VZCZCXRO5101
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSL RUEHSR
DE RUEHTH #0092/01 0220835
ZNR UUUUU ZZH
R 220834Z JAN 10
FM AMEMBASSY ATHENS
TO RUCPDOC/USDOC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/SECSTATE WASHDC 1364
INFO EU MEMBER STATES COLLECTIVE
RUEHIK/AMCONSUL THESSALONIKI 0060

UNCLAS SECTION 01 OF 15 ATHENS 000092 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV KSPR KIDE KTDB ELAB OPIC GR USTR
SUBJECT: 2010 Investment Climate Statement (ICS) - GREECE 
 
REF: 09 STATE 124006 
 
STATE FOR EB/IFD/OIA 
 
 
 
TREASURY FOR IMI/HOLLOWAY 
 
 
 
USDOC FOR 4212/ITA/MAC/OEURA 
 
 
 
STATE PLEASE PASS USTR WASHDC 
 
 
 
PARIS FOR USOECD 
 
 
 
 
 
This cable transmits the 2010 Investment Climate Statement for 
Greece. 
 
 
 
------------------------------- 
 
INVESTMENT CLIMATE STATEMENT 
 
January 2010 
 
------------------------------- 
 
 
 
 
 
A.1. Openness to Foreign Investment 
 
----------------------------------- 
 
 
 
Greece, a member of the European Union, provides a reasonably 
hospitable climate for foreign investment.  On the upside, Greece's 
membership in the EU's Economic and Monetary Union offers currency 
stability, the infrastructure has improved significantly in the 
last five years, and the ongoing liberalization of the energy and 
telecommunication markets offer investment opportunities.  Greek 
businesses are among the leading investors in Southeast Europe, and 
Greece is actively positioning itself as a hub for Balkan trade. 
 
 
 
On the downside, after a decade of high GDP growth (between 1997 
and 2007, Greece averaged 4 percent GDP growth, almost twice the EU 
average), the financial crisis and resulting slowdown of the real 
economy have taken their toll on Greece's rate of growth, which 
slowed to 2 percent in 2008 and is projected to shrink by 1.5 to 
2.0 percent in 2009 and by 0.3 percent in 2010.  Key economic 
problems with which the government is currently contending include 
a burgeoning government deficit (12.7 percent of GDP in 2009)and 
rapidly increasing public debt (113.4 percent of GDP projected for 
2009), both of which are the highest in the Eurozone.  The EU 
recently moved Greece one step closer to sanctions under the 
Excessive Deficit Procedure.  Both markets and the EU have mandated 
that Greece develop a plan to immediately restore fiscal discipline 
and reduce its deficit to the 3 percent EU ceiling within an agreed 
period of time (as yet, undetermined). 
 
 
 
Greece's economy continues to be hampered by extensive government 
regulation.  Many international corporations state that bureaucracy 
remains the number one impediment to doing business in Greece. 
International organizations such as the OECD, Transparency 
International, the World Bank (in its Annual Doing Business and 
Governance Reports), and the World Economic Forum (in its Global 
Competitiveness Report) cite issues with corruption and government 
regulations that complicate investment and other commercial 
activities.  As a result of both factors, Greece has had relatively 
modest levels of foreign investment as a percentage of the economy. 
 
ATHENS 00000092  002 OF 015 
 
 
It ranked 21 out of 30 OECD countries in level of FDI in 2008. The 
position of Greece in the world indices of the above organizations 
has deteriorated in the last year.  Greece ranks 109 in 2010 World 
Bank's Doing Business index (9 slots down from 2009 index).  Its 
economic freedom ranked as the 81st freest in the 2009 Heritage 
Economic Freedom Index.  It dropped to the 71th position on the 
Transparency Corruption Perception Index in 2009 from the 57th in 
2008 (in the last position together with Bulgaria and Romania among 
the 27 country-members of the EU). 
 
 
 
Historically, growth has been financed by private sector borrowing 
and public sector spending and absorption of EU structural 
adjustment funds, which totaled roughly 24 billion dollars from 
2000-2006.  The EU has allocated a similar amount of funding, 
approximately 26.5 billion USD, for Greece for 2007-2013. 
 
 
 
The GoG strongly encourages private foreign investment as a matter 
of policy.  Investments are screened by the Ministry of Economy, 
Competitiveness and Shipping only when the investor wants to take 
advantage of government provided tax and investment incentives; 
foreign and domestic investors face the same screening criteria. 
Although Greece previously restricted foreign and domestic private 
investment in public utilities, it opened its telecommunications 
market and is in the process of slowly liberalizing its energy 
sector.  Restrictions exist on land purchases in border regions and 
on certain islands due to national security considerations.  Greece 
is the only EU country that does not have a land registry, which is 
a barrier to investment.  U.S. and other non-EU investors in 
Greece's banking, mining, broadcasting, maritime, and air transport 
sectors are required to obtain licenses and other approvals that 
are not required of Greek and EU investors.  Foreign investors can 
buy shares on the Athens Stock Exchange on the same basis as local 
investors. 
 
 
 
Major investment laws are: 
 
 
 
-Legislative Decree 2687 of 1953 which, in conjunction with Article 
112 of the Constitution, gives approved foreign "productive 
investments" (basically manufacturing and tourism enterprises) 
property rights, preferential tax treatment and work permits for 
foreign managerial and technical staff.  The Decree also provides a 
constitutional guarantee against unilateral changes in the terms of 
a foreign investor's agreement with the Greek Government, but the 
guarantee does not cover changes in the tax regime. 
 
