VZCZCXYZ0003
OO RUEHWEB

DE RUEHTH #1621/01 3161610
ZNR UUUUU ZZH
O R 121610Z NOV 09
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1033
INFO RHEFDIA/DIA WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFISS/JOINT STAFF WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEHTH/AMEMBASSY ATHENS

UNCLAS ATHENS 001621 
 
SENSITIVE 
SIPDIS 
COMMERCE FOR ITA/MAC HILLEARY SMITH 
 
E.O. 12958: N/A 
TAGS: PREL PGOV ECON EFIN EAID
SUBJECT: GREECE: Ambassador's Call on Minister of Economy Katseli 
 
¶1.  (SBU) SUMMARY: In a 90-minute tour d'horizon of the Greek 
economy, Ambassador Speckhard's  November 6 courtesy call on 
newly-appointed Minister for Economy, Competitiveness, and Shipping 
Louka Katseli revealed the challenges confronting the new Greek 
government.  Katseli described her newly-formed ministry as one 
that will focus on "development instruments," private and public 
investment, trade and export policy, foreign direct investment, and 
shipping.  Her charge in the short-term is to pull Greece out of 
the recession; for the long-term, to enhance competitiveness 
through structural reforms.  Katseli admitted Greece has an 
inhospitable business and investment climate , not only for 
foreigners but for Greeks as well.  She aims to change that by 
reinvigorating the "Invest in Greece" one-stop shop mechanism, 
addressing the regulatory framework, and increasing transparency. 
The Ambassador stressed the need for greater reliability in the 
business environment; bad U.S. company experiences are already 
contributing to a credibility issue for Greece.  A new focus on 
electronic governance by the Papandreou government, Katseli 
predicts, should help facilitate investment and boost collection of 
traditionally-evaded taxes.  Katseli expressed great interest in 
her ministry's participation in the ECCC, acknowledging that the 
strategic economic dialogue's success would hinge on broad Greek 
participation.  On the continuing Piraeus port strike, Katseli 
assured the Ambassador that the COSCO contract would be honored, 
acknowledging the signal this sent to potential foreign investors. 
Katseli talked of better integrating shipping (the number two 
contributor to GDP after tourism) into the broader Greek economy. 
Recognizing Greek shippers' disappointment with the disbanding of a 
dedicated maritime ministry, Katseli will personally handle the 
portfolio although the piracy issue will be the preserve of the 
Ministry of Citizens Protection.  The minister bemoaned the fact 
that Greece is no longer competitive in low-skill industries, 
because of the high cost of wages; instead, Greece needs to exploit 
its rich human capital and focus on building an innovative economy. 
END SUMMARY. 
 
¶2. (SBU)  Ambassador Speckhard paid a courtesy call on Louka 
Katseli, Minister of the newly-created Ministry of Economy, 
Competitiveness, and Shipping, during which Katseli focused heavily 
on the need to undertake structural reforms to improve the business 
and investment climate of Greece.  Her mandate is to quickly turn 
around a sagging economy but she offered few specifics, with the 
exception of the 800 million euro increase in public investment in 
the 2010 budget, on how the GoG would achieve this.  Ultimately, 
Katseli hopes to tackle a burdensome regulatory framework, improve 
transparency, root out corruption, and streamline a cumbersome 
bureaucracy to attract greater Foreign Direct Investment (FDI). 
The Ambassador underscored the need for Greece to create an 
environment of predictability, which investors demand.  Katseli 
anticipates presenting a bill to Parliament in 2010 to simplify the 
regulatory framework.  Another of her early initiatives will be to 
put the decision-making power back in "Invest in Greece," the 
country's one-stop shop. 
 
