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PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHKW RUEHLA RUEHLN
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DE RUEHIK #0033/01 2081420
ZNR UUUUU ZZH
P 271420Z JUL 09
FM AMCONSUL THESSALONIKI
TO RUEHC/SECSTATE WASHDC PRIORITY 0461
INFO RUEHTH/AMEMBASSY ATHENS PRIORITY 0337
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHIK/AMCONSUL THESSALONIKI 0504

UNCLAS SECTION 01 OF 03 THESSALONIKI 000033 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR?SE 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM PREL ECON GR TU
SUBJECT: THESSALONIKI: HOW NORTHERN GREECE CAN CONTRIBUTE TO BALKAN 
STABILITY AND DEVELOPMENT 
 
THESSALONI 00000033  001.2 OF 003 
 
 
¶1.      (SBU) SUMMARY:   Location, history, infrastructure, 
economy and multi-ethnic character make northern Greece a 
natural engine and source of ideas for Balkan stability and 
prosperity.   Unfortunately, inertia, corruption and lack of 
leadership have sometimes made Greek Macedonia seem like more of 
a problem than part of the solution.  With continued USG 
encouragement, however, this privileged but under-achieving 
corner of the Balkans can contribute significantly toward wider 
U.S. goals in southeast Europe, including strengthening regional 
cooperation against terrorism and other transnational crime, 
protecting the environment, promoting innovation and economic 
development, and integration of Muslims and other minorities. 
Such encouragement will also help nudge Greece to adopt a more 
global outlook and assume greater leadership in its own 
backyard.  END SUMMARY 
 
¶2.  (SBU) Regional stability.  Northern Greece borders Turkey, 
Bulgaria, Macedonia and Albania and comprises the EU's eastern 
frontier against illegal immigration, narcotics trafficking and 
other cross-border threats from south Asia and the Middle East. 
It has the capacity and resources (with support from the EU and 
USG) to help develop and lead a more effective, regional 
approach to fighting transnational crime.  With thousands of 
illegal immigrants crossing the border from Turkey every month, 
many from Iraq, Afghanistan and other south Asian and Mideast 
states, the U.S. has an interest in encouraging Greece to 
strengthen law enforcement cooperation with Turkey and other 
neighbors.  The USG should continue to support regional training 
seminars that bring together police and prosecutors from around 
the Balkans (such as those organized by Post with FBI and 
Homeland Security support since 2005 throughout northern Greece) 
and help build capacity and cross-border cooperation.  While 
bilateral differences with Macedonia and Turkey complicate such 
cooperation, Greece is increasingly motivated to work with 
neighbors and the USG to fight urgent threats such as illegal 
immigration and cyber-crime.   In May, the recently opened 
police academy in Verria, northern Greece, held its first 
regional training seminar for police of neighboring countries 
(except Macedonia).  Northern Greece's senior police officials 
have expressed a strong interest in working with Post to 
co-organize additional regional seminars at the police academy 
in the future. 
 
¶3.  (SBU) Environmental cooperation.   Greece and its northern 
neighbors could face a number of common environmental 
challenges, e.g. water resource management, more effectively 
through regional cooperation.  The Thessaloniki-based scientific 
NGO Balkan Environment Center has the potential to lead regional 
efforts.  With substantial funding from the EU and technical 
assistance from U.S. experts, the Center has played a small but 
promising role in protecting northern Greek wetlands and coastal 
waterways, through methods and technology that the Center's 
director says are readily adaptable to similar challenges in 
other Balkan countries.  The Center has offered to help 
neighbors establish similar NGOs that would eventually comprise 
a Balkan/eastern Mediterranean network of NGOs promoting 
environmental research and solutions development.  A major 
advantage of such cooperation would be eligibility for 
substantial EU funding for regional (Inter-reg) projects to 
protect the environment.   The USG should press for such 
collaboration throughout the wider region.  An "Earth Day" 
teleconference meeting organized by Post between the leadership 
of the Balkan Environment Center and the northern Israel-based 
environmental research NGO, the Galilee Society, produced an 
agreement by both centers to cooperate on water resource 
management, renewable energy research and product development. 
With USG support and encouragement, the Balkan Center could 
serve as a catalyst and leader for similar collaboration around 
the Balkans and eastern Mediterranean. 
 
