VZCZCXRO2971
PP RUEHAG RUEHDF RUEHIK RUEHKW RUEHLZ
DE RUEHTH #1480/01 1600420
ZNR UUUUU ZZH
P 090420Z JUN 06
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC PRIORITY 5737
INFO RUCNMUC/EU CANDIDATE COLLECTIVE PRIORITY
RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 ATHENS 001480 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EINV EFIN PGOV EIDE CASC GR
SUBJECT: THIS LAND IS YOUR LAND, THIS LAND IS MY LAND: 
GREECE AGAIN CONFRONTS NATIONAL LAND REGISTRY PROBLEM 
 
 
¶1. (U) Summary: A major inhibitor of foreign direct 
investment in Greece is the lack of a functional national 
land registry (NLR). To address this problem, the GoG 
recently submitted a new draft bill that once again attempts 
to create a working NLR.  The political, legal, and economic 
issues that discourage an efficient real property marker are 
broader than the lack of a functioning NLR. End Summary 
 
Background 
---------- 
 
¶2. (U)  Only two western European countries currently do not 
have a functional NLR: Greece and Albania.  Greece began to 
formally address this problem as early as 1996 with an 
initial 5-year plan.  However, this initial effort failed due 
to cost overruns, poor management and bureaucratic 
maneuvering on the municipal, and prefecture level to 
maintain control of the lucrative permit issuance process. 
In 2000, after registering only 280 municipalities and less 
than one-quarter of Greece's land mass, the initial budget of 
138 million euros had expanded to over 500 million euros. 
Furthermore, the European Commission took back the 100 
million euros it had contributed to the registry from its 
Second Community Support Framework because the GoG had not 
met the NLR implementation goals it had committed to in order 
to secure the funding. 
 
Political and Legal Confusion 
----------------------------- 
 
¶3. (U) The political and legal environment in Greece 
continues to struggle with its inefficiency and lack of 
transparency.  The NLR issue exposes this struggle on several 
levels and serves as a reminder that while Greece is home to 
the oldest democracy in the world, its present day democracy 
is one of the youngest, since the constitution currently in 
use was ratified in 1975.  This constitution, born in the 
wake of the military junta (1967-74), takes every opportunity 
to champion individual rights, but has led to an environment 
of inefficiency and corruption.  Lack of clear Municipal, 
Prefecture, and State responsibility continue to obfuscate 
the NLR landscape on issues such as ownership, transference, 
building permits, and trespassing. 
 
¶4. (U) One concise example of this environment that is 
illustrative of the larger issues associated with Greece's 
lack of a functional NLR, is the case of an amcit who 
purchased 3,200 square meters of land on a Greek island.  The 
amcit purchased the property directly from the island's 
Department of Land (DOL).  After the sale was complete, a 
nearby church board decided it had a legal claim to the land 
the DOL had just sold and took the amcit to court.  The court 
in turn, ruled against the amcit and awarded the land to the 
church board.  The amcit then asked the DOL to replace the 
land it had just sold to him with something of equal value. 
After 12 years of legal maneuvering, the DOL returned the 
amcit's investment, with no interest or compensation for the 
time that it held the funds or the difficulty it had created. 
 
¶5. (U) Another aspect of the problem is the practice of 
individuals and/or small developers using arson as a means to 
build on GoG designated forest land.  Individuals and/or 
small developers intentionally set fire to forest land, which 
is protected from development under Greek law, in order to 
clear the land and then build on it.  Small municipalities 
whose jurisdiction lies on the periphery of these forest 
lands will often issue building permits and/or simply allow 
the illegal construction of a home or homes on the site, even 
though Greek national law requires that all burned forest 
land be replanted with indigenous trees.  The confusion over 
ultimate legal control of land and permitting continues to be 
waged between the municipalities, prefectures, the forest 
service, and the GoG itself, further exposing the 
inefficiencies and confusion of the land registry/land usage 
environment. 
 
Economic Obstacles: Tax Structure "...too complicated." 
--------------------------------------------- --------- 
 
¶6. (U) The GoG recently introduced a new tax structure for 
property exchange that adversely affects the overall efforts 
associated with the NLR initiative.  This new tax structure, 
which has been called "too complicated" by Nicholas Garganas, 
Governor of the National Bank, is comprised of four different 
sub-taxes: a VAT tax, an automatic capital gains tax, a 
property transfer tax, and a transaction levy.  These taxes 
are then subject to taxation on two separate property 
valuation schedules.  The new structure is so complicated 
that Greek builders have a difficult time calculating the 
fees associated with new construction; as a result, new 
building permits are down dramatically since the new 
 
ATHENS 00001480  002 OF 002 
 
 
structure took effect on January 1st, 2006.  Furthermore, 
higher value properties are subject to two additional luxury 
taxes at still higher rates. 
 
The New National Land Registry Bill 
----------------------------------- 
 
¶7. (U) In early 2001, the preparation for the 2004 Summer 
Olympic Games in Greece created an almost single minded focus 
on Olympic preparation by both the Greek public and private 
sector.  Several important issues were set aside until after 
the games, the NLR among them. 
 
¶8. (U) In October of 2005 George Souflias, Minister of 
Environment, Town Planning and Public Works, announced a new 
National Land Registry bill.  Unlike the 1995 effort, the new 
bill will not receive any EU funding, but will derive its 
nearly 1.5 billion euro budget largely from the property 
owners themselves (1.1 billion euros) as the GoG moves 
towards a completion goal of 2010.  The strategy involves two 
registration periods: the first will involve a flat fee of 35 
euro for preliminary registration, after which the land will 
be valued by the GoG; the second will assess a fee of 1% of 
the total land value to the property owners.  These fees, 
coupled with additional charges for associated services, such 
as duplicate documents and ownership changes, will provide 
significant steady revenue for the GoG. 
 
¶9. (U) When the current New Democracy government came to 
power in March 2004, 22 land registry offices were in 
operation and the pervious effort claimed registry of roughly 
1/3 of non-state controlled land.  Two years later, the GoG 
has 80 land registry offices open across the country as they 
begin again to confront the NLR issue on a national level. It 
is worth mentioning, however, that many of the new offices at 
more rural locations do not have adequate computer and 
database connections for appropriate communications with the 
nation's capital.  While work is ongoing to address this 
problem, it remains another technical challenge for the 
overall NLR effort. 
 
¶10. (U) Comment: In a land use environment that local Greek 
businesses and international investors alike find confusing 
at best and maddening at its worst, it is not difficult to 
see why Greece has had difficulty attracting foreign direct 
investment (FDI) and keeping its own capital at home. (Note: 
The Greek private sector is one of the leading investors in 
the Balkan states.)  This problem becomes more acute given 
the active opposition to reform from local bureaucrats, 
illegal landowners and small developers who profit from the 
current system.  Increased transparency, improved efficiency 
and overall ease of use must be established alongside the NLR 
if the Greek economy is to continue its positive growth trend 
in the coming years. End Comment. 
COUNTRYMAN