VZCZCXRO5680
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHIK #0029/01 1612041
ZNR UUUUU ZZH
P 102041Z JUN 09
FM AMCONSUL THESSALONIKI
TO RUEHC/SECSTATE WASHDC PRIORITY 0452
INFO RUEHTH/AMEMBASSY ATHENS PRIORITY 0331
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHIK/AMCONSUL THESSALONIKI 0495

UNCLAS SECTION 01 OF 03 THESSALONIKI 000029 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/SE 
 
E.O. 12958: N/A 
TAGS: ECON PGOV PHUM PREL SMIG SNAR SOCI GR
SUBJECT: NORTHERN NOTES MAY 2009 
 
REF: A) THESSALONIKI 01, B) THESSALONIKI 027 
 
THESSALONI 00000029  001.2 OF 003 
 
 
Following is a summary of major developments in northern Greece: 
 
 
 
THESSALONIKI PORT LOSES SHARE OF INTERNATIONAL MARKET, INCREASES 
PROFITS 
 
 
 
¶1.      (U) On May 05, local media reported that the port of 
Thessaloniki's international role is gradually diminishing. 
Media stated that in the first quarter of 2009, only 8% of the 
containers handled by the Cargo Station were in transit for 
other countries, compared to 19% the year before.  However, 
Minister of Merchant Marine Anastasios Papaligouras reported at 
a speech in Thessaloniki on May 14, that the number of Greek 
containers handled at the port since January 2009 had increased 
by 50%, compared to the same period last year.  On May 26, Port 
Authority Executive Director Ioannis Tsaras said in a press 
conference that despite a 17.47% reduction of the Port's overall 
turnover in the first quarter of 2009, profits increased by 
77.72%.  The port has recently suffered from a year-long labor 
slowdown, that ended on April 1, soon after the cancellation of 
an earlier tender for the privatization of the port's Cargo 
Station(Ref A.) 
 
 
 
ZONE OF INNOVATION PRESIDENT RESIGNS, RESTRUCTURING ANNOUNCED 
 
 
 
¶2.      (U) On May 11, the board of the Zone of Innovation 
accepted the resignation of former President Iakovos Vassalos 
(Ref B.)  Speaking to the press, Minister of Macedonia-Thrace 
Stavros Kalafatis was confident that the above development would 
not delay further the project, announcing the package of 
incentives for investing businesses in the Zone will be sent to 
the EU Competition Committee for approval "very soon."  Also, he 
revealed plans to replace some members of the Zone's board of 
directors and to create two centers, to the east and west of the 
city, so as to facilitate the balanced development of 
Thessaloniki.  Minister Kalafatis recently stated to post that 
the Zone of Innovation remained one of his "top priorities." 
 
 
 
CONVERSION OF SUGAR INDUSTRY UNITS TO BIO-ETHANOL PRODUCTION, 
"STILL AN OPTION" 
 
 
 
¶3.      (U) On May 31, local press published an interview by the 
Executive Director of Sugar Industry S.A. Dimitrios Darnakas, in 
which he openly questioned the GoG's political will to support 
the country's sugar industry.  Furthermore, he revealed that the 
company has recently commissioned a feasibility study concerning 
the conversion of the sugar industry plants in the cities of 
Larisa and Xanthi to bio-ethanol production units.  Consultants 
who participated in the failed effort to privatize the sugar 
factories have told post that conversion to bio-ethanol 
production is possible but very unlikely given market 
conditions. 
 
 
 
 
 
TAX EVASION SCANDALS DISCOVERED IN CENTRAL MACEDONIA 
 
 
 
¶4.      (U) On May 11, the Thessaloniki Special Economic Squad 
revealed seven unconnected cases of tax evasion, involving seven 
different companies, based in Thessaloniki.  The companies had 
set up offshore branches in Cyprus, evaded taxes estimated at 
about 7m ($9.8m) and were fined a total of 15m ($21m).  In 
another case, twelve mostly Athens-based companies were claiming 
to be exporting goods to Bulgaria via the Thessaloniki customs 
office, so that they could receive VAT returns worth 7.3m 
($10.2m.)  Four Thessaloniki customs officers, seven businessmen 
and twelve company owners have been charged and fines of a total 
of 110m ($154m) were imposed. 
 
