Events

Call of the Euro: Greek Investment, Economic Policy and Regional Stability

March 28, 2006 // 9:00am10:30am

Ladies and Gentlemen,
I consider it a great honor to be offered the privilege to express my thoughts to a distinguished audience today. Therefore, I would like to congratulate and thank the organizers for providing us with the opportunity to exchange views and ideas for major policy issues regarding development and investment in Greece and South-Eastern Europe, as well as the importance of such activities for regional stability.

As a member of the E.U. since 1981, Greece has experienced the repercussions of its recent political and economic developments. The French and Dutch peoples' rejection of the Draft Constitutional Treaty deprived the Old Continent from fulfilling its interest for further political unification. Our vision for a political union still lacks the necessary popular consensus and needs to be both re-examined and disseminated to public spheres for an open and productive debate and exchange of ideas. Finally, a deal was made over the E.U.'s Financial Perspectives for the period 2007 – 2013 but only after a long lasting negotiation period, which had revealed serious differences between the Member States, and in particular between the 15 and 10 new member states.

However, the goals of growth and competitiveness have brought European leaders together. A new consensus emerged regarding a new approach to the Lisbon Strategy. We need more research and development, efficiency and better coordination. We need innovative products and services to compete successfully in an increasingly competitive global market. We must also continue to pay attention to our social model, in order to finance pensions and health care, to safeguard the sustainability of labor markets, and improve our environmental policy.

In other words, Europe is in need of serious reforms which will boost its competitiveness to higher standards and re-vitalize its declared goals. Europe is in need of jobs. Europe is in need of competitive educational institutions. Nonetheless, creating more jobs does not necessarily mean we need low labor costs.

This, I can testify to; as a businessman, I have learned the importance of investment. Investment in human resources, investment in knowledge, innovation and expertise. Europe and its member states can succeed only if they can harness their knowledge, only if they translate their commitments into practice and successful reform programs, but above all, only if we invest in the citizens of the future.

The E.U., in order to continue to prosper, needs to be more responsive to new global challenges. Such responses will provide its citizens with new opportunities in a perpetually changing world.

I am certain of everyone's awareness in this room, that the more open an economy becomes, the more competitiveness increases. This is a fact. This alone should make decision-makers fashion new policies, capable of mobilizing companies towards productivity, innovation and value added products.

This is exactly the challenge facing Greece: our government has diagnosed the need for the reform of the Greek economy just in time.

The government's strategy is clear and coherent: we need to complete our integrated and cohesive strategy that will shape a new development model. We are certain that this model will activate new market and investment forces and introduce more opportunities as well as more transparent market conditions.

We are determined to provide our country with a new series of strategic opportunities, with a new vision of development and prosperity. We are in the process of creating a new, environment conducive for investment in an effort to capitalize on our country's E.U. membership, our neighbors' European future, the new-born markets and our existing assets.

Today, it is widely recognized that Greece has entered a new era of major achievements and new challenging goals. The successful hosting of the 2004 Olympic Games has shown Greece's undisputed ability to fulfill projects of a global scale. The event has proved that our country can be a dynamic pioneer, an efficient contributor to the global community, a considerable and reliable actor on the world stage.

Greece's positive international image along with its contemporary infrastructure, security provisions, combined transportation means, telecommunications and its recent role in the energy market, places the country in the center of investment interest.

Greece has assumed a leading role within the E.U., in order to achieve major strategic objectives in SE Europe. These are: the promotion of structural reforms, stability, democratic consolidation, the creation of well-functioning institutions, cooperation, development and prosperity.

Due primarily to its geo-political location, Greece is the European Union's guardian safety keeper of a new vision: to contribute dynamically in changing reality in its own back yard; to transform the Balkans from the powder-keg of Europe into a European neighborhood of peace, cooperation and prosperity by enhancing the ongoing stabilization process reflecting the political, economic and reality that is currently developing in the region, especially in the energy sector.