 
 
-Law 3299/2004, the investment incentives bill, as amended by Law 
3522/2006 and Law 3752/2009, provides grants to cover up to 60 
percent of qualifying investments (generally those made in 
less-developed regions of Greece).  Through a combination of 
incentives and corporate tax breaks, this law attempts to boost 
entrepreneurship, foster technological change, and achieve regional 
convergence throughout Greece.  Law 3522/2006 introduces grants to 
newly founded small enterprises (Greek and foreign) to assist them 
with operational expenses for up to five years and attempts to 
simplify and expedite procedures for the evaluation of investment 
projects. Law 3752/2009 encourages investors to take advantage of 
tax breaks instead of grants and increases incentives to investment 
in energy from renewable sources, in modernization of tourist 
installations and in high technology services. 
 
 
 
-Law 3389/2005 on Public Private Partnerships (PPP).  This law is 
designed to facilitate public-private partnerships in the service 
and construction sectors by creating a market-friendly regulatory 
environment. 
 
 
 
-Law 89/67 as amended in November 2005 by Law 3427/2005 provides 
special tax treatment for offshore operations of foreign companies 
established in Greece. 
 
 
 
-Law 468/76 governs oil exploration and development in Greece.  Law 
 
ATHENS 00000092  003 OF 015 
 
 
2289/95, amending this legislation, allows private (both foreign 
and domestic) participation in oil exploration and development. 
 
 
 
-Law 2773/99 opened up 34 percent of the Greek energy market in 
compliance with EU Directive 96/92 concerning the regulation of the 
internal electricity market.  Law 3175/2003 harmonizes Greek 
legislation with the requirements of the EU's Directive 2003/54/EC 
on common rules for the internal market in electricity. Law 3426/05 
completed Greece's harmonization with EU Directive 2003/54/EC and 
provided for the gradual deregulation of the electricity market. 
 
 
 
-Law 2364/95 as amended by Laws 2528/97, 2992/02, 3175/03 and 
3428/05 governs investment in the natural gas market in Greece. 
 
 
 
-Law 2246/94 and supporting amendments have opened Greece's 
telecommunications market to foreign investment. 
 
 
 
When Greece joined the European Monetary Union (EMU) Eurozone on 
January 1, 2001, it committed to serious structural reforms to meet 
EMU convergence criteria. To this end, the Greek Government has 
opened the telecommunications market, and the energy market has 
undergone some deregulation.  Since 2001, about 34 percent of 
eligible consumers of middle and high-tension voltage have had the 
choice to obtain their electricity from producers other than the 
parastatal monopoly, the Public Power Corporation (PPC).  The 
electricity market in Greece was to be completely deregulated by 
mid-2007. The process, however, has been slow, and the goal not yet 
realized. Only three private producers are operating at this time 
due to problems in arranging financing and obtaining state 
licenses. 
 
 
 
The new center-left government of PASOK, elected in October 2009, 
pledged fiscal and other structural reforms to enhance the 
competitiveness of the Greek economy.  The new administration 
promised to gradually adopt policies and programs designed to 
achieve fiscal consolidation and tax reforms, reduce red tape in 
business transactions and expedite market deregulation.  The new 
Finance Minister recently announced plans to raise about 2.5 
billion euros ($3.6 billion) from privatizations in 2010 to help 
pay down the country's burgeoning public debt.  It is not yet clear 
which companies will be privatized under this plan.  Greece has 
stakes in about 20 listed companies including ATE bank, Postal 
Savings Bank, gaming firm OAP and telecoms group OTE.  The state 
asset sale program will be clarified in the beginning of 2010. 
Greece has raised about 8.7 billion euros from privatizations in 
the period 2003-2009.  Some of these privatizations have sparked 
significant resistance from the public; however, the government 
thus far is standing firm.  The global economic environment may 
also impact the private sector's ability to raise financial 
resources to buy these firms.  Foreign and domestic investor 
participation in privatization programs is generally not subject to 
restrictions.  The previous Greek government had announced in 
December 2007 that it would cap private investment in companies of 
"strategic importance" (corporations which own, exploit, or manage 
national infrastructure networks such as telecommunications, energy 
etc.) at 20 percent unless special approval is granted by an 
inter-ministerial privatization committee.  The European Commission 
contested the Greek law on investment in strategic firms and sent 
Greece in November 2008 a final warning to change the law or face 
European Court action.  Thus far, the European Commission and the 
Greek government are still in negotiations on how this issue should 
be addressed. 
 
 
 
A.2. Conversion and Transfer Policies 
 
------------------------------------- 
 
 
 
Greece's foreign exchange market is in line with EU rules on free 
movement of capital.  Receipts from productive investments can be 
repatriated freely at market exchange rates.  Remittance of 
investment returns is made without delay or limitation. 
 
ATHENS 00000092  004 OF 015 
 
 
A.3. Expropriation and Compensation 
 
----------------------------------- 
 
 
 
Private property may be expropriated for public purposes, but only 
in a nondiscriminatory manner and with prompt, adequate and 
effective compensation.  Due process and transparency are 
mandatory, and investors and lenders receive compensation in 
accordance with international norms.  There have been no 
expropriation actions involving the real property of foreign 
investments in recent history. 
 
