tive 1 (see above). Thus, following regulations’ obligations that the OPs must be single-objective, all ERDF-financed OPs will

apply only to the eight Objective 1 regions. The other five regions must cover all their ERDF needs through the regional OPs

only. This requires a careful setting up of priorities and management.

Using the exception clause, Greece has prepared regional OPs, as well as the ESF-financed sectoral OPs, as multi-objective.

Especially for the regional OPs, the political choice was to group regions by three (excluding Attica) in order to create

economies of scale and thus multiply the positive results and achieve more flexible management.

21

7. What are the main

features of the man-

agement system?

Unlike the managing system for 2000-2006, the new Management and Control System is lighter in its features, incorporating

only those elements that are described in the EU regulations, and are therefore obligatory. The system is characterized by fewer

managing authorities and by the political choice to delegate responsibility to the appropriate level — which is where each proj-

ect is taking place — while keeping an oversight and responsibility toward the European Commission centrally.

It also introduces new elements, aiming at improving the time and quality of the projects undertaken.

1. Certification of beneficiaries. All beneficiaries must comply with a certification standard that is being currently developed,

in order to qualify for carrying out projects. This is expected to reduce the number of beneficiaries and improve results. Those

that are not certified will be able to delegate their project management to agents acting as intermediaries.

2. Demos SA (Municipality SA). This public company will help municipalities-beneficiaries that cannot carry out projects, by

undertaking them on their behalf and ensuring full and quality delivery. A similar company, called Nomos SA (Prefecture SA)

may also be created.

3. Regional Development Organism. It will assist the regions in their setting up of development policies and the follow-up of

projects.

4. Two new companies are introduced, Digital Reinforcement SA and Administrative Restructure SA, with responsibilities in

the relevant fields of action.

Sources: Ministry of Economy and Finance, and OJ of the EU, L147/29 (14/6/2003) and C139/10 (14/6/2006)

22

Cover

Greece's priorities for rural development in

the framework of the 4th Programming

Period 2007-2013 shall be served by the

Rural Development Program 2007-2013,

foreseeing Community co-financing of

3,707 million euros and national participation of

1,371 million euros, in other words total public

expenditure of 5,078 million euros. If private partic-

ipation is added to the abovementioned amounts,

standing at 1,496 million euros for programs where

private participation is provided for, then the overall

program amount stands at 6,574 million euros.

The Ministry of Agricultural Development and

Food’s overall strategy and policy on rural develop-

ment for the period 2007-2013 focuses on:

➢ Sustainable rural development through pri-

mary, agri-food and environmental sectors’ competi-

tiveness improvement in a viable countryside.

Greece's development vision on rural develop-

ment will be served by four strategic objectives capi-

talizing on the country's opportunities and advan-

tages, dealing at the same time with primary sector

and rural areas’ accumulated structural problems.

The national strategy has been reviewed to stave

off the significant impact of summer 2007’s disas-

trous blazes through short-term and long-term meas-

ures to be financed with 200 million euros.

Rural Development Program 2007-2013 strategic objectives

The strategic objectives of Greece's Rural Devel-

opment Program for the 4th Programming Period are

the following:

General Strategic Objective 1 Maintaining and improving agriculture, forestryand agri-food sector competitiveness

This objective contributes to the primary sector’s

further development and its adaptation to the new

international economic reality, characterized by

increased competition, trade deregulation tenden-

cies, high-quality and added-value products demand

and CAP interventional mechanisms reduction for

European agricultural products prices support.

Emphasis will be placed on transfer of knowledge,

modernization and innovation, with investments in

natural and human capital and customer satisfaction

with regard to provision of excellent product quality.

Similarly, actions will be included to meet agri-

cultural holdings’ sustained structural problems (age

distribution, small size of agricultural holdings and

segmented average plot) through early retirement

and encouragement for the setting up of young farm-

ers as well as infrastructure development for the pri-

mary sector relative to access to agricultural and for-

est land, as well as water management. The afore-

mentioned strategic objective achievement will be

pursued through the following specific objectives.

● Reversion of age distribution and agricultural

holdings’ small average size;

● Restructuring and development of business struc-

tures through technological equipment and inno-

vation promotion;

● Primary sector infrastructures’ upgrading and

improvement;

● Development of human resources skills for their

adaptation to new requirements.

General Strategic Objective 2 Protection of the environment and sustainablenatural resources management

This objective contributes to natural resources

protection and improvement in order to preserve bio-

diversity and develop agricultural and forestry sys-

tems in areas of high natural value and traditional

landscape, to improve water balances and aquifers,

to deal with soil erosion and mitigate the impact of

climate change.

Actions will be promoted toward the conservation

of biodiversity and rational use of agricultural land

and forests, water quality protection, and support of

producers in mountainous and less favored areas in

order to maintain agricultural activity. In particular,

interventions for soil and water protection will be

financed, as well as for forests increased either

directly by afforesting agricultural lands or indirectly

by reforesting forestland ravaged by fires and, finally,

by promoting organic farming and animal husbandry

and spreading methods and techniques aimed at sav-

ing water resources.

The aforementioned strategic objective will be

pursued through the following specific objectives.

● Soil protection;

● Water resources protection;

● Climatic change mitigation;

● Protection of biodiversity;

● Protection-conservation of agricultural land;

● Improvement of forests’ ecologic stability.

General Strategic Objective 3 Improvement of quality of life in rural areas andencouragement of rural economy diversification

The interventions proposed within the framework

of the current general objective (Axis 3) focus on

Competitiveness and environmentprotection top target list

Greece’s plan for rural development will be served by four objectives capitalizing on thecountry’s opportunities and advantages in the the primary and rural sector. The nationalstrategy has been reviewed to stave off the significant impact of summer 2007’s disastrousblazes through short-term and long-term measures reaching 200 million euros.

Alexandros Kontos Minister of Agricultural

Development and Food

www.minagric.gr

23

mountainous/less favored areas, placing particular

emphasis on basic infrastructure creation, as well as

on promotion of local economy diversification focus-

ing on entrepreneurship enhancement with emphasis

on innovation and economic diversification.

Within this framework, initiatives will be under-

taken for rural economy diversification and quality of

life in rural areas, aiming at employment opportuni-

ties and the creation of economic growth prerequi-

sites. In particular, the aim is to reverse the adverse

depopulation trend, mainly in declining areas where

the local economy depends largely on the primary

sector, as well as to integrate these areas in a com-

prehensive effort to create living and evolving rural

areas with growth perspectives through promotion of

multi-employment opportunities, ensuring equal

opportunities between men and women, exploiting

the natural and manmade environment, upgrading

infrastructures, and protecting and highlighting rural

areas’ particular characteristics, which will con-

tribute to rendering inhabitable areas more attractive

and attracting investments.

Furthermore, actions will be undertaken to acti-

vate rural areas indigenous potential through support

of small-scale entrepreneurship or through interven-

tions for local product processing and boosting

tourism. Strengthening the exploitation of rural areas,

new housing, and urbanization or reurbanization

standards supported by great infrastructure projects

funded by structural funds will be exploited under

this general objective.

The aforementioned strategic objective achieve-

ment will be pursued through the following specific

objectives:

● Enhancement of rural areas’ attractiveness;

● Enhancement of entrepreneurship.

General Strategic Objective 4 Creation of local capabilities for employment anddiversification in rural areas through the LEADER

approach The local development strategies developed

through the LEADER approach have a comprehen-

sive and multi-sector character. The comprehensive

approach regards promotion of all economic activities

the local production system is based on, equal devel-

opment of the agricultural area (mountainous, less

favored and lowland areas) and local development

within the framework of economic, social and envi-

ronmental balance. The comprehensive approach to

local development is identified with the ‘bottom-up’

approach, since it presupposes participatory pro-

gramming (planning) and mobilization of local

authorities and local populations, being cognizant of

the area's problems and abilities.

The approach's interventions will regard gover-

nance improvement and rural areas’ indigenous

growth potential mobilization through enhancement

of cooperation and networking of areas and authori-

ties and industries in order to develop new ways and

processes to meet the problems of selected rural

areas, aiming at supporting innovation in all areas of

local economy and innovative interventions with pos-

itive results for intervention areas’ competitiveness,

as well as the ability for new employment opportuni-

ties within the framework of a comprehensive local

development strategy.

The aforementioned strategic objective achieve-

ment will be pursued through the following specific

objectives:

● Implementation of cooperation plans;

● Enhancement of local authorities’ ability and pop-

ulation mobilization for local development strate-

gies planning and implementation;

● Program approval is expected in November 2007,

while its implementation has already started, at the

beginning of 2007 (the only one out of all Greek

4th Programming Period 2007-2013 programs)

and already 427 million euros has been disbursed

for early retirement, compensatory allowance for

agricultural land’s afforestation, denitrification and

other agri-environmental measures.

Competent authorites and bodiesAccording to Article 74 (2) of Reg. 1698/2005

for the implementation of the Rural Development

Program of Greece 2007-2013 that is going to take

place at the national level, the following authorities

are being established:

● Managing Authority (MA)

● Accredited Paying Agency (PA)

● Certification Body (CB)

1. Managing Authority (MA)As RDP Managing Authority, pursuant to Article

75 of Reg. 1698/2005 is designated the Special

Management Service of the Operational Program

‘Rural Development - Restructuring of the Country-

side 2000-2006’ (SMS of OPRD-RC).

The Managing Authority is responsible for NSPRD

(National Strategic Plan for Rural Development) and

RDP management and implementation in an effec-

tive and sound way and mainly for the following:

a) The Managing Authority is the country's basic

interlocutor with the European Commission on

issues of NSPRD and RDP;

b) Monitors and coordinates RDP implementation

progress, drafts revision proposals which it sub-

mits to the European Commission after approval

by the Monitoring Committee;

c) Is in charge of program management and audit

system planning;

d) Ensures that there is a system for data entry and

storage in computerized form relative to imple-

mentation purposes;

e) Takes care of state aids co-financed actions pro-

gramming and implementation coordination;

f) Selects the operations to be financed according to

RDP criteria and ensures the compliance thereof

with Community and national rules in force dur-

ing the whole implementation period etc.

2. Accredited Paying Agency (PA)OPEKEPE is designated as Paying Agency, pur-

suant to Article 6 of Reg. (EC) 1290/2005 on the

Common Agricultural Policy financing and as provid-

ed in Article 3 of L. 3508 (OG 249 ∞/16-11-2006).

In application of Article 6 of reg. 1290/2005 the

Paying Agency can delegate its tasks, excluding the

payment of Community aids.

3. Certification Body (CB)The Certification Body, pursuant to Article 7 of

Reg. 1290/2005, may be a public or private entity,

selected after an open public call for expression of

interest.

The Certification Body is responsible for the

accredited Paying Agency accounts audit, examining

if they are true, complete and accurate, with regard

to the existing administration and audit system.

24

Cover

Over the 25-year course of Greece's accession

to the European Union and due to the need

for better management of assistance deliv-

ered through Structural Funds, substantial

changes were introduced in the country’s

public administration. Since 1986, the European

Union has financed thousands of projects in Greece,

either through the Integrated Mediterranean Pro-

grams or the successive Community Support Frame-

works (CSF). During this period of EU interventions

various weaknesses were identified — namely struc-

tural inefficiencies of public bodies, bureaucratic pro-

cedures, lack of specialized staff, as well as serious

technological gaps. Some of the above were tackled

by granting a greater role to the private sector, by

deconcentration of decision making and by introduc-

ing a sound management, audit and control system.

This effort was reinforced by the creation of govern-

ment agencies, run under private sector rules and

staffed by qualified human resources, aiming to safe-

guard Community interventions in terms of quality

assurance, certification and project monitoring.

One such agency is the Management Organiza-

tion Unit (MOU) of the Community Support Frame-

work. It was established in 1996 by a joint decision

of the Greek government and the European Commis-

sion in order to strengthen the management capacity

of the implementing authorities of EU-funded pro-

grams, to inject know-how from the private sector

and avoid the inflexibilities of the public sector, with-

out, however, substituting its tasks.

IdentityThe CSF Management Organization Unit is a gov-

ernment agency operating under the auspices of the

Greek Ministry of Economy and Finance.

It is governed by a nine-member board of direc-

tors and its work force is made up of highly qualified

personnel recruited from both the private and public

sectors (the vast majority being university graduates,

most of whom have postgraduate degrees).

MOU's mission is currently to support CSF man-

aging authorities by providing quality capacity build-

ing in the fields of:

ñ Human resources (selection and recruitment of

specialized personnel, training and assessment);

ñ Management systems and tools;

ñ Administrative assistance and improvements in

infrastructure facilities.

In 2007, MOU obtained the ISO 9001:2000

certification by TUV Rheinland in the area of ‘Sup-

port of Administration and Implementation of EU

Structural Funds Interventions.’