3 (SBU) PM Papandreou is keen to facilitate investment, Katseli 
said, and attracting US FDI is at the top of that list.  To this 
end, Katseli will participate in the Capital Link Investment Forum 
in New York December 2-3.  [NOTE:  We are currently trying to 
recruit a USG official, possibly from Treasury or OPIC, to address 
the forum, which is for institutional investors.  The Ambassador 
separately offered USG assistance with setting up appointments for 
Katseli with USG officials in Washington around the early December 
timeframe.  Post would welcome meetings with E, USTR, Commerce, the 
Competitiveness Council, and the National Labor Relations Board. 
END NOTE] 
 
¶4. (SBU) Responding to the Ambassador's comment on the changing 
nature of commercial laws and congestion in the Greek commercial 
courts, Minister Katseli acknowledged the pressing need to 
introduce  mediation and arbitration in Greece.  Greek lawyers 
currently are not paid for arbitration efforts, creating a 
disincentive to go that route.  Instead, lengthy legal conflicts 
often ensue.  Turning to the Port of Piraeus strike, Katseli stated 
that COSCO's contract would be honored, despite campaign rhetoric 
that some privatizations would be re-examined.  However, she 
indicated the new government would be reviewing the tax 
concessions, which were a supplementary agreement and have come 
under scrutiny and criticism because the EU and WTO could determine 
them to be illegal indirect state subsidies. 
 
¶5. (SBU) Katseli, while no longer handling the port strike 
negotiations, hopes otherwise to work closely with the shipping 
industry to better integrate that sector into her vision for the 
 
broader development of the Greek economy.  [NOTE:  Oddly, tourism, 
which is Greece's biggest contributor to GDP, is under the Ministry 
of Culture and not an econ-related ministry. END NOTE]  Katseli has 
plans to upgrade ports and logistic centers, and make the shipping 
sector more attractive to Greek job seekers.  Katseli admitted that 
Greek ship owners initially were unhappy that they were placed 
under the rubric of the Ministry of Economy; however, she hopes to 
assuage their concerns by personally handling the portfolio.  When 
the issue of maritime piracy was raised, Katseli flatly said that 
would be handled by the Ministry of Citizens' Protection. 
 
¶6. (SBU) Katseli talked enthusiastically about building the Greek 
economy by focusing on certain sectors, such as shipping, in which 
Greece had a competitive advantage.  She sees potential in high 
tech, renewable energies, and other innovative sectors which can 
utilize Greece's vast human capital.  Greece should be able to play 
a larger regional economic role, as a gateway to the Balkans, 
Middle East, and Africa, Katseli said.  The 43 enterprise zones in 
Greece are woefully underdeveloped, but through public-private 
partnerships, Katseli hopes to develop the zones into profit 
centers. 
 
¶7. (SBU) The Ambassador encouraged Katseli to have her staff engage 
on the ECCC (Economic and Commercial Cooperation Commission), in 
order to make the strategic dialogue more fruitful.  Although the 
MFA has the lead, it is imperative that the ministries of Finance, 
Environment/Energy, and Hellenic Aid also be active participants. 
Katseli took the invitation to heart.  She proposed to identify 
staff to work with the MFA to make the ECCC agenda substantive and 
relevant.  Katseli agreed maintaining the planning momentum already 
begun to ensure a successful ECCC event in the April/May timeframe. 
[NOTE:  MFA prefers to hold the ECCC in the February/March 
timeframe. END NOTE] 
 
¶8. (SBU) COMMENT:  Katseli, inexorably tied to her husband's 
socialist economic policies when he was a former PASOK Minister of 
the Economy/Finance and because of her previous calls to overturn 
privatizations, may have a difficult time overcoming the 
presumption that she will be pro-labor at a time when the Greek 
economy needs greater flexibility in the labor market.  Katseli 
needs to signal that she unequivocally supports a pro-business 
approach to the economy.  She is a bright woman, with impressive 
academic credentials, who seems to understand what structural 
reforms need to be accomplished to jumpstart the economy, create 
jobs, and stimulate growth.  But, she may already have lost some 
gravitas and credibility when she was unable to decisively resolve 
the Piraeus Port strike.  In fact, her authority was seemingly 
undercut when, during the first two week phase of the strike, the 
Deputy Minister for Transportation was brought in to negotiate. 
Last week, when the strike flared up again, Deputy Prime Minister 
Pangalos was brought in as the heavyweight.  Despite professed 
support for forging a business- and investment-friendly 
environment, Katseli and the PASOK government will only be able to 
rehabilitate themselves and Greece's reputation with solid and 
decisive actions.  END COMMENT. 
Speckhard