¶4.  (SBU) Trade and investment.   Northern Greek businesses are 
already major contributors to economic development in the 
Balkans, and have the potential to create even more jobs and 
joint ventures.  Supporting thousands of jobs in neighboring 
countries, northern Greek business people have often been the 
trailblazers in developing new markets for goods and services in 
the region.   Even in countries that have strained or ambiguous 
relations with Greece, northern Greek businesses are eager to 
enhance their presence.  The Northern Greece Exporters 
Association organized two large trade missions to Kosovo over 
the past year, and members of the Northern Greece Industrialists 
Association, including Alumil, one of the largest manufacturers 
in Greece, own factories in Macedonia.   Northern Greece's 
greatest potential contribution to regional economic 
development, however, may lie in its ability to serve as a base 
for foreign companies aiming to access new markets in the 
Balkans.  With its large pool of skilled workers, good road, 
rail and port infrastructure and relative stability, northern 
 
THESSALONI 00000033  002.2 OF 003 
 
 
Greece is the logical "gateway" to the wider Balkans.  In order 
to realize this long-standing potential, however, the USG should 
continue to press Greece to address long-standing obstacles to 
trade and investment, e.g. excessive bureaucracy, corruption, 
monopoly practices and labor inflexibility.   Promising 
investments and joint ventures in northern Greece involving 
American partners such as Benjamin Moore Paints, 
Macedonia-Thrace Brewery and Solar Thin Films highlight northern 
Greece's potential as a Balkan gateway for American investment. 
 
¶5.  (SBU) Integration of the Muslim minority:  Greece has the 
potential to change its reputation from EU laggard to a model 
for the treatment of minorities in southeast Europe, but must 
first adopt a clear policy on minorities and overcome a tendency 
to view its Thrace (northeastern Greece) Muslim minority as a 
Turkish fifth column.   Despite major strides by Greece in the 
past thirty years to end ghetto-like conditions and blatantly 
discriminatory practices against Thrace Muslims, many remain 
poorly integrated and suspicious of the GoG.  While content to 
be Greek, many Thrace Muslims view Turkey as their motherland 
and protector, a role Turkey cultivates through its highly 
active and well-funded Consulate in Thrace.   Pro-Turkey Muslim 
clerics and politicians have exploited seemingly discriminatory 
Greek policies to rally their supporters around divisive 
nationalist agendas.   To win the trust and allegiance of Thrace 
Muslims and discourage the emergence of extremist or separatist 
voices, Greece needs to improve the quality of education and 
economic prospects in predominantly Muslim areas of Thrace, 
where unemployment exceeds 40 percent and many Muslims feel like 
second class citizens.   Greece must also bring its laws and 
policies on two specific minority issues into line with 
international standards, e.g. to allow Muslims to self-identify 
(e.g. as Turks) and to select their religious leaders without 
government interference.  Greece should be encouraged to take 
such steps as a continuation of constructive measures announced 
by the MFA in February 2007, without linkage to the wider 
bilateral dialogue with Turkey.   Recent UN, EU and COE reports 
and ECHR decisions criticizing Greece's treatment of Muslims 
provide face-saving political cover for policy changes that will 
become only more difficult with time. 
 
