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FY 1999 Country Commercial Guide: Greece

Report prepared by U.S. Embassy Athens, released July 1998 (*).

I. EXECUTIVE SUMMARY

This Country Commercial Guide (CCG) presents a comprehensive look at Greece's commercial environment using economic, political and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. Embassies through the combined efforts of several U.S. government agencies.

The Greek economy is improving steadily. The government is in its fifth year of an austerity program designed to meet the European Economic and Monetary Union (EMU) convergence criteria. Its announced intention is to continue the austerity program, joining EMU January 1, 2001. The results of the austerity program on the economy have been positive. Inflation continues its downward trend. By the end of 1997, inflation fell to 4.7%. Investment and consumer confidence remain strong and the growth of GDP in 1998 is projected to be 3.5 %, up from 3.3% in 1997. Unemployment, which stood at 9.7% in 1997 is projected to fall slightly to 9.2% in 1998. A chronic current account deficit highlights continuing structural economic problems. The government is trying to address these weaknesses by cutting back the public sector through a program of privatization. This program has been limited by fierce opposition by labor unions, and elements of the ruling PASOK (socialist) party.

Services represent the largest and fastest growing sector of the Greek economy. Tourism, shipping, trade, banking, transportation, communications, and construction are the largest service sub-sectors. In manufacturing, the food industry is expanding fast to support new markets in neighboring countries. Other important sectors include footwear and building materials. Greece is a surplus producer of vegetables and fruits. Its largest export items include fresh and processed fruits and vegetables, especially canned peaches and tomato products, olive oil, durum wheat, and tobacco.

Greece is an import-dependent country. In 1997, imports were $25 billion while exports were only $10.9 billion.

Traditionally, European countries have been Greece's largest suppliers. In 1997 imports from the United States accounted for 3.3% of the Greek import market, totaling $854 million. With $453 million in U.S. imports of Greek products, the U.S. trade surplus with Greece reached $401 million.

The German, French, Italian, and British presence is very strong in Greece. Companies from these countries miss no opportunity to bid on Greek government tenders or participate in local trade exhibitions.

In addition to duty-free status, EU suppliers enjoy the advantages of proximity to the Greek market, which translates into lower transportation costs and faster service. Despite these advantages, the receptivity to U.S. products and services is quite high. U.S. suppliers who are willing to market persistently and aggressively will find an excellent market for goods and services in many sectors.

Greece has a relatively good record in the implementation of EU directives. Having a uniform set of EU standards and certificates makes it easier for U.S. firms to enter the European and Greek markets. This is particularly true for firms that have developed marketing strategies for approaching the EU single market as a whole.

In general, the Greek commercial environment is favorable toward U.S. products and services. Among the non-agricultural sectors considered to offer "best prospects" for U.S. sales in Greece are: telecommunications services, renewable energy equipment, medical equipment, computers, franchising, defense equipment, building products, and food processing and packaging equipment. Among agricultural products the best prospects are: nursery products, planting seeds, frozen fish, tree nuts, and wood products.

Also of note are the opportunities in infrastructure projects to be undertaken in the next three years. Greece could receive as much as $3.6 billion from the EU in 1998 to finance a range of infrastructure development projects in sectors such as transportation, telecommunications, tourism, public health, energy, and environmental protection.

In September 1997, the International Olympic Committee (IOC) announced that Athens would have the honor of hosting the 2004 Summer Olympic Games. Since that decision was announced, an organizing committee has been named and projects have been identified, though few contracts have actually been awarded for Olympics-related projects. Greece will undertake a vast number of major projects in order to successfully host the Games. At least $230 million will be spent on projects directly related to the games, including the construction of eleven new sports facilities, a five-stadium complex, and an Olympic Village. Billions more will be spent on infrastructure improvements that are crucial to the successful staging of the Games. While observers agree that it is likely that most major contracts for Olympics-related works will go to Greek firms, major sub-contracting opportunities will develop for American firms.