MOU’s role in the 2000-06 periodMOU has played a vital role in setting up CSF

management structures. Specifically, the organiza-

tion:

ñ Recruited specialists for the staffing of the man-

aging authorities;

ñ Deployed task forces to support implementing

bodies (so-called ‘final beneficiaries’) with man-

agement weaknesses;

ñ Elaborated systems and tools related to the man-

agement of EU-funded projects;

ñ Carried out intensive training programs;

ñ Procured state-of-the-art office equipment and

modern infrastructure facilities to accommodate

the managing authorities;

ñ Organized, installed and operated the managing

authorities' information technology systems;

ñ Created Internet sites for citizens' information on

EU co-funding opportunities (www.info3kps.gr)

and promotion of best practices (www.hel-

laskps.gr/bestpractices).

DeploymentMOU's work force to date numbers 1,150

employees, where the majority (approximately

1,000) are seconded to the managing authorities.

MOU itself consists of a central unit based in Athens

including several task forces which provide direct

support to final beneficiaries. These task forces target

specifically:

ñ Remote and island areas;

ñ European Social Fund projects;

ñ Minority groups' projects;

ñ Solid waste and wastewater management proj-

ects;

ñ The CSF Management Information System (MIS);

Their support consists of:

ñ Management consulting;

ñ Technical advice and transfer of know-how;

ñ Monitoring of the appropriate regulatory require-

ments;

ñ Project studies assessment;

ñ On-the-job training.

μeyond the borders An area of high priority for MOU is the exchange

and transfer of know-how with European regions out-

side Greece. MOU actively participates in major

European networks such as IQ-Net (improving the

quality of Structural Funds programming through

MOUs inject know-how, avoid inflexibilities

The Management Organization Unit aims to strengthen the management capacity ofauthorities implementing EU-funded programs. The exchange and transfer of know-how with European regions is among its top priorities.

Dex AgouridesDirector General

The Management Organization

Unit SA

www.mou.gr

25

exchange of experience) run by Strathclyde Business

School in Glasgow, the INFORM Community network

for information officers on Structural Funds run by

the European Commission etc. It also participates in

exchange of activities, particularly with new member

states, which are initiated by government entities

and/or the private sector. MOU has participated in

such activities involving countries such as Romania,

Bulgaria, Poland, Cyprus, Hungary, Slovakia, the

Czech Republic and Albania.

The new period of EU structuralinterventions (2007-2013)

The National Strategic Reference Framework

(NSRF) was endorsed by the Commission in March

2007. This strategic document lays out how Euro-

pean Cohesion Policy will be applied to deliver

growth and jobs in the seven years to come. Greece

is the second member state to have its plan and pri-

orities approved by the Commission.

The Ministry of Economy and Finance, for the

drafting of the NSRF, has put in place an unprece-

dented mechanism for consultation involving all min-

istries and regions, as well as socioeconomic part-

ners, NGOs and local communities. The new NSRF

layout, flexible vis-a-vis the planning but also strin-

gent as to the expected results, provides for seven

sectoral and five regional operational programs (total

of 12 against 27 in the current period) with greater

emphasis placed on the development of rural and

semi-rural areas.

The guiding principles underlying the planning of

the new period are:

ñ A more strategic approach to planning;

ñ A reduction in the number of Operational Pro-

grams;

ñ Fewer but efficient managing authorities;

ñ The introduction of central coordination bodies

(ex. Inter-Ministerial Committee for Coordina-

tion);

ñ Greater synergies between co-financed interven-

tions and measures funded under the national

budget;

ñ A reliable and effective management and control

system with simplified procedures, aiming at

improving quality and transparency;

ñ The introduction of new implementing agencies

and intermediary bodies;

ñ Rationalization in the number of final beneficiar-

ies and enhancement of their technical and man-

agerial capacities (introduction of a National Cer-

tification System);

ñ Prevention of compliance problems with EU leg-

islation;

ñ Dissemination of accumulated experience and

know-how from previous programming periods.

MOU’s prospective roleUnder a new bill approved very recently by the

Greek Parliament, MOU's role is further strengthened

and expanded. This falls within the government's pol-

icy to press ahead with institutional and administra-

tive adjustments for effective governance of structur-

al interventions.

Adapting to this new regulatory framework, MOU

will concentrate on high-added-value areas such as:

ñ Assisting in the restructuring process of services

responsible for managing the EU funds as well as

setting up, where required, intermediate bodies

and regional development agencies;

ñ Providing the necessary infrastructures, as well

as better and faster networking;

ñ Ensuring the flow of information on co-financed

policies and actions to the wider public by fully

exploiting the possibilities of new technologies,

ñ Developing stronger ties with European partners

for the transfer of know-how and exchange of best

practices;

ñ Improving flexibility, speeding up responses and

disseminating innovative practices to other public

structures.

The strategy set by MOU's management for the

coming period is to turn the agency into a center of

excellence for EU structural interventions in

Greece.

26

Cover

The way European citizens live

and work is rapidly changing.

Globalization, accelerated

technological progress and

demographic aging all pose

significant challenges for Europe’s

economies and require radical

changes in the labor market.

On the one hand, businesses need

to adapt their organizational struc-

ture and technology to the new and

more complicated demands of the

market in order to become more com-

petitive.

On the other, employees have to

be equipped with the right skills in

order to be able to adapt to the con-

tinually changing economic condi-

tions.

In this framework, where knowl-

edge is the dominant element and

goes hand in hand with quality and

certification, human capital is of the

utmost importance, plays a decisive

role and at the same time lies at the

heart of developments.

The greatest investment that a

country can make is in policies that

prepare citizens to integrate into the

new international economic environ-

ment while life-long learning is the

key element which releases the

human being from stagnancy and

obsolete productive procedures.

The government, acknowledging

the need to address these challenges

positively, has put forward a Nation-

al Reform Program which focuses on

the enhancement of the growth-

employment-social cohesion relation-

ship. Only when economic develop-

ment and social cohesion go hand in

hand can high levels of growth and

competitiveness be achieved.

On this basis, we are reallocating

our financial resources for the next

programming period 2007-2013,

strengthening the development of

human resources. A high priority is

for national employment and social

cohesion policies to meet the com-

munity financing of the forth pro-

gramming period in order for our

interventions to be more effective and

efficient.

In this context, and taking into

consideration previous experience

from the implementation of the three

Community Support Frameworks

(since 1990), the Ministry of Employ-

ment and Social Protection drafted

the new Operational Program

‘Human Resources Development

2007-2013.’ The total funds for its

implementation are 3,013 million

euros and Community assistance

comes to the amount of 2,260 mil-

lion euros. It is worth noting that

more than 80 percent of the funds go

to the regions, aiming at regional

convergence and the exploitation of

our comparative advantages.

It was designed on the basis of the

real needs of the labor market and its

main goal is to activate and upgrade

human capital as a driving force for the

development of Greece as well as for

the promotion of social cohesion. It

includes specific systemic interven-

tions, concrete and measurable targets

which were concluded through the

active participation of social partners

and a broader social dialogue. It is

remarkable that the Ministry of

Employment and Social Protection,

through a ‘programming agreement,’

will provide up to 2 percent of the OP

‘Human Resources Development

2007-2013’ funds to the social part-

ners, with the scope to improve their

capabilities and to promote their active

participation in planning and in the

implementation of employment and

social cohesion policies.

The Operational Program ‘Human

Resources Development 2007-2013’

is not simply a financing tool. It is

about a dynamic, cohesive and inte-

grated grid of actions, always in line

with the Lisbon Strategy and the

national policy for the promotion of

employment and the enhancement of

social protection, anticipated to shield

the social net of the country and

ensure a society of equal opportunities

for all. The main priorities of the Pro-

gram aim at:

– Ensuring conditions of full

employment;

– Improving the quality of work and

productivity;

– Promoting the adaptability of both

employees and employers;

– Promoting employment for the

young, women, the long-term

unemployed and generally for

those who face difficulties in

accessing the labor market;

– Enhancing social cohesion and

eliminating social exclusion.

At the center of the governmental

policy and the new Operational Pro-

gram lies the effort to make life-long

learning more attractive. For both the

unemployed and employees we need

the kind of training which will consti-

tute an essential qualification for find-

ing a job and for promoting vocation-

al and geographical mobility during

the professional life. In this respect

continuous vocational programs will

be implemented on the basis of their

certification. For the employer we

need the kind of training which will

make the company more competitive.

Our strategy, our aims and our

policies are the guarantee for sustain-

able growth and strong social cohe-

sion. The big challenge is the effec-

tive implementation. The results will

be obvious in the near future and the

fund management and utilization will

be successful only when every Greek

citizen can have equal access to

knowledge, training, employment

and services.

It is of great importance for us to

have positive results which will not

depend on Community funds but will

be sustainable and become part and

parcel of the Greek society. To this

end the social partners play an

important role, as does the civil soci-

ety, which, in cooperation with the

government, can formulate an effec-

tive pattern of modern governance.

Human capital: Driving force for growth and social cohesion

Life-long learning is the key element which releases the human being from stagnancy and obsoleteproductive procedures. The government, acknowledging the need to address these challengespositively, has put forward a program to enhance growth, employment and social cohesion.

Dimitrios KontosGeneral Secretary of the Ministry

of Employment

and Social Protection

www.ypakp.gr

27

From a development perspective, the regions of Western Greece, the Peloponnese and theIonian Islands present a number of comparative differences, as well as many common points.Altogether, these qualities are exploited in the formulation of policies in the Cohesionframework and the Lisbon Strategy, which will contribute to sustainable economic growth.

Western Greek, Peloponnesse and island infrastructure in for lift

The Regional Operational Program (ROP) for the

regions of Western Greece, the Peloponnese

and the Ionian Islands concerns the entire ter-

ritorial unit which these three regions com-

prise. This particular territorial unit constitutes

one of the five new units that have been created as part

of a series of initiatives for the reformation of the frame-

work management of the program period 2007-2013.

In addition to the various sectoral programs and

with emphasis on the particular characteristics and the

needs of each region, the ROP aims at contributing to

the fulfillment of the strategic objectives for national

development. These objectives were, in turn, formulat-

ed according to the territorial, economic and competi-

tive characteristics of the areas involved.

From a development perspective, the regions of

Western Greece, the Peloponnese and the Ionian

Islands present a number of comparative differences,

as well as many common points. Altogether, these

qualities are exploited in the formulation of policies in

the Cohesion framework and the Lisbon Strategy,

which will contribute to the sustainable growth of the

economy in the area and to the improvement of its res-

idents’ living standards.

The General Developmental Objective (GDO) of our

territorial unit therefore comprises the enhancement of

the developmental possibilities, the acceleration of the

pace of economic expansion and social growth, as well

as a significant increase in productivity. In other words,

the GDO pursues the achievement of real convergence

with the rest of the European Union and improvement

of the quality of life for the citizens of the planning area.

More specifically, the GDO will be realized with the

application of three priorities for the programming area:

■■ Promotion of the attractiveness of the programming

area as a place of investment, work and residence;

■■ Investment in the productive sector of the economy

in the programming area;

■■ Reduction of intra-regional and trans-regional

inequalities.

These developmental priorities will be financed by

at least three categories of funds:

1. From the 2007-2013 Regional Operational Pro-

gram, at a total cost of 1,315,000.00 euros that

will be covered exclusively by the European Fund of

Regional Growth.

The public cost for each region separately is:

– Western Greece: 543,522,941.00 euros;

– Peloponnese: 412,000,000.00 euros

– Ionian Islands: 34,117,747.00 euros

– Technical assistance: 17,329,312.00

euros

2. From the Sectoral Operational Programs that will be

financed from the Structural Funds and the financ-

ing tools of the EU for the period 2007-2013,

including the:

– European Fund of Regional Growth

– Cohesion Fund

– European Social Fund

– European Agricultural Fund of Rural Growth

– European Fisheries Fund

3. From purely national resources, within the frame of

the National Program of Growth for the period

2007-2013.

In order to achieve the maximum possible synergy

with each other and with initiatives from other pro-

grams, as well as to serve the General Developmental

Objective, the actions of the ROP are systematized in

three general objectives:

■■ General Objective 1: Growth and modernization of

the accessibility infrastructures;

■■ General Objective 2: Digital convergence with the

exploitation of information technologies and com-

munications and reinforcement of business dex-

terity;

■■ General Objective 3: Sustainable development and

quality of life.

The core interventions planned by the ROP involve

the following sectors:

■■ Social infrastructures and services;

■■ Health and social solidarity (hospital infrastruc-

tures, special units, health centers and open care

etc);

■■ Culture (improvement of basic cultural infrastruc-

tures, protection and appointment of cultural her-

itage);

■■ Actions for the enhancement of accessibility and for

the environment;

■■ Action for viable urban growth;

■■ Actions for the aid of mountainous, unfavorable and

island regions;

■■ Actions of business dexterity.

Overall, the Regional Operational Program 2007-

2013 for Western Greece, the Peloponnese and the

Ionian Islands has been strategically planned in order

to strengthen the local economies, reduce unemploy-

ment, promote environmental policies and establish

sustainable growth throughout the territorial unit. In

conjunction with ongoing public infrastructure projects

in transportation and communications worth over 3 bil-

lion euros and in close cooperation with the private sec-

tor, we aim to reveal a totally new reality of progress

and prosperity for the entire area. Indeed, we are very

well within our targets for achieving this purpose.