 
 
A.4. Dispute Settlement 
 
----------------------- 
 
 
 
No investment disputes have come to the Embassy's attention for 
many years, the last couple of cases dating back to the mid-90s. 
Greece accepts binding international arbitration of investment 
disputes between foreign investors and the Greek State, and foreign 
firms have found satisfaction through this arbitration. 
International arbitration and European Court of Justice judgments 
supersede local court decisions.  Greece has an independent 
judiciary, but the court system is a time-consuming means for 
enforcing property and contractual rights.  Foreign companies 
report that Greek courts do not always provide unbiased and 
effective recourse.  The judicial system provides for civil court 
arbitration proceedings for investment and trade disputes. 
Although an investment agreement could be made subject to foreign 
legal jurisdiction, this is not common, particularly if one of the 
contracting parties is the Greek State.  Foreign court judgments 
are accepted and enforced, albeit slowly, by the local courts. 
Although the Greek government has been energetically prosecuting 
corrupt judges and attorneys in the last few years, problems with 
corruption still exist. 
 
 
 
Commercial and bankruptcy laws in Greece are in accordance with 
international norms.  Under Greek bankruptcy law, private creditors 
receive compensation after claims from the state and insurance 
funds have been satisfied.  Monetary judgments are usually made in 
Euros unless explicitly stipulated otherwise.  Greece has a 
reliable system of recording security interests in property. 
 
 
 
Greece is a member of both the International Center for the 
Settlement of Investment Disputes and the New York Convention of 
1958 on the Recognition and Enforcement of Foreign Arbitral Awards. 
 
 
 
A.5. Performance Requirements/Incentives 
 
---------------------------------------- 
 
 
 
Greece is in compliance with WTO TRIMS requirements.  Investment 
incentives are available on an equal basis for both foreign and 
domestic investors in productive enterprises.  More generous 
incentives are given to investments in less-developed regions.  The 
Investment Incentives Law (Law3299/2004) provides new and 
already-established companies incentives worth up to 55 percent of 
the overall investment made in these regions.  In December 2006, 
the law was amended by Law 3522/2006, which increases the incentive 
to cover up to 60 percent of an investment in less-developed areas. 
This amendment also introduces grants to newly founded small 
enterprises to assist them with operational expenses for up to five 
years.  The amended law is also intended to simplify and expedite 
procedures for the evaluation of investment projects. 
 
The incentives provided are combinations of grants, interest 
subsidies, subsidies for the creation of new jobs as well as for 
leasing equipment, and tax exemptions.  The Incentives Law was 
amended again in March 2009 (Law 3752/2009) to encourage tax breaks 
instead of grants and to facilitate investment in energy from 
 
ATHENS 00000092  005 OF 015 
 
 
renewable sources, in modernization of tourist installations and in 
high technology services. 
 
 
 
Additional tax incentives are extended to foreign investors if they 
establish export-oriented or import substitution businesses (Law 
2687/53). 
 
 
 
There are no performance requirements for establishing, 
maintaining, or expanding an investment.  Performance requirements 
come into play, however, when an investor wants to take advantage 
of tax and/or investment incentives.  In evaluating applications 
for incentives, the Greek authorities consider local content, 
import substitution, export orientation, creation of new jobs, 
energy conservation, environmental protection and technology 
transfers.  Companies that fail to meet the specified performance 
requirements may be forced to give up the incentives initially 
granted.  All information transmitted to the government for the 
approval process is, by law, to be treated confidentially.  Offset 
agreements, co-production, and technology transfers are commonplace 
in Greece's procurement of defense items. 
 
 
 
U.S. and other foreign firms may participate in government-financed 
and/or subsidized research and development programs.  Foreign 
investors do not face discriminatory or other de jure inhibiting 
requirements.  However, many potential and actual foreign investors 
assert that the complexity of Greek regulations, the need to deal 
with many layers of bureaucracy, and the involvement of multiple 
government agencies discourage investment. 
 
 
 
Foreigners from EU countries may freely work in Greece.  Foreigners 
from non-EU countries may work in Greece after receiving residence 
and work permits.  There are no discriminatory or preferential 
export/import policies affecting foreign investors, as EU 
regulations govern import and export policy, and increasingly, many 
other aspects of investment in Greece. 
 
 
 
A.6. Right to Private Ownership and Establishment 
 
------------------------------------------ 
 
 
 
Foreign and domestic private entities have the right to establish 
and own business enterprises.  They may engage in all forms of 
remunerative activity, including the right to establish, acquire, 
and dispose of interests in businesses. 
 
 
 
Private enterprises enjoy the same treatment as public enterprises 
with respect to access to markets and other business operations, 
such as licenses and supplies. Liberalization of the banking system 
and increased compliance with EU norms has made credit also equally 
accessible to private and public enterprises. 
 