We are confident that with our pioneering role, we are assisting the countries of our region as they try to change from within, as we contribute to their radical transformation which is and continue to be fundamental to their stability process.

Very soon, in 9 months that is, Bulgaria and Romania will be members of the E.U. The efforts of these countries have been hard and persistent. Their road to accession has not been unhampered. Now, the rest of the Balkan states are invited to follow the same process. We are determined to provide our strong support and our sincere efforts to assist them. This is our solid belief and principle.

However, we must clearly state that our contribution is not a blank check. Moving closer towards E.U. membership, the key to admission will be the result of essential and perpetual responses to certain social, political and economic criteria, encompassing as well as the values and principles of the E.U. The candidate countries, including Turkey, are monitored in every single turn of their road to membership. The fulfillment of certain criteria rests upon them.

It is clear that the European perspective is contributing to the stability and prosperity of the region. The recent ratification of the S.E. Europe Energy Community Treaty marks the emergence of a new era. Thus, a new era begins by transforming energy into a vital source that will promote stability, peace, prosperity, development in the region and facilitate the integration of the Balkan states into the European economic and institutional framework.

Practically, the signing of the Energy Community Treaty means that the European Union and nine partners of South East Europe - Croatia, Bosnia and Herzegovina, Serbia, Montenegro, the Former Yugoslav Republic of Macedonia, Albania, Romania, Bulgaria and UNMIK on behalf of Kosovo - will create the legal framework for an integrated energy market. Turkey is expected to participate in the second half of 2006.

The major goal of this Treaty signed in Athens, Greece on the 25th of October 2005 is to improve overall energy conservation and efficiency, reduce an excessively high energy intensity of production compared to international standards, strengthen national institutional capacities and adapt legislation and regulation to E.U. norms and practices. In the long term, the Treaty is expected to facilitate the attraction of large scale investments projects with regard to infrastructure works and ensure the provision of energy resources. Overall, the Treaty may constitute an ideal example of how cooperation and multilevel synergy promote regional development and prosperity.

With regard to the Energy Sector, we should also underline the significance of:
• The political agreement between Greece, Russia and Bulgaria for the construction of a cross-border oil pipeline. The 285-kilometre pipeline to carry Russian oil from Burgas in Bulgaria to Alexandroupoli in northern Greece has an estimated investment cost of 750-800 million US dollars with an annual capacity of 35 million tons of oil. It will supplement a sea route through the Bosporus for transportation of the product in the region.
• The awaited construction of the Greek – Turkish natural gas pipeline by the end of 2006.
• The ratification of the Greek – Italian natural gas undersea pipeline Agreement

A new economic sphere emerges. A sphere of economic cooperation which includes the countries of the Black Sea, the Balkans, the Near and Middle East. The heart of this new-born community lies in Greece. This is what makes our country a bidirectional investment gateway for ventures and enterprises which seek new opportunities to the Eastern as well as the Western markets.

It is obvious that being a member of the E.U. and due to its strategic location, Greece plays a prominent role in the general effort for development and the enhancement of business prospects in the region. Greece effectively functions as the linkage between the E.U. and Southeastern Europe, in terms of economy and geopolitics. It is the place, in which European companies can establish their headquarters, in order to develop their business activities in the countries of Southeastern Europe. Moreover, for those companies active in the Balkans, the Black Sea, the Caucasian countries and Russia, Greece constitutes an ideal location for regional headquarters.

Greece's geopolitical status is an asset for every investor interested in taking advantage of the E.U.'s reliable institutional and economic environment, as well as the opportunities offered by the new developing economies.

Due to its advantageous position and its monetary stability, Greece is the "stock market heart" of the region, a real gateway for direct foreign investment. Nowadays, almost 40% of the Athens Stock Exchange volume of shares and bonds traded, belong to foreign investors.