Spyros SpyridonGeneral Secretary

Region of Western Greece

www.ditikiellada-region.com

28

Cover

The National Strategic Development Plan, widely

known as ESPA, and the 4th Community Support

Framework were designed and planned in the Region

of Epirus targeting the needs of the region. The region

plans and manages what its inhabitants wish and ask

for. In order to carry out the operational plan we took into con-

sideration, exchanged views on and were bewildered by an

unprecedented fertile dialogue with all who were interested in

putting forward their proposals and opinions.

In recent years we have followed the governmental practice

which stimulates ‘the wide collaboration with social, econom-

ical players and institutions which formulate policy, under full

transparent procedures.’ Besides, we could not overlook the

commitments of the Greek government toward the nation —

commitments which we were obliged and compelled to fulfill.

We have submitted our proposals for the mapping out of

the economic policy of the region — focusing on the guidelines

of the Operational Programs — at the Ministry of Finance,

which is responsible for exercising a leading coordinative role

deriving from its institutional and legal frame (regarding the

midterm programming). Based exclusively on these proposals

the following statement was formulated and included in the

National Strategic Development Plan (ESPA). This statement

reflects the vision for development and the strategic aims of the

Region of Epirus.

‘In the Region of Epirus innovation and entrepreneurial

competitiveness will be promoted through the strengthening

and support of R&D, taking advantage of educational institu-

tions and provision of Internet and digital services to the enter-

prises. These aims, combined with the improvement of infra-

structure and collaboration among countries, will result in the

emergence of the Region of Epirus as the country’s northwest-

ern gate toward the European Community and the Western

Balkans.

Taking for granted the fact that for the Region of Epirus the

natural environment comprises a significant growth advantage

(biological farming, tourism) the region will target, on the one

hand, the protection and emergence of the natural environ-

ment and, on the other, the rational management of natural

resources for the benefit of all human activities.’

For the record, our joint Operational Program, with the

regions of Thessaly and Sterea Ellada, was the first to receive

the approval of the European Union.

What the Region of Epirus has to gain from the 4th Com-

munity Support Framework is analyzed below:

By locking the ERDF funds into the Regional Operational

Programs, the regions which are eligible for Objective 1 —

such as the Region of Epirus — are financed by ESPA in five

ways at the same time:

❏ Directly through the registered credits of the ERDF per

region (derived from the Regional Operational Programs);

❏ As exclusive recipients of the total resources of the five Sec-

toral Programs financed by the ERDF;

❏ As exclusive recipients of a concrete fund inside the three

Sectoral Operational Programs which are co-financed by

the ESF;

❏ As recipients of additional funding from the Cohesion Fund,

which plays a role in the 13 regions of the country;

❏ As recipients of the resources derived from the cross-bor-

der and trasnational cooperation programs.

Moreover, contrary to the 3rd CSF, the resources from the

Rural Development Funds are not included in ESPA 2007-

2013, meaning that a significant percentage of the total pub-

lic funding will be directed to the Region of Epirus for similar

actions. According to the final allocations of the Operational

Program of ESPA 2007-2013 and the indicative regional dis-

tribution of the sectoral programs, the current financing picture

of the region (public expenses) is reflected below:

1. Through the Regional Operational Program of Epirus, Thes-

saly and Sterea Ellada, the Region of Epirus accumulates

approximately 485 million euros;

2. Through the sectoral operational programs financed

through the ERDF & ESF the Region of Epirus accumulates

approximately 900 million euros;

3. Through the Cohesion Fund the Region of Epirus accumu-

lates approximately 150 million euros.

Consequently the total amount that will result in the Region

of Epirus approaches 1.5 billion euros without taking into

account the resources derived from the Rural Development

Funds. Although a big part of the abovementioned resources

will be absorbed by infrastructure (through the Sectoral Oper-

ational Programs ‘Strengthening Accessibility’ and ‘Environ-

ment & Sustainable Development’) we must highlight the fact

that we are obliged to finance actions that meet the goals set

by the Lisbon European Council.

The basis axes of the growth model which is promoted

today in the Region of Epirus, a region that was confronted

with a ‘growth shortage,’ are:

1. The creation of a competitive regional economy based on

improving infrastructure — the contemporary transport

infrastructure network stands out;

2. The new Developmental Law enhanced the Region of

Epirus with the same growth motives as the other regions

(situated near the borders) while its improvement attracted

investors' interest;

3. Health, providence and the tertiary educational sector are

the first priorities of the Region of Epirus, aiming at upgrad-

ing the quality of life;

4. Tourism and culture are an important developmental asset

for the region;

5. Focusing on supporting human resources. Also targeting

the increase of employment and promotion of equal oppor-

tunities in the job market;

6. Supporting the primary sector of the economy which plays

a key role in the regional economy and strengthens social

cohesion.

Research & development to boostEpirus innovation, competitiveness

Taking for granted the fact that for the Region of Epirus the natural environmentcomprises a significant growth advantage, the region will target, on the one hand, theprotection and emergence of the natural environment and, on the other, the rationalmanagement of natural resources.

Dimitris PanozachosGeneral Secretary

Region of Epirus

www.roe.gr

29

Δhe discussion about the role of information

and communication technologies (ICT) in

Greece has long suffered from two inter-

linked issues: The first is an almost per-

verse linking of technology to ‘accounting’

terms, mostly attributed to the flow of European

funds that have supported ICT projects since

2000. The second is a rather self-contained dis-

cussion about technology, on the basis of jargon,

acronyms, and purely technological targets. As if

broadband penetration by itself could mean any-

thing to the Greek citizen who tests his patience in

bureaucratic queues. Or as if a parent would care

about how many PCs are installed in school labs,

yet they remain locked and beyond the reach of his

own child.

Both of these issues stemmed from the same

origin: Back in the year 2000 the effort to promote

new technologies and broadband was mainly driv-

en by the availability of European funds that had to

be somehow invested in ICT. With the absence of

a coherent plan, the availability of huge amounts of

funds that had to be spent assumed the role of a

‘strategy.’ The structural peculiarities and the

bureaucratic jargon of an Operational Program

titled ‘Information Society’ were suddenly (and

sadly) becoming the distorted meaning of ‘technol-

ogy’ in Greece.

Fast-forward to 2007. A new Operational Pro-

gram titled ‘Digital Convergence’ is well under way

for the period 2007-2013. Again it's all about

European structural funds seeking to support

Greece's growth. A total budget of almost 2 billion

euros is allocated to information technologies and

broadband. What would hinder a true repetition of

the past?

The answer should be sharp: The existing ‘Dig-

ital Strategy 2006-2013’ put into effect as an

overall umbrella policy for ICT since 2006 by the

Greek government, was — this time — just expect-

ing its financing tool. The new program ‘Digital

Convergence’ is now arriving to serve its role as the

financing arm of the Digital Strategy.

It should thus be of no surprise that the new

program's structure is an accurate reflection of the

Digital Strategy's structure. It comprises two main

strategic objectives:

a. Enhanced business productivity through the

use of ICT, and

b. Improved quality of life through ICT.

The two strategic objectives are further broken

down into six main directions, including:

Business productivity includes increased ICT

uptake by businesses, integrated digital services to

firms, support to the ICT sector as a pillar of the

Greek economy and supports entrepreneurial activ-

ity in ICT-enabled ventures.

Secondly it includes quality of life refering to

the improvement of citizen welfare through ICT snd

the development of e-services for the citizen.

As such, the new Operational Program is

becoming a tool in the arsenal of the Digital Strat-

egy. What would the country do if it were not for

the EU funds? Shouldn't it have its own well-craft-

ed ‘digital plan’ and seek to implement it? And

what is driving reform after all, irrespective of the

field of policy? The existence of funds or the will-

ingness to change? The Digital Strategy clearly

demonstrates that it should be the latter, rather

than the former.

Why should this approach be more successful?

For a start, it is already based on the fertile ground

of the first two years of implementation of the Dig-

ital Strategy. Since 2006, existing programs and

funds were re-aligned to the aforementioned objec-

tives. The results have been promising: During

2006, Greece came globally first as the country

with the highest broadband annual growth rate,

according to data available from accredited inter-

national organizations. Market developments and

the growth of competition in the electronic com-

munications market have led to the slashing of

monthly retail prices for broadband access.

According to data gathered by the Observatory for

the Greek Information Society, monthly retail

prices for broadband access in Greece, and espe-

cially for new ADSL subscribers, have reached the

EU-25 average levels after having been reduced by

more than 85 percent since 2004. At the outset of

the Digital Strategy 2006-2013, the Greek govern-

ment had set the target of achieving a broadband

penetration rate at the level of 7 percent of the

population by the end of 2008, up from 0.1 per-

cent at the beginning of 2004. However, this goal

has already been achieved 18 months early. As of

today, Greece posts a broadband penetration rate

Digital Greece: A long story... in brief

Judging from the high digital growth rates of the last two years, Greece has nowdemonstrated it has both the ability and means to cover the digital ground that itpainfully lost during the last two decades. A new Operational Program titled ‘DigitalConvergence’ is well under way for the period 2007-2013.

A total budget of almost 2 billioneuros is allocated to informationtechnologies and broadband.

Dr Yannis LariosAdviser to the Secretary

for Digital Planning

Ministry of Economy and Finance

www.mnec.gr�

30

in the order of 8 percent of the population and is

continuing to grow at the same rate within 2007.

Furthermore, some new attributes of the ‘Digi-

tal Convergence’ program that have been unveiled

give clues of a different approach: No longer

should it be an exercise of funds allocation to min-

istries. Rather, it will be a race on the basis of the

principle of excellence. Those who are fast devel-

oping digital services and serving the strategy's

objectives with tangible results for citizens will be

rewarded. Those that just seek to lock in budgets

without a care for true implementation will be

treated differently.

Additionally, the new program should no longer

address the public sector solely. Quite the contrary.

The Digital Strategy promotes a shift toward digital

services and interventions that will directly address

the needs of citizens and businesses through ICT.

The keyword is ‘directly’ and without the unneces-

sary intervention of a large and inefficient public

sector. New institutions are being formed for mak-

ing this shift a reality in the implementation

process.

To be fair, interventions for a digital public sec-

tor have not been abandoned. However, the view-

point has now changed. E-government projects and

ideas that will be evaluated for eligibility should

have been designed — from the very start —

through the viewpoint of either the citizens or the

businesses. They should have as a unique guide

the benefit to be accrued by the citizen. Inward-

looking, self-fulfilling grandiose back-office public

sector ICT projects will hopefully become a case-

study of the past. Toward the same purpose, the

new program titled ‘Digital Convergence’ aspires to

closer cooperation with complementary programs

(such as the one about ‘Public Administration

Reform’) in order to introduce technology and busi-

ness processes re-engineering hand-in-hand.

Not to be ignored, though, is real support for

technology as a policy tool for regional develop-

ment. In the period ahead, ICT projects and Digital

Strategy interventions with a strong regional

dimension will be favored. Local authorities, cities

and municipalities will have a first-rate opportuni-

ty to utilize ICT as a tool for triggering local growth.

However, such an effort cannot and should not be

driven by the central government downward.

Unless the cities themselves decide to explore

these new Digital Strategy opportunities, no one

will be there and possibly no one should be there

to enforce them!

Last, but of equal importance, is an effort to set

targets and to measure progress on two scales. One

scale should certainly comprise technology indices

— the usual ones but probably the least important

ones about broadband penetration, PC use etc.

Such metrics that statistically savvy people usually

hanker to check and compare. The other scale

however is deemed to be the real metric of digital

progress and it's all about technology's impact on

real life. How many hours did the average citizen

save by not sitting at queues due to a new e-serv-

ice? How much more has the young kid learned at

school by using his laptop? etc. These real-life met-

rics introduce a new meaning both to the role of

technology and also to the impact of the Digital

Strategy itself.

Judging from the high digital growth rates of

the last two years, Greece has now demonstrated

that it has both the ability and the means to cover

the digital ground that it painfully lost during the

last two decades. The government's Digital Strate-

gy is already there and it is an accredited plan. The

financing tool is also there in the form of an Oper-

ational Program and it brings new and more inno-

vative elements up until 2013. If there was a last

hurdle that could possibly hamper this digital con-

vergence effort, it would be nothing more than

inertia and the fear of change. But for how long

and at what price can we afford to pay for this

fear? Digital Greece cannot and should not wait

any longer. The digital journey has already started

and it is really fascinating.

�

31

Companies

Solid profit figures and speculation of a buy-

out from a large foreign investor have kept

investor interest high in Greece's two

largest water utilities, Athens Water and

Sewage (EYDAP) and Thessaloniki Water

Supply and Sewage (EYATH), helping the shares

outperform broader gains on the Athens bourse so

far this year.

With a market value of 849 million euros,

EYDAP is the largest water and sewage regional

monopoly in Greece and serves more than 5 million

consumers in the broader Athens area. Its counter-

part in northern Greece, EYATH, is the country's

second-largest business of its kind and serves more

than a million consumers.