 
 
NORTHERN GREEK INDUSTRIES REVEAL SHARP FALL IN COMPETITIVENESS 
 
 
THESSALONI 00000029  002.2 OF 003 
 
 
 
 
¶5.      (U) In a press conference, the Federation of Industries 
in Northern Greece presented last year's report by the 
International Institute for Management Development (IMD) 
according to which Greece has lost another ten positions in the 
competitiveness index.  It suffered the second biggest drop 
after Estonia and is now in the 52nd position out of 57 
countries covered in the report.  Last year's drop follows that 
of 2007, when Greece conceded another six places to move down to 
42nd from 36th in 2006.  The report states that the sharpest 
fall was in the areas of government and entrepreneurial 
effectiveness.  New Federation of Industries of Northern Greece 
President Pentzos spoke of the need for the government and 
businesses to address "long-standing problems." 
 
 
 
STUDENT TESTED POSITIVE FOR SWINE FLU 
 
 
 
¶6.      (U) A 20-year old student who arrived from Edinburgh, 
Scotland, was the first confirmed case of swine flu in 
Thessaloniki.  The student is a classmate and friend of a 
21-year old who was also admitted to a hospital in Athens on May 
¶25. 
 
 
 
TRAFFICKING RING IN NORTHWEST GREECE DISMANTLED 
 
 
 
¶7.      (U) On May 16, Hellenic Police arrested two Greek men 
and a woman in the northwestern Greece town of Ptolemaida, in 
connection to the operation of a human trafficking ring.  One of 
the men is accused of illegally keeping eight foreign women who 
worked in his bar in Ptolemaida.  The arrests followed a 
statement to the police by one of the above women - confirmed to 
post by an anti-trafficking NGO - according to which the bar 
owner confiscated the women's travel documents, threatened their 
lives and forced them into prostitution.  In a different case, 
police in Xanthi arrested a Greek citizen for forcing into 
prostitution an Albanian woman. 
 
 
 
BIG INCREASE OF ASYLUM SEEKERS IN THESSALONIKI 
 
 
 
¶8.      (U) On May 12, the Immigration Office of Thessaloniki 
announced a dramatic increase in the number of submitted 
asylum-seeking applications.  More specifically, in the first 
quarter of 2009, the Office received 418 applications, compared 
to 807 in 2008 and 363 applications in 2007. 
 
 
 
ILLEGAL IMMIGRATION - STATISTICS AND ARRESTS 
 
 
 
¶9.      (SBU) On May 23, FRONTEX (EU body for co-operation on 
border security) conducted an exercise in both Greek and 
Bulgarian territory under the name "Thrace 2009."  The exercise 
concluded that Hellenic Police lack the technical capabilities 
that would allow for improved results in their effort to combat 
illegal immigration on the Greek-Turkish border [Note: On a 
recent visit by post to the Greek-Macedonian border, the local 
Police Director told post his force is "adequately equipped." 
End Note].  In an interview with local press, Hellenic Police 
Deputy Director Nikolaos Menexidis stated that in the first four 
months of 2009, 1,082 illegal immigrants and 22 smugglers were 
arrested on the Greek-Turkish border.  In the past month, 93 
illegal immigrants were arrested, including two Albanians, 16 
Iraqis and seven Chinese and also, 11 smugglers, including two 
Turkish, one Albanian and one Lithuanian. 
 
 
 
NARCOTICS - THESSALONIKI "AT HEROIN CROSSROADS" 
 
 
 
¶10.    (U) Local media describe the popular among smugglers 
"Balkan drug route," which starts from heroin-producing 
countries (most often Afghanistan) and passes through Turkey, 
 
THESSALONI 00000029  003.2 OF 003 
 
 
Greece, Albania and Italy.  As proof of the above, media notes 
that 20.9 kilos of heroin have been confiscated in Thessaloniki 
since January 2009. 
 
 
 
SECURITY ISSUES/VIOLENT INCIDENTS 
 
 
 
¶11.    (SBU) On May 16-18, there was a series of arson attacks 
with Molotov bombs and gas canisters in different parts of 
Thessaloniki.  One of the strikes was against the offices of 
Retired Army Officers, near the U.S. Consulate General and next 
to the offices of the Jewish Community of Thessaloniki.  No 
arrests were made.  On May 20, the organization "Nuclei of Fire" 
claimed responsibility for an arson attack against a building 
under construction that will soon house a new Police Station. 
Small damage was caused and no arrests were made.  On May 21, 
around 30 people attacked policemen with sticks and rocks, while 
the latter were questioning two drivers whom they had stopped. 
The attackers quickly retreated to the University campus, from 
where they had come and police were not able to enter in 
pursuit, due to the university asylum law.  A policeman was 
injured and two people were detained.  On May 24, unknown 
perpetrators threw a Molotov bomb at an ATM, damaging it 
slightly. 
YEE