 
 
A.7. Protection of Property Rights 
 
---------------------------------- 
 
 
 
Greek laws extend protection of property rights to both foreign and 
Greek nationals, and the legal system protects and facilitates 
acquisition and disposition of all property rights.  Regarding real 
property, the continued lack of a land registry, and more 
importantly, the multiple layers of authority concerning land use 
and zoning permits is one of the most significant disincentives to 
greenfield investments.  On IPR, Greece is a member of the Paris 
Convention for the Protection of Industrial Property, the European 
Patent Convention, the World Intellectual Property Organization, 
the Washington Patent Cooperation Treaty, and the Bern Copyright 
Convention.  As a member of the EU, Greece has harmonized its 
legislation with EU rules and regulations.  The WTO-TRIPS agreement 
has been incorporated into Greek legislation since February 28, 
 
ATHENS 00000092  006 OF 015 
 
 
1995 (Law 2290/1995).  The Greek government has also signed and 
ratified the WIPO Internet treaties, which were incorporated into 
Greek legislation in 2003 (Laws 3183 and 3184/2003) 
 
Greece's legal framework for copyright protection is contained in 
Law 2121 of 1993 on copyrights and Law 2328 of 1995 on media. 
Implementation and enforcement of these provisions, however, is not 
rigorous, and intellectual property problems continue in Greece. 
Greece was a special mention country on the Special 301 Watch List 
from 1994 until 2003, during which time Greece worked to resolve 
specific areas of violation, particularly those related to the 
broadcasting of copyrighted materials on the national airwaves. 
Violations, particularly in copyrighted audio-visual products, 
software and apparel and footwear continue to raise industry 
concerns.  Despite the existence of adequate IPR legislation, 
Greece lags in implementation of enforcement of these laws.  The 
judiciary is not focused on the issue and has little training on 
IPR issues.  The lack of enforcement resulted in Greece being 
placed on the U.S. Special 301 Watch List once again in 2008 and 
¶2009. 
 
 
 
Audiovisual, music, and software industries bear the brunt of IPR 
violations in Greece.  This is likely to rise with increased 
internet penetration.  Unlicensed sharing of a licensed copy among 
multiple computers is the largest problem for the software 
industry, while street vending of pirated DVDs and CDs is a common 
practice.  Efforts by local authorities to safeguard copyrights 
have been inconsistent and at present provide inadequate 
protection.  An audit program initiated in early 2009 by the 
Ministry of Finance tax police unit (YPEE) was effective in 
discouraging the use of unlicensed software by enterprises; 
however, this program was short-lived and is no longer in effect. 
The new government has not yet indicated its intention to launch 
similar initiatives, but the Ministry of Citizens' Protection has 
announced a new department, expected to begin operations in the 
first quarter of 2010, to combat various forms of economic crime, 
including violations of intellectual property.  A formal 
interagency coordinating committee on IPR issues established in 
2008 published a National Action Plan in February 2009 to combat 
IPR infringement and coordinate efforts among ministries to improve 
enforcement of IPR rights.  Unfortunately, the government has not 
implemented its own recommendations. 
 
 
Trademark violations, especially in the apparel sector, are an area 
of some concern.  Although Greek trademark legislation is fully 
harmonized with that of the EU, U.S. companies believe the 
importation and sale of counterfeit products may be increasing. 
Although in the past, U.S. companies reported a lack of support in 
combating this problem, recently, they report they are receiving 
more. 
 
Intellectual property appears to be adequately protected in the 
field of patents.  Patents are available for all areas of 
technology.  Compulsory licensing is not used.  The law protects 
patents and trade secrets for a period of twenty years.  There is a 
potential problem concerning the protection of test data relating 
to non-patented products.  Violations of trade secrets and 
semiconductor chip layout design are not problems in Greece. 
 
 
 
A.8. Transparency of the Regulatory System 
 
------------------------------------------ 
 
 
 
As an EU member, Greece is required to have transparent policies 
and laws for fostering competition.  Foreign companies consider the 
complexity of government regulations and procedures and their 
inconsistent implementation to be the greatest impediment to 
investing and operating in Greece.  On occasion, foreign companies 
report that they encounter cases where there are multiple laws 
governing the same issue, resulting in confusion over which law is 
applicable. 
 
 
 
In order to simplify and expedite the investment process, a 
quasi-state investment promotion agency, the Hellenic Center for 
Investment (ELKE), was established in 1996.  ELKE, reorganized and 
renamed Invest in Greece Agency in March 2008, is designed as a 
one-stop shop for investors in cutting through red tape and 
 
ATHENS 00000092  007 OF 015 
 
 
acquiring the numerous permits needed to proceed with investments. 
For investors seeking government incentives under Law 3299/2004, 
the Agency is responsible for helping investors with projects 
valued at over 8.8 million euros ($11.9 million), or over 3 million 
euros ($4 million) in cases in which there is at least 50 percent 
foreign participation.  It also advises the government on 
streamlining investment and promoting Greece as a favorable 
investment destination, and improving the investment climate in 
Greece.  The new investment incentives laws 3522/2006 and 3752/2009 
that amended 3299/2004 are also intended to simplify and expedite 
the evaluation of projects. 
 
 
 
Greek labor laws limit working hours, limit overtime, restrict 
part-time employment, and are restrictive regarding the dismissal 
of personnel.  A labor law (3385/2005) passed in July 2005 gives 
greater flexibility to employers to ask employees to work without 
overtime premium pay during peak times, in return for compensatory 
time off during non-peak times.  Under current regulations, both 
private and public companies are prohibited from firing or 
laying-off more than two percent of their total workforce per month 
without government authorization. 
 
 
 
Greece's tax regime lacks stability, predictability, and 
transparency.  The government often makes small adjustments to tax 
levels and has not hesitated to impose retroactive taxation. 
Although foreign investors object to the frequent changes in tax 
policies, foreign firms are not subject to discriminatory taxation. 
 
 
 
 
Generally, in sectors open to private investment, foreign 
investment is not prohibited or restricted in any way.  Proposed 
laws and regulations are usually published in draft form for public 
comment before being debated in Parliament.  The International 
Financial Reporting Standards (IFRS) for listed companies was 
introduced in fiscal year 2005, in accordance with EU directives. 
These rules improved the transparency and accountability of 
publicly traded companies. 
 