The shares of EYDAP and EYATH have risen

13.5 and 62 percent respectively since the start of

the year, outperforming the Athens bourse bench-

mark general index, which has gained 12 percent

in the same period. EYATH's share performance

has been boosted by market speculation that the

Athens water utility was looking into taking it over.

In a filing to the Athens bourse, EYDAP denied

examining the option of operating in the northern

Greek market and said that it is not aware of any

interest being shown by French utility Suez.

The denial, however, has failed to stamp out

the rumors of a growing interest being shown by

Suez in the Greek market. According to brokers,

Suez holds just under 5 percent in EYATH. A deci-

sion concerning a possible stake sale would be

made by the government, which owns 61 percent

of EYDAP and 74 percent of EYATH. The Finance

Ministry has not formally outlined its 2008 privati-

zation agenda.

Analysts described EYDAP's financial perform-

ance in the first half of the year as positive and

said the outlook for the year ‘looks even better.’

‘The main investment positives in EYDAP's invest-

ment case are its monopolistic position and exclu-

sive access to a market that has been growing rap-

idly on the back of many factors, such as strong

and sustainable water consumption, the prolonged

heat waves and persistent droughts and the

increase in the country's tourism volume by an

average of 4-5 percent annually,’ said P&K Securi-

ties in a recent note.

As far as EYDAP's first-half earnings are con-

cerned, turnover grew by 7.3 percent at the end of

June 2007, while the gross margin improved by

16.5 percent to 78.4 million euros in the same

period. Gross profit margin was 43.7 percent at

the end of the first half from 40.2 percent a year

ago. Earnings before interest, tax, depreciation and

amortization (EBITDA) increased by 22.7 percent

at the end of the first half of 2007, reaching 29.5

million euros from 24 million euros in the respec-

tive period of 2006. Earnings before interest and

taxes (EBIT) recorded strong growth as they

increased by 42.1 percent from 13.4 million euros

at the end of June 2006 to 19.1 million euros at

the end of June 2007.

‘It is also remarkable that for the first time in a

first half of the year after the adoption of the IFRS

the company has positive operating cash flow and

significantly improved free cash flow,’ the compa-

ny said in a statement.

EYATH on the other hand said that earnings

after taxes and minority rights have presented an

impressive increase (64.12 percent) during the

first semester of the current fiscal year compared

to the equivalent one last year. In particular, they

amounted to 4.2 million euros against 2.6 million

euros last year. At the same time earnings before

taxes have been increased by 45 percent approxi-

mately and reached 6.1 million euros against 4.2

million euros last year.

Earnings per stock during the first semester

reached 0.24 euros against 0.14 euros, presenting

an increase of 71.4 percent.

Meanwhile EYATH's turnover ‘closed' at

33.289 million euros, against 31.854 million in

the first semester of 2006, presenting an increase

of 4.5 percent. The company's net position from

73.3 million euros in the first semester of 2006,

reached 73.9 million euros this year while at the

same time cash holdings on 30/06/07 reached

12.6 million euros against 10.3 million on

31/12/2006, an increase therefore of approximate-

ly 23 percent.

According to EYATH, significant strengthening

of profit making is due to the company's expansion

policy, balancing of expenses, limitations on waste

and cutting back on certain people's ‘privileges.'

‘The main investment positives for EYATH

include a monopolistic position and exclusive

access to a fast-growing market, strong water mar-

ket dynamics, and a guaranteed five-year tariff

increase policy that removes uncertainty,’ said

P&K Securities.

Investor interest in Greek waterutilities strong as shares outperform

Analysts described EYDAP’s financial performance in the first half of the year as positiveand said the outlook for the year ‘looks even better.’ On the other hand, EYATH’s profitgrowth is strong due to the company’s expansion policy and cost containment.

By Stelios Bouras

32

Δhe legal Greek gaming market comprises three

major fields: sports betting, casinos and lotteries.

Fixed-odds sports betting is controlled by OPAP

while the Greek Organization of Horse Racing

(ODIE) operates horse-race betting. Licenses for the

lotteries have been granted to OPAP and the Greek State

Lottery, while some years ago (up to 2003) Intralot was

operating an instant lottery. The Greek gaming market for

2006 stood at 8.127 billion euros. The compound annual

growth rate for the same period was 16.3 percent.

For 2006, OPAP accounted for 55.7 percent of the mar-

ket, leaving casinos with 35 percent in second place. The

State Lottery (the only beneficiary is the state) has a market

share of 5.1 percent while horse racing controls 4.2 percent.

The latter has seen its market share decline significantly since

1998 (10.4 percent) compared to international trends. State-

run ODIE has recently made steps toward its modernization

(e.g. relocation to new facilities and vigorous advertising),

although it still carries the burden of high debt. In the past

OPAP had investigated a possible alliance with ODIE. Such a

possibility could lead to significant synergies but it may

require significant investment. It should be noted that during

the abovementioned period OPAP more than doubled its mar-

ket share while at the same time casinos, horse racing and

the State Lottery lost market share.

During 2002, the Greek government prohibited gambling

machines outside casinos. Additionally, it virtually banned

every electronic device from slot machines to PCs running

computer games. Following complaints and legal proceed-

ings, the government clarified that computer games via the

Internet or local network were allowed, as long as no financial

stakes were involved. However on 18/10/2007, the European

Commission decided to ask the European Court of Justice to

impose a fine on Greece for failing to comply with the court's

order to lift a blanket ban on all electronic gaming machines

— including computer games — throughout the country. The

Commission is recommending that the court impose a one-off

fine of 3.5 million euros and a daily penalty of 31,798 euros

on Greece as long as it refuses to comply.

Immediately after the prohibition of gambling machines,

OPAP introduced Super 3, Extra 5 (2002) and Kino (2003).

The introduction of the latter, a numerical fixed-odds game

accounting for 39.94 percent of OPAP’s revenues in 2006,

proved to be a huge success. It is worth noting that after the

prohibition of gambling machines, the casino subsector did

not gain market share against OPAP. Possible reasons could

be: 1) the strong penetration of Kino via players who consid-

ered Kino as a good alternative; 2) the continuation of

machine gambling through an illegal network.

In addition, on 27/06/07 the European Commission

launched infringement proceedings against Greece by a let-

ter of formal notice. The Commission sought to verify

whether the restrictions in question are compatible with Arti-

cle 49 of the EC Treaty, which guarantees the free movement

of services. The Commission considers that the restrictions in

question are not compatible with existing EU law and that

the measures taken by certain member states to restrict the

free movement of sports betting services have not been

shown to be necessary, proportionate or non-discriminatory.

Furthermore, in the Commission's view, existing national

operators cannot be regarded as non-profit operations, given

that they are subject to strict annual revenue targets and

often rely on commercial retail outlets to market their various

gambling services. The Commission inquiries cover the cross-

border provision of sports betting services, but also deal with

issues such as advertising and sponsorship. The Greek gov-

ernment sent a response letter to the European Commission

regarding the organization of the local gambling sector. The

basic argument of the Greek side is that gambling was

excluded from the Services Directive last year, so it’s up to

every state to decide upon this matter. In any case, the Greek

state has declared that is ready to discuss further restrictions

on how OPAP regulates the market. Specifically, issues such

as setting a monthly budget limit per player as well as adver-

tising limits will be directly examined. It is clear that, up to

now, the Greek state has shown no intension of deregulating

the market, thus leaving the OPAP monopoly intact. Global-

ly, during 2007 key members states of the European Union

either liberalized their gaming markets or stated that they

would move toward deregulation during the coming years.

Specifically, Italy granted operation licenses to six operators,

while in Spain every autonomous union will organize its own

tender. Additionally, France and Sweden have already

expressed their intention to liberalize the local markets. It

should be noted that the Spanish, Italian and French lotter-

ies were the top three European lotteries in terms of total

sales for 2005. In our view, this trend demonstrates that

sooner or later most of the member states will deregulate

Markets

Research

Securities

GAMING SECTOR

Greek gaming sector’s evolution (mln euros)

Year 1998 % 1999 % 2000 % 2001 % 2002 % 2003 % 2004 % 2005 % 2006 %

OPAP 669.4 26.43 591.8 21.96 1,420.2 37.87 1,766.4 41.28 1,934.2 42.03 2,230.6 49.02 3,067.9 52.58 3,592.9 52.01 4,524.1 55.67

Lottery

(State & Instant) 474.4 18.73 466.2 17.30 472.1 12.59 497.8 11.63 505.1 10.98 462.5 10.16 376.9 6.46 416.5 6.03 417.5 5.14

Horse racing 262.8 10.37 330.4 12.26 347.9 9.28 349.3 8.16 336.4 7.31 347.9 7.65 328.7 5.63 322.4 4.67 337.5 4.15

Casinos 1,126.5 44.47 1,306.4 48.46 1,509.5 40.26 1,665.3 38.92 1,825.8 39.68 1,509.5 33.17 2,061.6 35.33 2,576.2 37.29 2,848.0 35.04

Total 2,533.1 100.0 2,694.8 100.0 3,749.7 100.0 4,278.8 100.0 4,601.5 100.0 4,550.5 100.0 5,835.2 100.0 6,908.1 100.0 8,127.2 100.0

33

their domestic markets, but in any case we expect Greece

to be among the last.

Casinos

A total of nine casinos operate in Greece, with only one run by

the state. The Club Hotel Casino Loutraki maintained its lead-

ing position in the casino market for yet another year. Casinos

operating near the two biggest Greek cities (Athens and Thes-

saloniki) account for 82 percent of total visitors. According to

the 1994 law, the Greek state has the right to grant new licens-

es in areas where casinos already operate 12 years after the first

operating day. The first casinos in Greece opened in 1995,

while the rest came later. Currently there are rumors that the

state is seeking to grant a new license on Crete (which as yet

has no casinos), while at the same time it is examining ways to

raise money by offering extension periods to existing casinos

and privatizing Corfu’s casino. We think that, due to social con-

cerns as well as the lack of demand in most places outside

Athens, the opening of new casinos in Greece is not likely, with

the exception of Crete and possibly a third license in Attica.

Internet gambling

Internet gambling is not legally available in Greece. To date

OPAP has not expressed any official intention of introducing

Internet betting, because even though such a move could

boost its profits, it could also jeopardize its arguments on

monopoly. In addition, the company is seeking ways to stop

Internet betting. The United States, where betting transactions

via credit card are blocked by the bank if the Internet site is

physically located outside the country, could be a good exam-

ple. However, the fact that the Ministry of Finance, the bank-

ing sector and OPAP would have to act in alliance on this mat-

ter may significantly delay the application of such a measure.

Even though Internet penetration is low in Greece, we think

that eventually OPAP should be at least internally prepared to

face Internet competition.

Social responsibility

The social side effects that the liberalization of gambling

would cause are the main arguments of the monopoly

defenders in Greece and in the EU. As a result OPAP has

made significant progress toward social responsibility, gain-

ing legal backup in the deregulation issue. Specifically:

ñ It does not advertise Kino at all, which, as previously

stated, is the closest legal alternative to slot machine

gambling.

ñ It had the lowest advertising budget in Europe calculat-

ed as a revenue percentage (2005 figures).

ñ It contributes much to society in terms of donations and

sponsorships.

ñ It has not launched any new games since 2003.

As for the casinos, the Club Hotel Casino Loutraki, in coop-

eration with the Hellenic Center for Intercultural Psychiatry

(SOS Line), has set up a 24-hour free phone line offering

help to gamers, and a special program to fight gambling

addiction, while at the same time it was the first company

to initiate the self-barring policy.

OPAP SA was established as a private legal entity in 1958, was reor-

ganized as a societe anonyme, or corporation, domiciled in Greece, in

1999, and its accounting as such began in 2000. On 13/10/2000, the

company purchased from the Hellenic Republic the 20-year exclusive

right to operate certain numerical lottery and sports betting games for

the amount of 322.817 million euros. According to the latter, the com-

pany has the sole concession to operate and manage nine existing

numerical lottery and sports betting games as well as two new numer-

ical lottery games, which it has yet to introduce. The company also

holds the sole concession to operate and manage any new sports bet-

ting games in Greece as well as the right of first refusal to operate and

manage any new lottery games permitted by the Hellenic Republic. The

company currently operates six numerical lottery games (Joker, Lotto,

Proto, Extra 5, Super 3 and Kino) and three sports betting games

(Stoichima, Propo and Propo-Goal). It has also designed two new lot-

tery games (Bingo and Super 4). It distributes its games through an

extensive on-line network of approximately 5,338 dedicated agents.

Starting February 2007, OPAP has undertaken the execution risk of

running Stoichima (its main fixed-odds sport game) on its own, aiming

to boost sales and save 2-3 percent of extra costs. In addition, on

01/08/07, the company signed an agreement with Intralot for the pro-

curement of 29,400 new terminals divided between agent, touch

screen, and ticket checker terminals.