This development clearly demonstrates the foreign investors' proven loyalty in Greek economy and Greek enterprises. It is also indicative of the unique opportunities offered for the big enterprises, to gain access in a very promising, reliable and profitable market through the Athens Stock Exchange.

At the same time, the government has introduced a series of institutional initiatives in order to generate additional investing benefits:

1. The new Investment Incentives Law: it fosters a mild investment climate and aims to the diffusion of the development towards the country's regions. The incentives provided are up to 55% cash grant of the total investment plan or tax-free profits up to 100% of the investment. We aim to support the citizens and enhance entrepreneurship transforming the state into a force that boosts and does not block any investment initiative. We work towards a high - powered and productive Greece. We work for a productive and thriving society, a society of opportunities for all. The early fruits of this effort are already visible and promising as well. As of March 17, 2005 when the new law was first implemented, to today, one year later, investment plan applications with a total capital of millions euros have been submitted.
2. With regard to E.U. funding, in the context of the 3rd Community Support Framework, Greece is capitalizing each and every Euro injected in our economy, by investing it rather than merely spending it. This development has allowed us to invest every single euro instead of spending without care and proper planning.
3. The introduction of tax reform has resulted in the reduction of the profit tax rate from 35% in 2004, to 25% in 2007.
4. The process for setting up enterprises has been significantly simplified.
5. The legislation establishing a regulatory framework for public - private partnerships (PPP-PFI) to implement projects and the provision of services has recently been enacted As a result, several attractive areas of investment have opened up, concerning minor and medium range projects such as roads, ports, hospitals, museums, schools, but also services for the first time.
6. The energy sector has been deregulated, opening a new area for attracting private investment.
7. We are undertaking efforts in order to ensure that public services will operate as a One Stop Shop, providing investors and enterprises with high quality services without unnecessary bureaucratic hurdles. Indeed, this is one of the highest priorities I have in my agenda.
8. We have declared the period from 2005 until 2010 as "the Years of Competitiveness". During this period, Greece will focus on taking the necessary measures for the economy in order for it to compete successfully with the rest of the world.

Overall, our central strategic goal is to introduce a new model of governance: more responsible, more competitive and more efficient. We wish to transform the current bureaucratic public sector into a market-friendly institution, to provide citizens, entrepreneurs and investors with motives, support and equal opportunities. Institutional safeguards, open dialogue, networking of social partners and productive forces, and meritocratic management, all constitute major principles. Our core policy is formulated in order to foster business opportunities and competitiveness, to attract foreign investors and enhance international cooperation.

But, the future long term investment and challenge for Greece is knowledge.

In an era of new global challenges, the new economy highlights the necessity for a knowledge-based society. Our government is putting its best efforts to upgrade Greece's human capital value. Only a synthesis of sustained education and new technological achievements can guarantee a new era of innovation, competitiveness and growth.

We have implemented an unprecedented strategic plan throughout the Greek regions, in order to implement our major policy goal: to shape a new perception, a new reality, a new stimulus for regional and local development. Our universities, our research institutes, the Technologic Parks, the Innovation Centers and Local Chambers of Industry and Commerce are united in their efforts for a new educational and developmental paradigm.

Ladies and Gentlemen,

Our era is filled with promise. Knowledge and information are produced and disseminated with inconceivable speed, digital technology provides the new economy with new potentials, new markets, new networks. Global competition is empowered while new challenges arise for business activity worldwide.

U.S. – Greek relations are based on a long standing tradition of cooperation, shared common values and strategic interests. More than ever before, we are privileged today to share a close relationship, characterized by better cooperation including on investment and development policy goals.

I am honored to bring to you here, today, my country's message for closer cooperation, and extend an open invitation to you: come and acknowledge first hand contemporary Greece. Our relationship is based on our existing mutual understanding and trust, as we participate in joint ventures and combined responses to new economic challenges, aligned with our shared values and common interests.

After all, our political cooperation carries a stronger message, a message of peace, stability and growth.

Thank you very much.

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