 
 
A.9. Efficient Capital Markets and Portfolio Investment 
 
------------------------------------------ 
 
 
 
Greece has a reasonably efficient capital market that offers the 
private sector a wide variety of credit instruments.  Credit is 
allocated by public and private banks on market terms prevailing in 
the Eurozone and credits are equally accessible by private Greek 
and foreign investors.  Two American banks operate in Greece 
(Citibank and Bank of America), serving both the local and 
international business communities. There is sufficient liquidity 
in the market to enter and exit sizeable positions. 
 
 
 
An independent regulatory body, the Hellenic Capital Market 
Commission, supervises brokerage firms, investment firms, mutual 
fund management companies, portfolio investment companies, real 
estate investment trusts, financial intermediation firms, clearing 
houses and their administrators (e.g., the Athens stock market), 
and investor indemnity and transaction security schemes (e.g., the 
Common Guarantee Fund and the Supplementary Fund) and encourages 
and facilitates portfolio investments.  Owner-registered bonds, 
bearer bonds and shares are traded on the Athens Stock Exchange, 
which has held "developed country" status since 2001, according to 
key western investment firms.  It is mandatory for the shares of 
banking, insurance and public utility companies to be registered. 
Greek corporations listed on the Athens Stock Exchange that are 
also state contractors are required to have all their shares 
registered. 
 
 
 
Private Greek and foreign banks hold about 70 percent of the 
banking system's assets.  Following an ambitious privatization 
program, only two banks remain under state control: Agricultural 
Bank of Greece and Postal Savings Bank (there is limited state 
participation through government controlled social security funds 
 
ATHENS 00000092  008 OF 015 
 
 
in another two banks: National Bank of Greece and Bank of Attica). 
According to the Bank of Greece, Greece's central bank, private 
banks in Greece have healthy loan-deposit ratios (over 90 percent). 
State banks operate on free market criteria and limit their 
exposure to public enterprises of questionable financial health. 
Total combined assets of the five largest banks are estimated at 
360 billion dollars (based on 2007 data). 
 
 
 
Despite the Greek banks' limited exposure to risky financial 
products at the center of the 2008-2009 global financial crisis, 
credit markets in Greece have been affected by the ensuing freeze 
in the capital markets. Following the examples elsewhere in Europe 
and the U.S., the Greek government announced in October 2008 that 
it would support the Greek credit system to restore flows in credit 
markets with a combination of state guarantees, state participation 
in the share capital and liquidity increase in the total amount of 
28 billion euros (about $38 billion).  The majority of Greek banks 
have made  use of the 28-billion euros rescue plan in 2009 thus 
strengthening their liquidity and capital base; however, as in 
other countries, as a response to tightened risk criteria, credit 
expansion has slowed tremendously.  In addition, as a result of the 
slowing economy, the non-performing loans (NPLs) ratio increased to 
7.2 percent in the nine months of 2009 compared to 5.0 percent in 
2008 The results of stress tests conducted in 2009 by the Bank of 
Greece in the context of the annual regular consultation with the 
IMF were encouraging, indicating that the Greek banking sector had 
enough buffers to weather the expected slowdown.  The merely 
marginal exposure of Greek banks to assets directly or indirectly 
linked with the initial causes of the international crisis, the 
satisfactory level of their capital adequacy, their relatively 
strong deposit base, the tightening of credit standards and the 
continuous audits by the Bank of Greece have all helped alleviate 
the adverse impact of the crisis on banks' key aggregates.  As a 
result, the Greek banking system remains fundamentally sound, given 
the current conditions. 
 
 
 
There are a limited number of cross-shareholding arrangements in 
the Greek market.  To date, the objective of such arrangements has 
not been to restrict foreign investment.  The same applies to 
hostile takeovers (a practice which has been recently introduced in 
the Greek market). 
 
 
 
A.10. Competition from State-Owned Enterprises (SOEs) 
 
--------------------------------------------- -------- 
 
 
 
Greek State-Owned enterprises (SOEs) are active in utilities, 
defense industry and banking.  In sectors where the SOE is 
practically a monopoly, i.e. water and sewage, urban 
transportation, private companies are not allowed to enter the 
market.  The electricity market, which was to be completely 
deregulated by mid-2007, still presents problems to the entry of 
private producers. Only three private producers are operating at 
this time due to problems in arranging financing and obtaining 
state licenses. In sectors which have been opened to private 
investment, such as the telecommunications market and the banking 
sector, private enterprises compete with public enterprises under 
the same terms and conditions with respect to access to markets, 
credit and other business operations, such as licenses and 
supplies. 
 
 
 
The SOEs in Greece are governed by a board of directors the 
majority of the members of which and senior management are 
appointed by the government.  The appointment of senior management 
is subject to parliamentary approval.  Representatives of labor 
unions and minority shareholders are also sitting on the board. 
The Chairman of the Board and the Managing Director are usually 
technocrats with political affiliation with the ruling party. 
Although they enjoy a fair amount of independence, they report to 
the line Minister.  SOEs are required by law to publish annual 
reports and to submit their books to independent audit.  There are 
no sovereign wealth funds (SWF) in Greece but public pension funds 
may invest up to 20 percent of their reserves to state or corporate 
bonds. 
 