The company’s basic economic figures according to financial statements

for the year ended 2006 are as follows:

Turnover came to 4,633,428,778.34 euros against 3,695,234,505.83

euros in 2005, presenting an increase of 25.39 percent. Operating profit

came to 738,211,249.40 euros, presenting an increase of 3.31 percent,

while net profit was up 11.23 percent to 509,806,697.57 euros. In addi-

tion OPAP disclosed 2007 first-half results. Revenues were down 2 per-

cent year-on-year to 1,224 million euros, EBITDA reached 201 million

euros, up 32 percent y-o-y and net profit stood at 142 million euros, up

35 percent y-o-y. Headlines were above consensus, due to the strong Kino

and Joker top line and the change of accounting of Intralot’s know-how

transfer contract. Prize payouts to lottery and betting winners, as the main

account of the cost of sales, represent the profit of the games’ winners of

the company according to the rules of each game. Distributions to the Hel-

lenic Football Association are related to the Propo and Propo-Goal games.

All in all, OPAP has been reporting solid results for a number of years and

aims to benefit further via a new business plan expected at the beginning

of 2008. After considerable delays the former management of OPAP was

expected to announce the business plan by September 2007. However,

following the recent management change, it is normal that the new pres-

ident and CEO, Christos Hadjiemmanuil, should be updated before any

official announcements. The new business plan could include opportuni-

ties such as:

ñ Participation in cross-border million-euro-type lotteries.

ñ Governmental approval for machine games (VLTs, AWPs etc).

ñ Operation of games via new media.

ñ A major sport event to boost Stoichima results in 2008.

ñ Kino to be introduced on ships.

ñ Bill and ticket payment services to add a new niche market.

As far as risk is concerned, the possible deregulation of the gaming mar-

ket in Greece is a threat to OPAP. Even though the management claims

that in such a case the company has the liquid assets needed in order to

expand internationally and generate synergies in lottery and betting oper-

ations, it is also true that it would be difficult to retain its local market

share. Thus, it is possible that the management will seek to sign contrac-

tual agreements with the agents connecting the issue with the refurbish-

ment of the agencies.

OPAP

www .pkon l i n e . g r

Cosmote Mobile Telecommunications SA, the

mobile operator with the widest presence in

Southeast Europe, has announced its consoli-

dated financial data and operational key performance

indicators (KPIs) for the nine months ending

September 30, 2007, under International Financial

Reporting Standards (IFRS). Cosmote operates in five

countries — Greece, Albania, Bulgaria, the Former

Yugoslav Republic of Macedonia (FYROM) and

Romania — through Cosmote Greece, AMC, Globul,

Cosmofon and Cosmote Romania. Since October

2006 Cosmote has also been consolidating the posi-

tion of its subsidiary Germanos, a chain of stores

offering phone and computer goods and services.

Over the past nine months and in all its opera-

tions Cosmote has continued to realize strong cus-

tomer additions, as a result of Germanos’s contri-

bution and expansion, both resulting in fast revenue

growth. Total subscribers added in all markets in

the third quarter of 2007 exceeded 1 million, dou-

ble the amount added in Q3 2006, leading to total

net additions during the first nine months of 2007

of almost 3 million.

Overall, the Cosmote Group's customer base has

reached 14.1 million, a 42 percent increase from a

year ago. This strong subscriber growth is clearly

leading to a faster-than-anticipated achievement of

the 15 million subscriber benchmark, initially tar-

geted for 2009 but now well within reach in the

next two quarters.

Consolidated revenue growth for the nine months

reached 38.1 percent year-on-year, and excluding the

Germanos impact approximately 14 percent. In Q3,

consolidated revenue growth reached 39 percent, an

acceleration compared to earlier quarters, mainly due

to the accelerated Q3 growth in Greece and Ger-

manos sales. In Greece, Cosmote continued to power

sales growth through increasing subscriber numbers

and market share, mainly in the post-paid segment

and through the Germanos distribution channel.

At the same time, positive usage elasticity is

leading to significant outgoing revenue growth

despite tariff reductions. As a result, average rev-

enue per user (ARPU) declines have been con-

tained, despite aggressive prepaid offerings. In

Albania, AMC continued its strong performance,

with revenues increasing through subscriber expan-

sion in a stable AMOU & ARPU environment; in

Bulgaria, Globul succeeded in sustaining fast rev-

enue growth with significantly improving margins;

Cosmofon in FYROM is continuing its upward path

in its KPIs, with substantial improvement in its

EBITDA performance; Cosmote Romania is attract-

ing very strong subscriber numbers and is on track

to meet its ambitious financial targets for 2008 and

2009. Throughout the past 12 months, Germanos

has been the key to the Group's growth, by increas-

ing substantially its net additions to Cosmote in all

regions of common operations and accounting for

around 56 percent of total Group net additions

(excluding Albania) in Q3.

Consolidated EBITDA increased by 13.4 percent

in Q3 and 15.9 percent in the first nine months.

The continuing EBITDA growth is the result of

steady improvements in the profitability of all inter-

national operations with record margins in Bulgaria,

Albania and FYROM, in addition to the strong

turnover growth. In Greece, EBITDA increased by 2

percent in Q3, with a margin decline largely due to

one-off factors, discussed below.

Group net income in Q3 declined by 15 percent

compared to Q3 2006, leading to a nine-month

increase of 1 percent. The net income decline in Q3

is mainly due to significant FX losses of approxi-

mately 19 million euros in Romania due to the RON

devaluation during Q3, increased interest costs and

higher depreciation, resulting from the substantial

capital expenditure in Romania and Bulgaria.

Group progress in 2007 remains on course to

meet the key targets set in terms of revenue and

EBITDA growth.

Total Group capital expenditure reached approx-

imately 340 million euros in the first nine months

of 2007. Romania continued to absorb the majori-

ty (approx 132 million) as it is investing heavily to

expand its network capacity. Greece absorbed some

97 million euros and Bulgaria a further 66 million.

Increased customer intake, resulting in substantial

traffic growth in all markets, is leading to higher

capital expenditure requirements. As a result, Cos-

mote expects to revise its capital expenditure plans

upward for 2007 to a total of up to 540 million

euros, related mainly to capacity expansion in

Greece, Romania and, to a lesser extent, Bulgaria.

At the end of September, Group net debt stood at

2.4 billion euros.

34

Companies

Cosmote:

Expansion in all markets

Piraeus Group

Solid growth in volumes, profitability

Profitability and business volumes of Piraeus Group contin-

ued the fast pace of growth in the nine months 2007.

Loans grew by 43 percent and deposits by 27 percent on

a yearly basis. This significant increase of business activities led

to net profit in the nine-month period of 512 mln euros up by

50 percent y-o-y, while core profit was up by 52 percent.

This performance and the recent completion of the Bank's

1.35-bln-euro share capital increase, in combination with the

fast expansion of Piraeus Group activities to the broader geo-

graphical region of Southeastern Europe and the Eastern

Mediterranean, made the revision of our business plan neces-

sary.

According to the revised business plan, which is based on

organic growth, Piraeus Bank Group's total assets will be close

to 80 bln euros by the end of 2010 compared to 40 bln euros

today, while net profit of 2010 will reach 1.2 bln euros.’

(Michalis Sallas, Chairman of the Board of Directors)

Key performance points of the 9M 2007 period

ñ Increase of Group profit after tax and minorities by 50 per-

cent up to 512.1 mln euros against 342.1 mln in 9M

2006. Earnings per share 1.83 euros versus 1.23 euros last

year, increased by 49 percent.

ñ Increase of core profit, excluding the net revenues that

resulted from the unwinding of the cross-shareholding with

ING in 2006 and the selling of the stake in Bank of Cyprus

this year, by 52 percent to 358.8 mln euros from 236.7

mln last year.

ñ Improvement of return-on-equity ratio (RoE) to 34.9 percent

from 29.9 percent in 9M 2006 and return-on-assets ratio

(RoA) to 1.83 percent from 1.68 percent respectively.

ñ Net interest income on average interest earning assets

(NIM) at 3.01 percent.

ñ Increase of net interest income by 28 percent and net com-

mission income by 25 percent y-o-y.

ñ Improvement of cost-to-income ratio to 42.7 percent com-

pared to 46.6 percent previous year.

ñ Loan portfolio grew by 43 percent and deposits grew by 27

percent y-o-y.

ñ Significant increase of international operations' volumes:

doubled loan portfolio (100 percent), growth of deposits by

44 percent y-o-y.

ñ Expansion of branch network to 690 branches in Septem-

ber 2007, out of which 309 branches in Greece and 381

branches abroad.

35

Turnover rose 20 percent to 370.5 mln euros from

307.6 mln euros. Pre-tax earnings increased 36

percent to 41.7 mln euros. Net profit for the peri-

od increased 45 percent to 33.4 mln euros from 23

mln euros. EBIT increased 24 percent to 42.8 mln

euros. Total passengers welcomed onboard rose by

19 percent to 4.1 million. Average passengers per

flight improved to 96 from 94.

Dimitris Gerogiannis, managing mirector, com-

mented:

‘I am pleased to report a positive set of nine-

month results, showing net profits of 33.4 mln

euros, 45 percent higher compared to the respec-

tive 2006 period. These improved results were

driven by a consistent strong momentum in pas-

senger traffic growth combined with successful

cost efficiency measures. I am also pleased to

report progress in areas that have been set as key

priorities in our strategic development plan and

these include expanding our international network,

further strengthening our relationship with

Lufthansa, reinforcing our domestic position and,

last but not least, achieving progress on the cost of

distribution front.

‘Looking forward into 2008, where the major

part of our fleet modernization would take place, we

are focusing on improved customer services as well

as further cost efficiencies that the renewal will

bring, in an overall challenging cost environment.

The oil price, which has repeatedly hit and exceed-

ed record high levels, has become the most imme-

diate challenge for the near future. While partially

mitigated by the weak US dollar and the application

of fuel surcharges, we believe its effect will be felt

in 2008. To this end, among our goals is to accel-

erate the re-fleeting process — to the degree possi-

ble — so as to more rapidly improve the fuel effi-

ciency of our fleet as well as enhance our revenue

potential as a result of our improved services.’

Total revenue rose by 20 percent to 370.5 mln

euros from 307.6 mln euros attributed to the strong

demand trend and network expansion. Aegean Air-

lines achieved excellent profitability during the nine

months of 2007. Pre-tax profits showed an

improvement of 36 percent to 41.7 mln euros from

30.7 mln euros. Net earnings after tax for the nine-

month period jumped 45 percent to 33.4 mln euros

with a respective margin of 9 percent. Net earnings

growth for continuing operations was even higher,

standing at 59 percent. Important factors that con-

tributed to the improved profitability were scale

economies and distribution efficiencies due to high-

er web sales.

As far as the traffic development is concerned,

Aegean Airlines welcomed more than 4 million pas-

sengers on board during the nine-month period,

achieving a 19 percent y-o-y growth. Domestic

demand remained strong with passenger traffic up

12 percent to 2.6 million passengers, confirming

the success of Aegean's strategy to further strength-

en its presence as well as stimulate demand in the

domestic market. Growth in international routes

was higher, reflecting efforts for further internation-

al network expansion, with Aegean Airlines trans-

ferring 1.5 million passengers, 34 percent more

compared to last year.

Aegean Airlines

Passenger traffic lifts earnings

Titan Group turnover for the first nine months of

2007 was 1,144 million euros, down 4 percent

versus the prior year. Year-to-date EBITDA was

342 million euros, down 7 percent against last year.

Net profit for the Group, after minority interests and

taxes, reached 193 million euros, down by 9 percent

on the previous year. At constant exchange rates,

Group turnover and EBITDA would have decreased

by 1 percent and 5 percent respectively year-on-year.

In the US, the significant downturn of the residential

sector, compounded by the crisis in the subprime

mortgage market, strongly affected sales across all

product lines, despite the positive contribution from

recent acquisitions.

The decline is more pronounced in the previously

buoyant Florida market, but is also noticeable in the

other states where the Group operates. Furthermore,

the court-ordered cessation of mining in Florida's

Lake Belt region since July 17 has radically reduced

the profit contribution from the aggregates activity

and adversely influenced production costs at our

Pennsuco cement plant. In Greece, the surge in

demand posted at the beginning of the year receded,

as expected. Construction activity in the third quarter

declined, compared to a strong Q3 in 2006. In addi-

tion, solid fuel prices and dry-cargo freight rates

reached unprecedented levels, affecting the Group's

profitability. Southeastern Europe posted a consider-

able increase of profitability, primarily due to the

enhanced performance of Bulgaria, with the remain-

ing markets also making a positive contribution.

In Egypt, profitability declined, due to rising ener-

gy costs and the scheduled shutdown of the Beni

Suef plant for over a month, for upgrade of capacity.

Group investments for the third quarter reached 395

million euros, mostly relating to acquisitions but also

to improvements in operations efficiency. Titan also

proceeded with the buyback of 344,092 own shares

with a total value of 12.2 million euros during the

current financial year, with a view to enhancing long-

term value creation for shareholders.

For the remainder of 2007, we anticipate

demand for building materials in Greece to be below

last year's levels, while markets in Southeastern

Europe are expected to maintain the prevailing

dynamism. In the US, the housing crisis is extremely

severe while concerns remain about a broader slow-

down of the economy. Regarding the court decision

affecting mining in Florida's Lake Belt region, the

Army Corps of Engineers is expected to complete the

requested Supplementary Environmental Impact

Statement (SEIS) in early 2008. In parallel, the hear-

ing of the appeal we filed against the judge's ruling

at the 11th Circuit Court of Appeals in Atlanta is

scheduled to commence at the end of November

2007.