The privatization of state-controlled companies may provide additional opportunities for U.S. companies. The government is pressing to "privatize," or at least sell minority stakes in, various state-owned enterprises. A minority stake of the Hellenic Telecommunications Organization (OTE) will be sold, and the partial "privatization" of the Public Power Corporation (PPC), Hellenic Petroleum (formerly the Public Petroleum Corporation), and the two state refineries (ELDA and EKO) are projected. The Hellenic Industrial Bank (ETVA) and a number of other state-owned banks and state organizations are planning the privatization of a number of companies that they control or in which they have an equity interest.

The proximity to other countries in Southeastern Europe and the traditional trade ties of Greek businessmen with these neighboring countries may offer different types of opportunities. Greek relations with Albania and the Former Yugoslav Republic of Macedonia (FYROM) continue to improve, and Greek businesspeople have played a key role in enhancing relations with these two countries. Greek firms also have, to a degree, good ties to Central and Eastern European countries. The Black Sea region also offers potential for American firms working with Greek firms. U.S. firms may wish to target these markets from a base in Greece or to explore three-way arrangements with Greek companies.

At present, there are over 100 U.S. firms with subsidiaries in Greece; hundreds more sell through agents and distributors. Total U.S. investment in Greece is estimated at $2.3 billion (current market value), representing about one-third of all foreign investment in Greece.

Greece also provides good opportunities for U.S. firms with European subsidiaries, which enable them to compete on a more equal footing with EU suppliers. The Greek market has its own peculiarities, particularly when it comes to bids on government tenders. Lack of familiarity with regulations and lack of experience in dealing with the bureaucracy can lead to frustration and delays in contract negotiations. A competent local representative is invaluable in such cases.

Similarly, U.S. firms considering investment should review the relevant regulations with legal, tax and other business experts in order to avoid potential problems. The quasi-governmental Hellenic Center for Investment (ELKE) is able to provide assistance in dealing with Greek government institutions.

The U.S. Embassy in Athens, in implementing its "Strategic Commercial Plan", has formed an Embassy Trade Promotion Coordinating Committee which combines the resources of various agencies within the Embassy and the U.S. Consulate General in Thessaloniki. The key objectives of this committee are to coordinate an effective advocacy on behalf of U.S. firms, to monitor and supply information to U.S. business on commercial opportunities, and to assist U.S. suppliers in increasing their exports of goods and services.

An important part of this effort is the effective use of the newly-formed Joint Economic and Commercial Cooperation Commission. The Commission was created in January 1998 by Secretary of Commerce William Daley and Minister of National Economy Yannos Papantoniou during the former's visit to Athens. The purpose of the Commission is to formalize high-level talks between the United States and Greece on commercial and economic matters, with the goal of increasing bilateral trade and investment. The first meeting of the Commission, which was judged to be very successful, was held in Athens in May 1998. The second meeting will be held in Washington D.C. in the first half of 1999.

II. ECONOMIC TRENDS AND OUTLOOK

Major Trends and Outlook

Greece, a member of the European Union (EU), continues to make progress in meeting the macroeconomic convergence criteria for participation in Economic and Monetary Union (EMU) established by the Maastricht Treaty. Greece was the only EU country that desires to enter EMU, but failed to meet the criteria in time to enter in the first tranche. It aims to join the EMU on January 1, 2001.

The government is in its fifth year of a convergence program designed to meet EMU entry requirements. By the end of 1997, as a result of a fiscal policy focused on expanding revenue collection, the government budget deficit to GDP ratio had fallen to 4%. Thanks to the stable drachma policy pursued by the Bank of Greece, inflation had been reduced to 4.7% at the end of 1997. The stable drachma policy, applied from 1994 to March 14, 1998, aimed at preventing the drachma from depreciating against other EU currencies by as much as inflation differentials would naturally dictate and was the main policy tool used to bring double digit inflation of the 1980's and early 1990's under control.

The drachma was included in the EU Exchange Rate Mechanism (ERM) on March 16, following a 12.3% drachma devaluation on March 14, 1998, and a commitment to the EU Monetary Committee that the Greek government would speed up structural reforms and prepare a revised economic convergence program.