ATHENS 00000092  009 OF 015 
 
 
A.11 Corporate Social Responsibility (CSR) 
 
------------------------------------------ 
 
 
 
Awareness of corporate social responsibility has been growing over 
the last decade among both producers and consumers. Several 
enterprises, particularly large ones, in all fields of production 
and services have accepted and promoted CSR principles.  A number 
of non-profit business associations have been established in the 
last few years (Hellenic Network for Corporate Social 
Responsibility, Eurocharity, etc.) in order to disseminate the 
values of CSR and promote it in both the business world and society 
as a whole.  Their members have incorporated in their practices 
programs that contribute to the economic and sustainable 
development of the communities in which they operate; minimize the 
effects that their activities may have on the environment and the 
natural resources; create healthy and safe working conditions for 
their employees; provide equal opportunities for employment and 
professional development; and provide their shareholders with 
satisfactory returns through responsible social and environmental 
management.  Firms that pursue CSR in Greece definitely enjoy 
public acceptance and respect. 
 
 
 
A.12. Political Violence 
 
------------------------ 
 
 
 
 
 
Greece is a parliamentary democracy currently governed by a pro-EU, 
center-left government.  The country witnessed massive riots in 
December 2008 following the accidental shooting of a young student 
in an encounter with the police.  Anarchists and students attacked 
and destroyed police stations and businesses. Since that time, 
there has been a resurgence of domestic terrorism. Active groups 
include both established entities such as Revolutionary Struggle 
and newly emerged organizations such as the Sect of 
Revolutionaries. These groups currently target security forces, 
government ministries, politicians and Greek business. However they 
have also launched attacks against US and other western businesses. 
 
 
Revolutionary Struggle (RS), an anti-establishment radical leftist 
group, has claimed responsibility for a large number of attacks on 
police, banks, and other targets, including an RPG attack on the 
U.S. Embassy in January 2007, and the bombing of the Athens Stock 
Exchange in September 2009. The Sect of Revolutionaries claimed 
responsibility for the murder of a police officer in Athens in June 
2009, in addition to a number of other attacks on police and other 
targets throughout the year.  Unknown assailants attacked a police 
station in suburban Athens with AK-47s in October 2009, critically 
wounding several officers, and a powerful bomb went off outside the 
building of the National Insurance Company in Athens in December 
¶2009. Self-styled anarchists have continued to attack what they 
call "imperialist-capitalist targets" with tools such as firebombs 
and Molotov cocktails.  Since these incendiary attacks typically 
occurred outside normal business hours, only a few people have been 
seriously injured and there have been no deaths.  Several U.S. 
businesses have been targeted. 
 
 
 
A.13 Corruption 
 
------------------ 
 
 
 
Bribery is considered a criminal act and the law provides severe 
penalties for infractions, although diligent implementation and 
enforcement of the law remains an issue.  The problem is most acute 
in the area of government procurement, as political influence and 
other considerations are widely believed to play a significant role 
in the evaluation of bids.  As a signatory of the OECD Convention 
on Combating Bribery of Foreign Government Officials and all 
relevant EU-mandated anti-corruption agreements, the Greek 
Government is committed to penalizing those who commit bribery in 
Greece or abroad.  The OECD Convention has been in effect since 
¶1999. 
 
ATHENS 00000092  010 OF 015 
 
 
The Greek Government has tried to fight corruption in public 
administration and has established a number of inspection bodies to 
investigate cases of corruption.  The main authority is the Public 
Administration's Inspectors and Auditors Unit, established in 1997, 
at the Ministry of Interior.  Independent inspection divisions 
exist at various Ministries and in the Greek Police and the 
Hellenic Coast Guard.  Investigation procedures and preliminary 
inquiries on financial crimes come under the jurisdiction of a 
special unit in the Ministry of Economy and Finance, the Special 
Audits Service (Greek acronym: YPEE).  The responsibility for the 
prosecution of bribery cases lies with the Ministry of Justice.  In 
cases where politicians are involved, the Greek Parliament decides 
whether parliamentary immunity should be lifted to allow a special 
court action to follow.  The Greek Chapter of Transparency 
International closely follows developments to press for 
investigation and prosecution of corruption cases.  Greece dropped 
to the 71th position on the Transparency Corruption Perception 
Index in 2009 from the 57th in 2008 (in the last position together 
with Bulgaria and Romania among the 27 country-members of the EU). 
 
 
 
International and domestic NGOs as well as U.S. firms believe that 
anticorruption efforts need to increase.  Mutual accusations of 
corruption between political parties are frequent and the new 
center-left government, elected in October 2009, based its 
pre-electoral campaign on promises for increased anti-corruption 
efforts.  To show how seriously the new government is taking its 
anti-graft platform, the Deputy Minister of Interior was forced to 
resign weeks after his appointment on suspicion of favoritism in 
transfers of policemen and other personnel in the Ministry. 
 
 
 
There were a number of corruption cases in the previous 
government's tenure which led to the resignation of four Ministers 
and had a tremendous impact on the popularity of the leading party 
which eventually lost the elections. 
 
 
 
Corruption in the judiciary has been confronted more drastically 
than in the political world. The Greek judiciary is under 
continuing corruption investigation resulting in dismissals, 
suspension from duty, disciplinary action, even imprisonment in 
about 100 cases of corruption.  Greece is also investigating 
whether German engineering group Siemens bribed companies and 
officials to win deals.  A prosecutor has filed charges and an 
investigating judge has launched an inquiry. 
 