Our 50 percent joint venture in Egypt, following

the award by Egypt's Industrial Development Author-

ity of the relevant license, is starting a 150-million-

euro investment to expand by 1.5 million tons per

annum the capacity of the Beni Suef plant. Con-

struction of the new line and supply of engineering

and electrical equipment has been assigned to the

French group FCB. Furthermore, the construction of

the new plant in the area of Boka e Kuqe in Albania

is progressing at a fast pace. We expect both cement

plants to be operational at the end of 2009, enhanc-

ing our geographical diversification and increasing

the Group's presence in these emerging markets.

36

Companies

Titan Cement Company

South eastern markets strong

Forthnet

Unbundling ratio improves

In the third quarter Forthnet accelerated the pace of unbundling significantly as evidenced by the

steadily improving unbundling ratio. At the beginning of June, the unbundled active customers stood

at 15,280 while at the end of September that number was more than 42,580. In terms of new addi-

tions, Forthnet increased its market share to approximately 42 percent of total unbundling in the third

quarter. More importantly the pace accelerated further in October. The activations in October reached

about 14,000 setting a new record for activations in a single month. As the pace of unbundling increas-

es the company shifts further its attention from wholesale products to ULL products & services.

In a seasonally weak quarter, Forthnet added 26,427 new Broadband subscribers1 reaching a total

of 189,267 as of the end of Septembe. Forthnet 2Play continuous its strong uptake, constituting - of

Forthnet's active ULL subscriber base with ARPU at 46 euros (excluding VAT). Demand for Broadband,

2play and other ULL services is expected to remain strong.

In an effort to increase its appeal to the consumer market, Forthnet launched a retail network of Forth-

net branded shops. In October 07, Forthnet opened 31 Broadband shops, through a mix of mainly fran-

chised, owned, and shop-in-a-shop stores. This number is expected to grow over time.

37

Third quarter 2007 reported consolidated

net income increased 109 percent year-

on-year to 84 million euros and nine-

month (9M) net income grew 23 percent to

265 million euros, corresponding to 0.27

euros and 0.87 euros per share (EPS) respec-

tively. Adjusting for inventory effects, ‘clean’

net income was up 3 percent y-o-y to 226

million euros in 9M, but down 18 percent to

82 million euros in Q3. Reported Group earn-

ings before interest, tax, depreciation and

amortization (EBITDA) increased 3 percent to

444 million euros in 9M; on a comparable,

‘clean’ basis, they were lower by 11 percent

to 392 million euros.

Key financials for the nine-month period

to 30 September, 2007, and comparisons to

last year's results, are:

ñ Sales revenue: 5.9 billion euros, down 3

percent (Q3: 2.1 billion euros, up 5 per-

cent).

ñ Net income: 265 million euros, up 23

percent (Q3: 84 million euros, up 109

percent).

ñ Earnings per share: 0.87 euros, up 23

percent (Q3: 0.27 euros, up 109 per-

cent).

ñ ‘Clean’ EBITDA: 392 million euros, down

11 percent (Q3: 132 million euros, down

30 percent).

ñ ‘Clean’ net income: 226 million euros, up

3 percent (Q3: 82 million euros, down 18

percent).

ñ RO∞CE: (12-mth trailing) 10 percent.

ñ ROE: (12-mth trailing) 11 percent.

Key themes for Q3/9M results were:

a) Weakening refining environment

– After the exceptional strength in May,

Mediterranean benchmark refining mar-

gins weakened significantly, with the Q3

blended benchmark refining margin down

by $2.5/bbl over the previous quarter and

$0.8/bbl lower versus Q3 2006. However,

in 9M 2007 the blended benchmark refin-

ing margin was 2 percent higher y-o-y.

– During Q3, the euro strengthened further

against the US dollar, with an adverse

translation effect on refining margins and,

thus, profitability. However, weakness in

the dollar positively affected the revalua-

tion of US$-denominated loans, resulting

in 16 million euros currency gains.

– The Greek products market grew (exclud-

ing seasonal heating gasoil sales) by 0.9

percent, on the back of strong automotive

diesel and aviation fuel sales. Heating

gasoil sales were down 14 percent due to

the warmer winter, while gasoline sales

were flat.

– In Q3, crude oil prices continued their

ascent, moving by an average $6/bbl over

Q207, leading to a positive inventory

effect. In contrast, the sharp fall in crude

oil prices led to inventory losses of 85 mil-

lion euros in Q306.

b) Improving profitability

– In the absence of last year's inventory

losses, 9M reported EBITDA increased by

3 percent to 444 million euros (Q3 at 135

million euros, up 32 percent); ‘clean’

EBITDA was down 11 percent to 392 mil-

lion euros (Q3 at 132 million euros, 30

percent lower).

– Net income grew 23 percent to 265 mil-

lion euros in 9M (Q3 at 84 million euros,

up 109 percent). On a comparable,

‘clean’ basis, net income increased by 3

percent y-o-y to 226 million euros in the

respective period.

– Free cash flow reached 282 million euros,

driven by improvements in working capi-

tal needs.

– Net income boosted by FX gains, stronger

DEPA-related income and a lower tax

rate; 9M reported EPS increased by 23

percent to 0.87 euros (Q3 at 0.27 euros,

up 109 percent), while ‘clean’ EPS was

up 3 percent to 0.74 euros (Q3 at 0.26

euros, down 18 percent).

Hellenic Petroleum

Third quarter income up 109 pct

38

Companies

OPAP, the leading gaming operator in Greece,

announced interim financial results for the

nine-month period ending September 30,

2007, prepared in accordance with International

Financial Reporting Standards (IFRS).

OPAP's revenues for the nine month 2007

increased by 5.0 percent amounting to 3.5 billion

euros compared to 3.3 billion euros in nine mont

2006, primarily due to KINO's very strong perform-

ance, which more than offset a decline in Stihima

revenues, itself a reflection of incremental revenues

in the comparable period during the 2006 World

Cup which took place in June and July 2006.

Revenues for third quarter 2007 grew by 7.8

percent to 1.16 billion euros, compared to 1.08

billion euros for the same period in 2006.

The Company's EBITDA, adjusted for the first

out of the two one off payments of 25.0 million

euros made towards the victims of the recent forest

fires in Greece, reached 589.1 million euros, up

14.6 percent year-on-year, due to reduced costs

following the undertaking of the organisation and

operation of the Stihima game and despite the

increase in distribution costs and payout to the win-

ners of Stihima, which was mainly recorded in the

third quarter compared to the same period in 2006.

The adjusted EBITDA margin increased to 16.6

percent versus 15.2 percent for the same period in

2006.

Adjusted EBITDA for third quarter 2007

increased by 4.0 percent to 192.2 million euros,

while the EBITDA margin stood at 16.5 percent

versus 17.0 percent for the same period in 2006.

Adjusted net profit for nine month 2007

amounted to 416.2 million euros, an increase of

17.1 percent year-on-year, while for the third quar-

ter it increased by 2.8 percent, and amounted to

130.8 million euros, reflecting the above mentioned

factors, as well as the lower corporate tax rate.

OPAP S.A.

Revenues rise by five pct on strong KINO performance

Total revenues amounted to 3.84

billion euros versus 3.58 billion

euros in nine month 2006, an

increase of 7.4 percent.

During the third quarter of 2007,

the negative impact to hydro genera-

tion, due to the very low snow and

rain fall levels of the first four

months of the year continued, albeit

at a lower pace, causing a severe

decrease in hydro generation by

53.1 percent in nine month 2007,

compared to nine month 2006.

This decrease, resulted in a

expenditure of 178 million euros

that impacted the nine month in

2007 financial results, compared to

the financial results of the corre-

sponding period of 2006, as a con-

sequence of the substitution of

almost the entire reduction of hydro

generation by “expensive fuels”

(natural gas and energy purchases).

Other operating expenses,

including lignite, amounted to

410.2 million euros, from 439.8

million euros in nine month 2006,

a decrease of 6.7 percent.

EBITDA amounted to 610.8 mil-

lion euros, compared to 631.2 mil-

lion euros in nine month 2006, a

decrease of 3.2 percent.

Pre-tax profits in nine month

2007 amounted to 76.6 million

euros compared to 105 million

euros in nine months 2006, a

decrease of 28.4 million europs (27

percent), while net income amount-

ed to 60.2 million euros, compared

to 71.2 million euros, respectively,

a decrease of 15.4 percent.

Capital expenditure amounted to

584.8 million euros compared to

493 million euros in nine months

2006, an increase of 18.6 percent.

This increase is mainly attributed to

capital expenditures for the develop-

ment of mines and for electricity

generation projects.

Under especially difficult condi-

tions, PPC managed successfully

the consequences from the intensive

and of a long duration summer heat

waves, that tested the country's

electricity system, while succeed-

ing, as well, in the quick restoration

of damages caused by the cata-

strophic fires that resulted in

numerous and significant electrifica-

tion problems. These factors,

impacted on the financial results of

3Q 2007.

PPC

Revenues hit 3.8 bln euros

39

Volume of 1,554 million unit cases, 14

percent above 2006; strong operating

profit (EBIT) momentum to 616 million

euros, 20 percent above last year on a com-

parable basis; net profit of 435 million euros,

18 percent above 2006 on a comparable

basis, EPS of 1.80 euros, 18 percent above

the prior year on a comparable basis.

Volume of 584 million unit cases, 12 per-

cent above 2006; solid improvement in oper-

ating profit (EBIT) to 285 million euros, up 21

percent on last year; net profit of 213 million

euros, up 22 percent on the prior year; EPS of

0.88 euros, up 21 percent year-on-year.

Note: Comparable financial indicators

(previously referred to as ‘underlying’) exclude

in 2006 the recognition of pre-acquisition tax

losses, significant restructuring costs and non-

recurring items.

Doros Constantinou, managing director of

the Coca-Cola Hellenic Bottling Company

(CCHBC), commented: ‘Our performance in

the third quarter has built on the strong

momentum achieved at the half year with the

continued successful execution of our strategy

across our geographies and product cate-

gories. We delivered another quarter of robust

volume growth, together with strong operating

margin expansion and as a result we are

upgrading our guidance on our full-year finan-

cial targets. We are in the process of com-

pleting our business planning cycle and

believe that our in-country strategic initia-

tives, coupled with the positive momentum

we are witnessing across our territories, will

support CCHBC's vision of being the undis-

puted leader in every market in which we

compete.’

CCHBC is one of the world's largest bottlers

of products of The Coca-Cola Company (TCCC)

and has operations in 28 countries serving a

population of over 540 million people.

CCHBC shares are listed on the Athens

Exchange (ATHEX:EEEK), with secondary list-

ings on the London (LSE:CCB) and Australian

(ASX:CHB) stock exchanges. CCHBC's Ameri-

can depositary receipts (ADRs) are listed on

the New York Stock Exchange (NYSE:CCH).

Financial information in this announce-

ment is presented on the basis of Internation-

al Financial Reporting Standards (IFRS). The

company also prepares financial information

under accounting principles generally accept-

ed in the United States (US GAAP), which are

available on our website (www.coca-colah-

bc.com).

Coca-Cola HBC

Business momentum continues -

guidance upgrade

40

Companies

The year 2007 has been one of recuperation

for Piraeus port, the leading container and

car trans-shipment hub in the Eastern

Mediterranean. The nearly two months’ work

dispute at the end of 2006 had its conse-

quences within 2007. Nevertheless, despite this set-

back, the year ending finds Piraeus port strengthened

in both financial and traffic terms, thus proving that

the country’s main port has undertaken significant

structural and organizational changes during the last

three years, setting the foundations that predeter-

mine future growth.

The majority of Greek citizens have come to know

Piraeus as a busy passenger port — with nearly 20

million passengers per year heading to the Greek

islands and another million visiting the port and its

facilities on cruise vessels, it comes as no surprise.

Indeed, in the cruise area Piraeus port has seen

an unprecedented increase in demand during the

last two years, reaching rates of close to 30 per-

cent. This success was not out of luck though.

Since 2005 passenger services have been substan-

tially improved through the use of modern informa-

tion technology as well as through the expansion of

the passenger terminals.

No matter how strong the increase in demand in

the cruise area is, the heart of the port still beats at

its container and car terminals.

Container terminal projectsWith an annual throughput of 1.4 million TEU

and with more than 53 percent of the annual traffic

attributed to trans-shipment, Piraeus's container ter-

minal is considered to be the regional trans-shipment

hub of the Eastern Mediterranean and the main gate

to the Black Sea.

The Black Sea economic area is already rapidly

expanding. The Black Sea hinterland, covering six

nations, is home to almost 300 million people, with

buying power of $9,000 per capita and a GDP

growth rate ranging from 6-9 percent. Given these

facts, it comes as no surprise that the Black Sea is

considered to be the European trade powerhouse for

the next decade and Piraeus port can be the main

trans-shipment hub for cargoes toward this growing

market.