The basic macroeconomic targets of the revised convergence program are as follows:

	1998	1999	2000	2001	EMU Target
GDP growth	3.5	3.7	3.9	4.5	N/A
Government Deficit as percentage of GDP	2.4	2.1	1.7	0.8	3.0
Government Debt as percentage of GDP	107.8	105.8	102.5	99.8	60.0
Inflation(annual aver.)	4.5	2.5	1.9	1.7	2.7 (est)

The revised convergence program targets imply that Greece will meet the EMU entry criteria on government deficits and debt (declining rate) in 1998 and on inflation in 1999.

The fiscal balance showed continuous improvement thanks to higher tax revenues and, beginning in 1997, a declining rate of government expenditures. Higher revenues were attributable to more effective tax collection, tightening of tax exemptions, and imposition of additional taxes. Lower growth of expenditures was mainly due to lower subsidy payments and a decline in the growth of interest payments due to lower interest rates.

The 1997 general government debt and annual deficit to GDP ratios improved to 108.7 % and 4.0 % respectively. For 1998 the target is a further reduction of the deficit to 2.4 % of GDP and of debt to 107.8 % of GDP.

Developments to date in 1998 have been generally positive. The drop of inflation to 5.2 % on an annualized basis in June, raised hopes that the 4.5 % annual average inflation for 1998 can be achieved. The official target for the end-1999 inflation is to be below 2 % thus meeting the EMU entry target. The rate of wholesale price increases (goods only) rose in April to an annualized rate of 5.1 % up from the 2.5 % rate recorded at the beginning of the year. This increase is due to the mid-March drachma devaluation. The government has postponed increases for most of the state administered prices and fees. Public sector pay increases for 1998 have been contained at the 2-3 % range.

Investor and consumer confidence has remained strong and GDP growth for 1998 is now predicted to be 3.5 %, unchanged from 1997. Growth is being financed by private sector borrowing, including foreign borrowing, a booming stock exchange, and public sector absorption of EU structural adjustment funds. EU net transfers to Greece in 1997 could equal $5 billion, or about 4 % of GDP, if fully utilized. Recent year utilization rates have been improved. Investors' confidence is best reflected in the bullish performance in the Athens Stock Exchange (ASE), which has weathered the impact of the Asian crisis. The ASE index rose by 58.5 % in 1997. In the first five months of 1998 it rose another 75.1 %.

The Greek financial markets have attracted increased foreign capital inflows in the last few years, first due to increasing interest rate differentials resulting from the stable drachma policy. After the drachma devaluation on March 14 and the drachma's inclusion in the ERM, strong foreign capital inflows (about $10 billion in three months) were attracted by prospects for significant structural reforms and subsequent productivity increases. Part of those funds boosted the Athens Stock Exchange and drove the interest rates on long-term Greek government securities down (7.5 % coupon for the 15-year and 8.6 % for the 10-year bonds).

The large foreign capital inflows increased liquidity and made more money available for businesses directly though the banking system and through the ASE. In 1997, the value of transactions in the ASE increased to 5.8 trillion drachmas up from 1.99 trillion drachmas recorded in 1996. In the first four months of 1998, the value of transactions in the ASE topped 3.6 trillion drachmas. The ASE market capitalization rose from 21.1 trillion drachmas at the end of 1995, to 23.5 trillion drachmas at the end of 1997. This rose again to 38.7 trillion drachmas by the end of April 1998, 9 % above the projected GDP for 1998. Additional capital was also made available through inflows of EU support funds totaling roughly 3 % of GDP in 1997. The result was a boost in investment and private consumption and an increase in GDP growth to 3.5 %. The unemployment rate in 1997 remained unchanged at 10.3 %. Unemployment is projected to drop to 9.8 % in 1998.