 
 
A.14 Bilateral Investment Agreements 
 
--------------------------------------- 
 
 
 
Greece has bilateral investment protection agreements with Albania, 
Algeria, Argentina, Armenia, Azerbaijan, Bosnia, Bulgaria, Chile, 
China, Croatia, Cuba, Cyprus, Czech Republic, Egypt, Estonia, 
Georgia, Germany, Hungary, India, Iran, Jordan, Kazakhstan, Korea, 
Latvia, Lebanon, Lithuania, Mexico, Moldova, Morocco, Poland, 
Romania, Russia, Serbia, Slovenia, South Africa, South Korea, 
Syria, Tunisia, Turkey, Ukraine, Uzbekistan, and Zaire. 
Investments by EU member states are governed and protected by EU 
regulations. 
 
 
 
Greece and the United States signed the 1954 Treaty of Friendship, 
Commerce and Navigation, which covers a few investment protection 
issues, such as acquisition and protection of property and 
impairment of legally acquired rights or interests.  Also, Greece 
and the United States signed the 1950 Treaty for the Avoidance of 
Double Taxation and the Prevention of Fiscal Evasion with Respect 
to Taxes on Income. 
 
 
 
A.15 OPIC and other Investment Insurance Programs 
 
--------------------------------------------- ------- 
 
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Full Overseas Private Investment Corporation (OPIC) insurance 
coverage for U.S. investment in Greece is currently available only 
on an exceptional basis.  OPIC and the Greek Export Credit 
Insurance Organization signed an agreement in April 1994 to 
exchange information relating to private investment, particularly 
in the Balkans.  Other insurance programs that also offer coverage 
for investments in Greece include the German investment guarantee 
program HERMES, the French agency COFACE, the Swedish Export 
Credits Guarantee Board (EKN), the British Export Credits Guarantee 
Facility (ECGF), and the Austrian Kontrollbank (OKB).  Greece 
became a member of the Multilateral Investment Guarantee Agency 
(MIGA) in 1989. 
 
 
 
For the purposes of OPIC Currency Inconvertibility insurance, 
currency inconvertibility is no longer an issue as Greece has been 
part of the Eurozone since January 1, 2001. 
 
 
 
A.16 Labor 
 
------------- 
 
 
 
There is an adequate supply of skilled, semi-skilled, and unskilled 
labor in Greece, although some highly technical skills may be 
lacking.  The total number of immigrants is estimated as high as 
1.2 million, nearly one-fifth of the work force, and approximately 
thirty percent of them are undocumented or hold residence permits 
that have expired.  Illegal immigrants predominate in the unskilled 
labor sector in many urban areas.  Greece has started a process to 
regularize the status of some immigrants, necessary to integrate 
them into society.  Approximately half of the estimated 1.2 million 
aliens in the country are from neighboring Albania. 
 
 
 
The 2009 unemployment rate in Greece is estimated to have increased 
to almost ten percent (from eight percent in 2008) as a result of 
the economic crisis. Labor-management relations in the private 
sector are generally good.  Strikes, labor stoppages, and related 
job actions occur mostly in the public sector, where job security 
is guaranteed by legislation. 
 
 
 
Greece has ratified ILO Conventions protecting workers' rights. 
Specific legislation provides for the right of association and the 
rights to strike, organize, and bargain collectively.  Greek labor 
laws prohibit forced or compulsory labor, set a minimum age (15) 
for the employment of children and determine acceptable work 
conditions and minimum occupational health and safety standards. 
 
 
 
A.17 Foreign Trade Zones/Free Ports 
 
-------------------------------------- 
 
 
 
Greece has three free-trade zones, located at Piraeus, Thessaloniki 
and Heraklion port areas.  Greek and foreign-owned firms enjoy the 
same advantages in these areas.  Goods of foreign origin may be 
brought into these zones without payment of customs duties or other 
taxes and remain free of all duties and taxes if subsequently 
transshipped or re-exported. 
 
Similarly, documents pertaining to the receipt, storage, or 
transfer of goods within the zones are free from stamp taxes. 
 
 
 
Handling operations are carried out according to EU regulations 
2504/1988 and 2562/1990.  Transit goods may be held in the zones 
free of bond.  The zones also may be used for repackaging, sorting 
and re-labeling operations.  Assembly and manufacture of goods are 
carried out on a small scale in the Thessaloniki Free Zone. 
Storage time is unlimited, as long as warehouse charges are 
promptly paid every six months. 
 
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A.18 Foreign Direct Investment Statistics 
 
-------------------------------------- 
 
 
 
Statistics on foreign direct investment are not collected 
systematically, resulting in a wide variation in estimated data on 
investment levels.  By all estimates, though, FDI levels in Greece 
are the lowest in the EU.  Greek statistical data were previously 
based on records of investment approvals kept by the Ministry of 
National Economy or the Bank of Greece, but there has been less 
monitoring of investment since the lifting of foreign exchange 
restrictions, and the Ministry of Economy now keeps records of only 
the investments that seek government assistance.  Bank of Greece 
records of capital inflows do not distinguish among greenfield 
investments, acquisitions, foreign borrowing by Greek companies, 
and other capital transfers.  The Greek Government has claimed for 
several years now that a new data system based on surveys is being 
set up. 
 