The Piraeus Port Authority (PPA) operates the

Eleftherios Venizelos Container Terminal (EVCT) at

Neo Ikonio. It is located a short distance from the

center of Piraeus, comprises Piers I and II, occupy-

ing 90 hectares, with a total capacity close to 1.8

million TEU and can accommodate the most

advanced types of container ships up to 16m draft.

Pier I, situated at the eastern side of the Contain-

er Terminal, is currently under expansion and is

expected to be operational by 2009. This expansion

will add 1.0 million TEU capacity and is only the first

step of an ambitious investment plan set into motion

by PPA in order to capture the traffic increase which

is expected from the continuous growth of China's

exports and economic development in the Black Sea

and Balkan area. This investment plan has a time

span of seven year and encompasses both infrastruc-

ture and superstructure works that will ultimately

provide a capacity of 4.5 million TEU.

With the application of the strategic investment

plan, Piraeus port will have the necessary capacity

to capitalize on its advantageous geographical

position for serving the expanding Balkan and

Black Sea markets.

However, Piraeus is not the only port in the area

eyeing the expanding demand in the East Mediter-

ranean. Competing ports in the area are also realiz-

ing expansion plans and because of that the timing of

the completion of the investment for Piraeus is of

crucial importance. What’s more, the capacity

expansion requires funds close to 500 million euros.

This budget is beyond the financial capabilities of

PPA as well too risky to undertake single-handedly.

Within this view, the Piraeus Port Authority is

searching for a strategic partner that through a con-

cession will undertake part of the investment in infra-

structure and superstructure and will assume opera-

tions under a build-operate-transfer (BOT) agree-

ment. These plans have attracted the interest of most

of the major world port operators who are displaying

an initial willingness to undertake such an endeavor.

Thus PPA is preparing an international call for ten-

ders that will probably be announced within the com-

ing months.

The move of PPA SA to bring in a strategic part-

ner will undoubtedly ensure the materialization of its

Piraeus port on developmentroute as financial results improve

The port of Piraeus is in a phase of development and improvement. Financial resultsachieved so far as well as traffic growth reported in almost all business activitiescertify this belief. However, a number of critical decisions in the short term willdetermine the future of the country’s largest port.

Piraeus port will have thenecessary capacity to capitalizeon its advantageousgeographical position for servingthe expanding Balkan and BlackSea markets.

μechrakis DionysiosPresident of Piraeus

Port Authority

www.olp.gr

41

vision for the container terminal — i.e. to achieve the

undisputed hub position in the Eastern Mediter-

ranean — while at the same time creating new job

opportunities at the port and the surrounding munic-

ipalities and also enhancing services provided both to

local cargo port users and shipping companies

engaged in trans-shipment activities at Piraeus.

Car terminals flourishingThe advantageous geographical position of

Piraeus for serving the Black Sea and Balkan markets

holds true for the car terminals as well.

Piraeus is already believed by some to be the

most important hub for car trans-shipment in the

Mediterranean. However, the port’s management is

not resting on its laurels and, following the inaugura-

tion of a new car terminal in 2005, has already taken

steps to increase the capacity by another 36,000

square meters and one more berthing spot. The new

area just recently became operational and further

expansion plans are under way that will undoubtedly

further enhance the competitive position of Piraeus.

These capacity expansion projects, together with

important operational improvements like the adop-

tion of a bar-coding system that enables better logis-

tics services as well as personnel training and

improved safety standards are the main reasons for

the considerable demand increase of 30 percent

faced by Piraeus port. The improved operation of the

Piraeus car terminals has been evident for some

time and is probably the reason why the world’s

leading car manufacturer Toyota is considering the

inclusion of Piraeus port in its European and Black

sea logistics network. Without doubt this move will

boost Piraeus's status in the relevant market and

will also provide scope for further operational

improvements since the car manufacturer is consid-

ered to be a leader in logistics operations and

Piraeus is one of the few hubs worldwide where the

car company will not assume independent opera-

tions, thus accepting Piraeus's operational status as

being up to the required standards.

Increased financial resultsThe port of Piraeus is currently making a start on

a significant improvement. Managerial measures to

enhance service quality as well as the good timing of

investments are mirrored in the improved financial

results.

It is worth noting that in the first half of 2007,

Piraeus port’s turnover increased by 9.1 percent

amounting to 81.28 million euros, against 74.47

million in the relevant period of the previous year.

Furthermore, earnings before taxes amounted to

16.48 million euros, against 10.05 million in 2006,

presenting an increase of 63.96 percent.

The port of Piraeus is undoubtedly in a phase of

development and improvement. The financial results

achieved so far as well as the traffic growth reported

in almost all business activities are testimony to this

belief. However, there are a number of critical deci-

sions to be made in the short term that will deter-

mine the future of the port at least for the coming

decades. Neither the port's management nor the

main shareholder (the Greek state) are willing to miss

out on the significant opportunities that lie ahead.

Without doubt the necessary decisions will be taken

shortly and will allow the port to embark on a new

phase of development.

42

Markets

FTSE and ATHEX select Alpha Bank to create an ETF based on the FTSE/ATHEX 20 Index. Theproduct will be launched in January 2008 with an initial net asset value of 140 million euros.

Alpha Bank to launch first ETFbased on blue chip index

Following the call for tender announced by the FTSE

Group (FTSE) and the Athens Exchange on September

13 for the creation of the first Exchange Traded Fund

(ETF) to be listed on the ATHEX, the FTSE and ATHEX

are pleased to announce that Alpha Bank Group has

been selected to create an ETF based on the FTSE/ATHEX 20

Index. The product comes to market in January 2008 with an

initial net asset value of 140 million euros.

The licensee has been selected from 7 candidates based on

the following main criteria:

– Starting Net Asset Value and expected growth of the ETF;

– Marketing budget and plan;

– Management and custody fees;

– Distribution network to both institutional and retail

investors;

– Speed of introduction of the ETF;

– Issuer's interest in developing and launching ETFs on other

indices.

In a joint statement, Imogen Dillon Hatcher, managing

director of FTSE Europe Middle East and Africa, and Spyros

Capralos, ATHEX chairman, said, 'We are delighted to be

involved in the launch of this first ETF on the ATHEX and are

confident that this will be the first of a series of domestic,

regional, sectoral and thematic indices that the FTSE and

ATHEX plan to introduce to the Greek market.'

Through a joint venture cooperation, the FTSE and the

Athens Exchange have created the FTSE/ATHEX 20 Index,

which is widely regarded as the performance benchmark of the

Greek market, comprising companies with the biggest capital-

ization traded on the Athens Exchange.

The FTSE/ATHEX 20 index represents

a market capitalization of approxi-

mately 92 billion euros, or about 50

percent of the total market cap of the

Greek stock market (prices as of

20/11/07).

ETFs are essentially index-tracking

funds that are listed and trade on

exchanges like stocks. They enable

investors to gain exposure to entire

market segments in specific geograph-

ical areas and/or sectors through a

simple transaction, on a real-time

basis and at a lower cost than many

other forms of investing. ETFs appeal

to both individual and institutional

investors and can be used as:

➢ A core holding in a portfolio with

the aim of reducing risk;

➢ A tool for implementing a diverge

range of investment allocation

strategies;

➢ An attractive alternative to futures

and swaps;

➢ A performance enhancement tool

through securities lending.

In fact, ETFs are one of the fastest-

growing segments in the investment

industry and have opened a whole new

panorama of investment opportunities

to both individual and institutional

investors. The first ETF was launched

in the US in 1993, and there are now

more than 950 ETFs worldwide with

assets close to US$700 billion, man-

aged by 66 managers. It is worth not-

ing that 239 new ETFs have been

launched in the first half of 2007

alone, while there are plans to launch

an additional 524 ETFs in Europe, the

US and the rest of the world.

Through its competitive proposal,

Alpha Bank Group has shown its com-

mitment to the success of this first

Greek ETF, as the Group wishes to

maintain and expand its leading posi-

tion in the Greek equity market and

continue its tradition in offering inno-

vative products. Alpha Asset Manage-

ment AEDAK, the fund manager

(issuer) of the ETF, is one of the major

institutional asset managers in Greece

with approximately 6.5 billion euros in

assets under management. In addition,

Alpha Asset Management AEDAK is

the leading institutional manager of

domestic equities with about 1.2 bil-

lion euros in Greek equities under

management. The company was the

first to introduce in Greece in 1996 a

passively managed, index-tracking

fund. Alpha Asset Management

AEDAK along with Alpha Finance, who

will act as a primary market maker of

the product, have the expertise and the

size for a successful product. The

potential success of this first ETF could

open the way for the creation of other

regional ETFs, an opportunity that

exists given the global investment

interest in the Greek and Southeastern

European markets.

43

DOW JONES STOXX®

BALKAN 50 EQUAL WEIGHTED INDEX

Components

Company Supersector Country

Adris Grupa Pref. Financial Services Croatia

Agrobanka Beograd Banks Serbia

AIK Banka Nis Banks Serbia

Akbank Banks Turkey

Alkaloid AD Skopje Health Care FYROM

Alpha Bank Banks Greece

Atlantska Plovidba Industrial Goods & Services Croatia

Balgarska Telekomunikacionna Telecommunications Bulgaria

Kompanija

Banca Transilvania Banks Romania

BRD-Groupe Societe Generale Banks Romania

Coca-Cola HBC Food & Beverage Greece

Cosmote Telecommunications Greece

EFG Eurobank Ergasias Banks Greece

Energoprojekt Holding a.d. Beograd Industrial Goods & Services Serbia

Eregli Demir ve Celik Fabrikalari Basic Resources Turkey

Ericsson Nikola Tesla Telecommunications Croatia

Granit AD Skopje Construction & Materials FYROM

Haci Omer Sabanci Holding Financial Services Turkey

Himimport Financial Services Bulgaria

INA - Industrija Nafte Oil & Gas Croatia

Industrialen Holding Balgarija Financial Services Bulgaria

KOC Holding Financial Services Turkey

Komercijalna Banka a.d. Beograd Banks Serbia

Komercijalna Banka AD Skopje Banks FYROM

KRKA Redne Health Care Slovenia

Luka Koper Industrial Goods & Services Slovenia

Makpetrol AD Skopje Oil & Gas FYROM

Metals Banka a.d. Novi Sad Banks Serbia

National Bank of Greece Banks Greece

OPAP Travel & Leisure Greece

OTE Telecommunications Greece

Petrol d.d. Redne Oil & Gas Slovenia

Piraeus Bank Banks Greece

Podravka Prehrambena Industrija Food & Beverage Croatia

Public Power Corp Utilities Greece

Rompetrol Rafinare SA Constanta Oil & Gas Romania

SNP Petrom Oil & Gas Romania

Sofarma Health Care Bulgaria

SSIF Broker Financial Services Romania

TB Centralna Kooperativna Banka Banks Bulgaria

Telekom Slovenije Telecommunications Slovenia

Titan Cement Co Construction & Materials Greece

Toplifikacija Skopje Utilities FYROM

Turkcell Iletisim Hizmetleri Telecommunications Turkey

Turkiye Garanti Bankasi Banks Turkey

Turkiye Is Bankasi Banks Turkey

Turkiye Petrol Rafinerileri Oil & Gas Turkey

Turkiye Vakiflar Bankasi Banks Turkey

Yapi ve Kredi Bankasi Banks Turkey

Zito Prehrambena Industrija Food & Beverages Slovenia

Δen of the largest Greek companies have been listed in the new Dow

Jones STOXX Balkan 50 Equal Weighted Index. They include Alpha

Bank, Coca-Cola HBC, Cosmote, EFG Eurobank, National Bank of

Greece, OPAP, OTE, Piraeus Bank, Public Power Corporation and

Titan Cement.

STOXX Ltd, a joint venture of the Deutsche Boerse, the Dow Jones &

Company and the SWX Group, launched the new index on November 5. It

is a blue chip index measuring the performance of the 50 largest and most

liquid stocks traded in the Balkan region.

The Balkan countries comprise growing economies with developed com-

petitive returns in recent years, which makes the index an appealing tool for

financial institutions. The Dow Jones STOXX Balkan 50 is designed to

underlie investment products such as mutual funds, exchange-traded funds

and structured products.

The countries currently included in the Dow Jones STOXX Balkan 50 are

Bulgaria, Croatia, Greece, the Former Yugoslav Republic of Macedonia

(FYROM), Romania, Serbia, Slovenia and Turkey. To ensure a significant

and balanced representation of all eligible countries, the index comprises

the 10 largest companies of Greece and Turkey and the five largest com-

panies of the other countries. The criteria for the inclusion is for the com-

pany to have a relatively high free float, with each share in the index par-

ticipating with about 2 percent of the value. The number of components is

fixed at 50. Components are selected based on free-float market capitaliza-

tion and liquidity.

The composition of the Dow Jones STOXX Balkan 50 Equal Weighted

Index is reviewed annually in September. Price and total return indices are

calculated in euros and US dollars. Daily historical index values of the Dow

Jones STOXX Balkan 50 Equal Weighted Index are available back to

December 31, 2006.