¶6.  (SBU)  Logistics hub.  The Port of Thessaloniki, Greece's 
second largest, is planning a significant expansion in 2010 that 
will help it carve out a predominant logistics role in southeast 
Europe.  The port is recovering from over a year of costly 
strikes and work slow-downs by port workers opposed to GoG 
efforts to modernize and privatize port operations.   The worker 
protests and financial crisis contributed to the collapse of a 
Euros 420 billion deal signed in 2008 with Hutchison Whampoa to 
upgrade port infrastructure and privatize cargo handling 
operations.  The GoG now plans a more modest upgrade financed by 
a Euros 220 million loan from the European Investment Bank. 
Improvements will include construction of a large new pier that 
will accommodate larger ships.  Even with the new pier and other 
improvements, the Port will need to convince port workers to 
accept modern, competitive labor practices and win back freight 
forwarders and other shipping clients in southeast Europe who 
turned to other ports in recent years due to strikes and other 
delays in Thessaloniki.  Port officials believe Thessaloniki has 
the potential to serve as a faster, cheaper alternative to 
western European ports that currently handle the majority of 
shipments of goods from Asia.   European Commission 
Transportation officials reportedly favour such re-routing to 
relieve congested shipping and trucking routes.   A rejuvenated 
port combined with a nearly completed major renovation of the 
Egnatia highway system connecting northern Greece with its 
Balkan neighbors will facilitate trade and transport throughout 
the region.   Also, the ongoing development of the 
Burgas-Alexandroupoli oil pipeline and Turkey-Greece-Italy gas 
interconnector and (potentially) the recent resumption of oil 
drilling in the Bay of Kavala will enhance northern Greece's 
importance as a regional logistics and energy hub. 
 
¶7.  (SBU) Zone of Innovation.  Ten years of GoG efforts to 
create a Zone of Innovation, or "Salonika Valley", for 
information technology and other innovative industries in 
northern Greece have been hindered by bureaucracy, poor 
leadership and local politics.   Many of the necessary 
ingredients, however, for attracting entrepreneurs and 
innovative ventures to northern Greece already exist, including 
Greece's largest university, a successful scientific research 
and consulting center (EKETA), a large pool of well-educated 
workers, a core group of Greek IT companies who have invested 
their own capital in the future of the Zone, land and 
infrastructure dedicated to the Zone, and a package of tax, 
labor and other incentives approved by the GoG - all in a 
desirable and logistically well-situated geographic location. 
Several U.S. companies, including Silicon Valley giant Applied 
 
THESSALONI 00000033  003.2 OF 003 
 
 
Materials, have visited Thessaloniki and expressed interest in 
participating in the Zone, if and when it becomes a reality. 
The USG should continue to remind the GoG that in addition to 
creating special incentives, it will need to remove the largest 
barriers to foreign investment in Greece, i.e. bureaucracy and 
lack of transparency, and let qualified business people take 
over key positions on the Zone's board of directors, currently 
composed of academics, lawyers and politicians with little 
business experience. 
 
¶8.  (SBU) Relations with Macedonia.   Though most northern 
Greeks object passionately to the use of the name Macedonia by 
anyone but themselves and resist compromise on the name dispute 
with the Republic of Macedonia, business people and technocrats 
here understand the need to solve the dispute as soon as 
possible and to strengthen ties with their northern neighbors 
even in the absence of a settlement.  Business leaders claim 
their existing investments and plans for additional investments 
in Macedonia are jeopardized by tensions and uncertainty 
generated by the name dispute.  The USG can help bring 
like-minded pragmatists on both sides together for practical 
cooperation on a wide range of initiatives.   Both the Northern 
Greece Industrialists Association and Northern Greek Exporters 
Association are willing to send or host trade missions for 
discussions with Macedonian counterparts, but need the U.S. to 
play a neutral matchmaking role.  Greek MFA officials based in 
Thessaloniki who are responsible for economic development are 
willing to direct Hellas Aid funds to support practical 
cooperation, e.g. on the environment, with Macedonia.  Because 
of strained relations with Macedonia, the MFA officials propose 
that USAID participate in the project as a third party, even if 
USAID's contribution is only symbolic.  Also, the 
Thessaloniki-based Balkan Environment Center claims that there 
are 5 million Euros of untapped EU (Inter-Reg) funds available 
for Greek-Macedonia scientific/environmental cooperation.  The 
USG should urge both governments to reach an agreement on such 
cooperation, e.g.  a long-standing proposal for monitoring 
cross-border water pollution on the Axios River.   Also helpful 
would be more practical exchanges between academics from both 
countries.  A network of social science faculty from around the 
Balkans, including Macedonia, recently established by 
Thessaloniki's University of Macedonia with Post's assistance, 
is one example of how the U.S. can play "honest broker" between 
neighbors separated by a common name. 
 
¶9.  This message was drafted by former CG Hoyt Yee, who departed 
Thessaloniki on July 4. 
KING