 
 
According to the UN's trade and development organization's World 
Investment Report (which is based on Bank of Greece records, with 
all the limitations as mentioned above), FDI inflows into Greece in 
2008 were 5.1 billion dollars (1.45 percent of GDP), significantly 
higher than the 1.9 billion dollars reported in 2007. (The increase 
in FDI inflows in 2008 was almost fully covered by the  Deutsche 
Telekom's 4.3 billion dollar purchase of the Greek 
Telecommunications Organization OTE.) Outflows for direct 
investment abroad were 2.7 billion dollars in 2008 (0.75 percent of 
GDP) and 5.3 billion dollars in 2007. 
 
 
 
Although there is no official estimate of total foreign investment 
in Greece, the total stock of foreign investment is estimated at 
around $35 billion, or approximately ten percent of 2008 GDP. 
Until the Greek government provides more reliable data, this 
estimate should serve only as a guideline.  Again highlighting the 
absence of reliable data, the U.S. Embassy estimates the total 
stock of U.S. investment to be about $6 billion, a little more than 
one-sixth of the total stock of foreign investment.  U.S. firms 
employ about 11,200 people. 
 
 
 
Greece's investment abroad is mainly directed to the Balkans. 
According to the Greek Ministry of Foreign Affairs, Greek direct 
investment in the Balkans is estimated at 7.2 billion dollars, one 
third of which is invested in Serbia, one third in Romania, and the 
remaining one third in Bulgaria, Albania and the Republic of 
Macedonia. 
 
 
 
Major U.S. investments in Greece: 
 
 
 
(Based on 2007 total assets as reported by the companies.  Source: 
2009 ICAP - Greek Financial Directory) 
 
 
 
 
NAME OF AMERICAN COMPANY            TOTAL ASSETS 
 
 
(NAME OF GREEK COMPANY)       (2007, U.S. $ MILLIONS) 
 
 
 
 
 
 
Carlyle Group (Neochimiki)           959.3 * 
 
 
Philip Morris Group                    931.8 
 
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(Papastratos) 
 
(Kraft Hellas) 
 
 
Coca Cola Hellas Bottling              882.6 ** 
 
 
Duke Energy (Attiki Gas Supply) 523.7 
 
 
Searle (Vianex)                        318.4 
 
 
Johnson & Johnson                      246.3 
 
 
Crown Cork and Seal                    242.9 
 
 
(Crown Hellas Can Packaging Mfrs) 
 
 
Abbott Laboratories                    239.2 
 
 
Schering-Plough                        188.4 
 
 
First Data (First Data Hellas)         154.9 
 
 
Procter & Gamble                       142.5 
 
 
Bristol-Myers Squibb                   120.9 
 
 
Pepsico                                111.4 
 
 
IBM                                     92.0 
 
 
Colgate Palmolive                       63.9 
 
 
Hewlett-Packard                         44.4 
 
 
3M                                      42.3 
 
Xerox                                   40.6 
 
 
Marriott (Asty)                         39.7 
 
 
Ideal Standard                          38.1 
 
Heinz (Copais)                          36.0 
 
Mobil Oil                               35.5 
 
Dow Chemicals                           34.0 
 
Georgia-Pacific                         32.6 
 
S.C. Johnson and Son                    27.8 
 
McDonald's                              19.2 
 
 
 
TOTAL                                5,608.4 
 
 
 
*  estimate - new investment 2008 
 
** amount represents 23.81 percent U.S. ownership of the Greek 
subsidiary's total assets 
 
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Major non-U.S. foreign investments in Greece are: 
 
 
 
NAME OF FOREIGN COMPANY              TOTAL ASSETS 
 
(NAME OF GREEK COMPANY)       2007, U.S. $ MILLIONS 
 
 
 
 
 
GERMAN 
 
 
 
Deutsche Telekom AG (OTE)          4,320.0 * 
 
Siemens Tele Industrie A.G.            621.1 
 
Thyssen Krupp (Hellenic Shipyards)     446.5 
 
Praktiker                              193.7 
 
Bayer                                  174.6 
 
Beiersdorf                              58.4 
 
 
 
TOTAL                                5,814.3 
 
 
 
CHINESE 
 
 
 
China Ocean Shipping - COSCO          4,600.0 * 
 
(Piraeus Port Container) 
 
 
 
BRITISH 
 
 
 
Vodafone                             2,036.2 
 
 
BC Partners (Regency Entertainment)  1,572.0 
 
 
Dixons Overseas Limited                430.3 
 
(Kotsovolos) 
 
British American Tobacco               121.8 
 
 
 
TOTAL                                4,160.3 
 
 
 
 
 
FRENCH 
 
 
 
Carrefour                            1,569.4 
 
Lafarge                              1,297.9 
 
(Heracles General Cement) 
 
L'Oreal                                131.3 
 
Alcatel (Nexans Hellas)                104.0 
 
Air Liquide                             80.6 
 
ATHENS 00000092  015 OF 015 
 
 
TOTAL                                3,183.2 
 
 
 
 
 
DUTCH 
 
 
 
Amstel-Heineken                        681.4 
 
(Athenian Brewery) 
 
Shell                                  576.2 
 
Unilever (Elais - Unilever)            523.4 
 
 
 
 
 
Friesland                              112.8 
 
 
 
 
 
TOTAL                                1,893.8 
 
 
 
 
 
 
 
 
ITALIAN 
 
 
 
 
 
Fulgorcavi Halia                       199.1 
 
 
(Fulgor Greek Electric Cables) 
 
Italcimenti                            186.4 
 
(Halyps Building Materials) 
 
Barilla (Misko)                         77.8 
 
 
 
TOTAL                                  463.3 
 
 
 
 
 
* estimate - new investment 2008 
Speckhard