The year-to-date performance through October 31, 2007 of the Dow

Jones STOXX Balkan 50 Equal Weighted Index is 38.7 percent.

Dow Jones licenses the index to banks and financial institutions and

they in return issue financial products on it which investors can invest in.

Investors can only ‘buy’ from the index when investing in a financial

product that uses this index as the underlying product.

10 Greek companies in a new Balkan index

Supersector weighting (%)

Country weight in index (%)

44

ThemesThe Hellenic Center for Investment (ELKE) is promoting the numerous investmentopportunities that Greece offers and is proactively supporting the path of economic growththat emanates from Greece. Record foreign direct investments figures in 2006indicategrowing confidence in economy.

Greece to build on record yearas inflows reach 4.2 bln euros

As Greece establishes itself as a significant

player in the global economy and pursues

an outward-looking economic position, the

country's investment climate is taking on a

positive, dynamic and confident character.

Foreign direct investment has increased signifi-

cantly during the last three years and Greece has

recorded record levels of inflows for 2006. In addi-

tion, Greek companies have led an impressive

surge of investment activity throughout Southeast

Europe and have a commanding presence in the

entire region.

The Hellenic Center for Investment (ELKE) is

vigorously promoting the numerous investment

opportunities that Greece offers and is proactively

supporting the path of economic growth that

emanates from Greece.

An outward-looking economyThe outward-looking nature of the Greek econ-

omy is best exemplified by the dominant position

that Greek enterprises enjoy in Southeast Europe.

Today, approximately 4,000 Greek companies are

active in Southeast Europe and the Eastern

Mediterranean. Each of these businesses is driving

economic growth and expansion in a market of

more than 140 million residents. In fact, Greece is

among the leading investors in Albania, Bulgaria,

Serbia, Montenegro, Romania and the Former

Yugoslav Republic of Macedonia (FYROM), with

investment stock totaling more than 4 billion euros

in 2006. The vast majority of these investments

(about 75 percent) is directed toward establishing

new businesses and mergers or acquisitions, and

these companies in 2006 alone have provided net

inflows back to Greece totaling 760 million euros.

Greek banks have taken a leadership position in

the modernization process of the region's banking

sector. Over 2,000 branches of Greek banks operate

in Southeast Europe, introducing innovative, new

products to emerging economies and providing a host

of B2C and B2B services. Other sectors have also

established themselves solidly, including telecommu-

nications, food and beverages, textiles, construction,

and a diverse number of services.

The multiplier effect of these activities is consid-

erable, leading to healthy economic growth across

the board and a stronger business base.

On the domestic front, Greece is continuing its

well-designed policy of reform, with emphasis on fur-

ther reducing taxes, creating strong incentives for

private investment and employment, taking full

advantage of the EU's Third and Fourth Community

Support Frameworks, promoting exports, strengthen-

ing public-private partnerships (PPPs) to build infra-

structure, and continuing with privatizations. These

reforms are proving to be highly effective, as we have

seen through the very positive course of the economy

over the last three years.

The Greek economy has outperformed the EU

average for more than five years. Economic growth

was 4.1 percent in the second quarter of 2007,

compared with 2.5 percent in the eurozone and 1.7

percent in the United States, and is expected to

maintain a 4 percent rate in 2008.

FDI — an impressive achievementOne of the most impressive achievements of the

significant reforms has been the dynamic increase in

foreign direct investment. Gross FDI inflows in 2006

totaled more than 6.99 billion euros, a 100 percent

increase over 2005. More significantly, net inflows

reached 4.275 billion euros, up from 487 million in

2005, a noteworthy 10-fold increase.

It is important to underline that a large share —

about 60 percent of the FDI total — was directed

toward new business establishment, mergers and

acquisitions, and the remainder toward loans and the

purchase of real estate. In addition, 700 million

euros of this total represents reinvested earnings, a

sure sign of confidence among investors and a strong

message of their intent to remain in Greece for the

long term. Of the total, the amount of loans, at 1.899

billion euros, is a positive sign of investor confidence,

indicating a strong willingness to commit funds for

projected revenues and growth.

Investor confidenceInvestor confidence in Greece is demonstrated by

the all-important markets of the EU and the US.

Table 1 shows the gross FDI inflows for 2006 by

country. Recent initiatives by Greece in Russia and

Dr Dimitrios PazaitisCEO

Hellenic Center for Investments

www.elke.gr / info@elke.gr

In addition, 700 million euros ofthis total represents reinvestedearnings, a sure sign of confidenceamong investors and a strongmessage of their intent to remainin Greece for the long term.

Eastern Europe, the Middle East, and Asia bode well

for FDI in the near future from these regions, which

are showing a strong interest in energy, telecommu-

nications, tourism, transportation and manufactur-

ing. These advances are creating a new identity for

Greece in the eyes of investors worldwide. The sig-

nificant increases in FDI over the last three years

clearly demonstrate that reforms have met with the

approval of the global investor community. And the

role of Greece as a regional hub, in energy, com-

merce and transit, is one of the most positive features

that investors recognize today.

Multinational parents based in Greece totaled

240 in 2005 and foreign subsidiaries totaled 790.

The total stock of foreign investment totaled $37 bil-

lion in 2006, up from $14 billion in 2000 and $5.6

billion in 1990.

The sectors in which FDI is concentrated are var-

ied and range from mining to tourism (Table 2).

Reform and growthSupporting investor interest in Greece are the

bold initiatives that are providing confidence and

optimism. The reduction of corporate taxation rates,

from 35 to 25 percent, has sent clear signals that

business growth is a high priority.

Time-consuming processes are being eliminat-

ed, especially in the important areas of licenses and

permits. And the labor force in Greece, with a high

percentage of well-educated and English-speaking

talent, offers investors high-caliber human

resources at highly competitive costs.

In addition, the investment incentives in Greece

are the highest allowed under EU legislation, reach-

ing up to 60 percent of a project's value. Whether

in cash grants, leasing, wage subsidies or tax

allowances, incentives in Greece are convincing

investors that the Greek government is providing a

business environment that is second to none.

Among the most convincing signs that Greece is

adapting its business environment to today's glob-

al marketplace is the recent privatization history.

Partial or full privatizations since 2004 have raised

more than 5.79 billion euros, introducing a dynam-

ic and competitive spirit in formerly state-owned

enterprises. Hellenic Petroleum, National Bank of

Greece, the OPAP state lottery company, the Hel-

lenic Telecommunications Company (OTE), Agri-

cultural Bank of Greece (ATEbank), the Greek

Postal Services (ELTA), Greek Postal Savings Bank

and Emporiki Bank are successful examples.

Continued economic development and growth is

being ensured by policies that pursue reform, wisely

utilize EU funding, promote investment through the

revised Investment Incentives Law of 2006, and

benefit from the implementation of the successful

PPP (Private-Public Partnerships) framework.

EU Fourth Community Support Framework

funds are expected to reach a total of 35 billion US

dollars through 2013. Public investments in a vari-

ety of infrastructure projects will reach 13 billion

dollars, and private investments likewise total

approximately 13 billion. PPP projects, which

began in 2006, will exceed 4.3 billion dollars in

value in 2008.

These advances are creating a new identity for

Greece in the eyes of investors worldwide. Greece's

position as a gateway to Europe, an important tourism

market, and a base for R&D is being noticed by

investors who look for stability, opportunity, location,

and growth markets.

ELKE’s roleThe Hellenic Center for Investment is dedicated

to supporting the international investor with superior

services to facilitate new and expanding business

activity in Greece. ELKE is positioned as a catalyst to

implement Greece's new investment promotion poli-

cy by proactively seeking investors from around the

globe. Unique investment opportunities in areas like

tourism, energy, technology, logistics, and light man-

ufacturing are unprecedented.

45

Table 2

Sectors FDI 2006

Mining

Food, Beverages, Tobacco

Clothing, Leather Goods

Metals, Metallurgy

Coal, Petroleum, Refineries

Chemicals

Electrical Appliances

Radio, TV Equipment

Vehicles

Other Industrial Products

Electricity, Gas, Water Supply

Construction

Real Estate

Hotels, Restaurants

Wholesale, Retail

Post, Telecommunication

Banks, Financial Institutions

Insurance

Consulting Services

Education, Healthcare

Source: Bank of Greece

Table 1

Country Amount (million euros)France 2,486

Great Britain 1,071

Germany 1,069

Netherlands 330

Luxembourg 330

Italy 325

Spain 26

Portugal 14

Sweden 32

Ireland 9

Austria 101

Belgium 154

Denmark 3

Finland 1

Cyprus 170

USA 150

TOTAL 6,995

Source: Bank of Greece

46

Themes

Global business survey on familyfirms shows high confidence

Confidence is high among family business

owners, but many are not making adequate

provisions for the future, according to the

new survey of PricewaterhouseCoopers

(PwC).

➢ 49 percent of family firms have no succession

plan.

➢ More than two-thirds are optimistic about future

growth.

➢ 85 percent call for a simpler tax system and/or

paying lower taxes.

Almost half of family businesses around the world

do not have a plan outlining the future ownership of

their business, according to the 2007/2008 Global

Family Business Survey released on November 21,

2007, by PricewaterhouseCoopers. This first ever

global survey of almost 1,500 family businesses in

28 countries, including Greece, also reveals that this

rises to 56 percent when looking at companies with

a turnover of less than 50 million euros a year and

60 percent when looking at companies that were

founded in the last 20 years.

One-quarter of the family firms surveyed are

expected to change hands within the next five years

and 51 percent of these are expected to remain in

family hands. On the other hand, 25 percent of the

family businesses in Greece plan to hand over to the

next generation, while 50 percent anticipate selling

to a private equity investor. Moreover, even in many

of the companies that have drawn up a succession

plan, some of the most important details have not

been worked out. Only 48 percent, for example, have

actually chosen a successor.

A surprisingly high percentage of family business

owners have also failed to gauge their potential tax

exposure. Fifty-six percent of respondents state that

they have not had their businesses valued domesti-

cally, and 84 percent of those with a cross-border

presence have not had their companies valued inter-

nationally within the last 12 months.

While many family businesses have not devel-

oped a succession plan or appointed someone to take

over the reins when the current head of the compa-

ny retires, they may be better prepared for other _

less predictable _ contingencies. Sixty-seven percent

say that they have made provisions for dealing with

both business and family issues, should a key man-

ager or shareholder become incapacitated or die.

OutlookThree-quarters of respondents report that

demand for their products and services has grown in

the past 12 months. Many are, however, wary of

growing too rapidly. Only half have increased their

capital expenditure in the last 12 months, while 41

percent have maintained the same level of invest-

ment.

Confidence among family business owners is

high. Fifty-eight percent are confident that the mar-

kets in which they operate will get better over the

coming year. In Greece, this percentage is similar

(56 percent), although there's pessimism, since 26

percent expect that the state of the market will dete-

riorate. Executives in emerging economies are espe-

cially positive - 84 percent anticipate the value of the

orders they secure to rise in the next 12 months,

compared to 70 percent globally and 66 percent in

Greece.

Most respondents feel that their companies are

well placed to capitalize on new opportunities and

are ‘somewhat' or ‘very’ competitive, citing ‘product

design or quality’ and ‘Customer loyalty’ as their key

strengths. Of some concern is that 25 percent of the

respondents report that they do not have a business

plan.

Asked what external challenges they thought

would most affect their companies over the coming

years, 44 percent cited market conditions, followed

by product competition (39 percent) and government

policy (33 percent). North American and European

executives are more concerned about market condi-

tions than any other external risk (59 percent and 43

percent respectively), while those running companies

in the emerging markets see the prospect of changes

in government policy as a bigger threat (37 percent).

Regarding Greece, competition comes first with 64

percent, next come market conditions with 54 per-

cent, interest rates with 32 percent and government

policy with 30 percent.

Forty-two percent of executives say that difficul-

ties recruiting skilled staff will be one of the biggest

internal obstacles they face. As a result, human

resources heads up the list of areas in which they

plan to invest over the coming year. A hefty 73 per-

cent say that their first priority is to hire and train

good new employees, followed by sales activities (69

percent) and marketing (64 percent). As far as

Greece is concerned, priorities are similar, though in

lower percentages compared with the global levels

(38 percent in all three sectors).

Although 34 percent of respondents admit to con-

flicts over their future strategy and 27 percent have

quarreled about the performance of family members

employed within the firm, 70 percent have not

adopted any procedures for resolving conflicts and

two-thirds have no defined criteria for deciding who

should be allowed to take an active role in the organ-

ization.

Eighty-five percent of respondents believe simpli-

fication of the tax regime and a reduction of the tax

burden should be a top priority of the government

over the next three to five years. Regarding Greece,

this percentage comes up to 98 percent. They would

also welcome help in creating closer links with aca-

demia for the purposes of product development, a

stronger corporate compliance environment and the

provision of more state support for staff training.

Confidence among family business owners is high. Fifty-eight percent are confident that the markets inwhich they operate will get better over the coming year. In Greece, this percentage is similar (56 percent),although there's pessimism, since 26 percent expect that the state of the market will deteriorate.

http://www.alpha.gr/

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