While the outlook for the Greek economy has improved, serious structural reform is needed for Greece to meet and sustain EMU convergence criteria. The government has announced a modest program that would privatize or sell minority stakes in some 12 government enterprises. The program is being implemented haltingly due to increased resistance from trade unions and to opposition to reforms from within the ruling PASOK party. To date, the government has been successful only in selling minority stakes in the Hellenic Telecommunications Organization (OTE), the National Bank of Greece and Hellenic Petroleum. Structural changes in the public sector (i.e., elimination of unnecessary activities/entities, changes in the labor and social insurance regimes) are now at the top of the Greek government's agenda.

Principal growth sectors

Services make up the largest and fastest growing sector of the Greek economy, accounting for about 69 % of GDP. Trade and banking (20 %), transportation and communications (9.5 %), health and education (9.5 %), and tourism are the largest sectors.

Banking and Trade: Growth in the banking system is due to the provision of new services and Greece's overall economic growth. The Greek banking system is in the process of consolidation to cope with the more competitive environment coming with the Economic and Monetary Union. Higher demand, sparked in part by the overvaluation of the drachma up until March 1998, boosted retail trade volume by 4.3 %.

Transportation and Communications: The transport sector (including shipping) was particularly active as foreign trade expanded further in 1997. Land transport was up. The number of air passengers carried by the national airline Olympic Airways (OA) rose by 8.5 % over 1996. Conversely, transport of goods by train dropped 5.3 %, compared with a 14.2 % increase in 1996. Telecommunications volume rose by 6.2 %. This was due to increased competition to the Greek telecom company (OTE) from two cellular companies and OTE's offering of new services. OTE entered the mobile phone sector in late 1997.

Tourism: The tourist industry reported a strong recovery in 1997. According to Bank of Greece data, tourist arrivals rose by 8 % and overnight stays by 12.7 %. Preliminary data for 1998 indicate an increase in tourist arrivals and bookings. This is the result of a more effective promotion of Greek tourism abroad, including outreach to new markets in Eastern and Central Europe. The March 14, drachma devaluation also helped make Greece a more competitive tourist destination.

Construction (7.5 % of GDP): Construction had traditionally been one of the main growth areas. In 1997 it showed strong (7.5 %) growth, thanks to increased private investment activity and to public construction works. Residential construction was up by 11 %. Construction has benefited from higher public investment budgets and the acceleration of EU-financed major infrastructure projects.

Industry: The industrial sector accounts for about 17 % of GDP. Food and beverage production declined for a second year in a row due to higher consumption of imported goods. Production of clothing and footwear also declined while that of textiles increased due to stronger international demand. Increased production of non-metallic minerals (cement) was attributed to higher construction activity and export demand. The strongest activity was in basic metallurgy (increased exports of aluminum products) and production of machinery. High technology equipment, especially in telecommunications, is a fast growing sector with export potential primarily in Southeastern and Central Europe. The mining sector is relatively small in importance as it now accounts for only about 1% of GDP. In 1997 it recorded increases in quarrying and building materials (up 18.8 %), ferronickel (4.2 %), sulfur and barite (125.3 %). Conversely drops were recorded in the production of lignite (down 1.8 %), bauxite (down 17.5 %) and crude oil (down 8.7 %).

Agriculture: This sector accounts for about 10 per cent of GDP and employs 17.8 % of the work force. In 1997 it recorded an output increase of 1 % following a drop for two years in a row. Despite significant support from the EU in the form of both structural funds and subsidies, Greek agriculture is still characterized, to a large extent, by small farms and low capital investment. Adjustments in the EU Common Agricultural policy have increased the need for modernization and better management in the agricultural sector, but these changes have been slow in coming.

Government Role in the Economy

The Greek government has traditionally played a very important role in the economy. In 1997, roughly 45 % of recorded economic activity was in the public sector. The government controlled at the beginning of 1998, 7 social insurance funds, 48 public enterprises and directly or indirectly some 70 % of the banking system. The government owns or controls all public utilities, and the national airline, Olympic Airways. The revised 1998-2001 Convergence Program, designed to enable Greece to comply with the Maastricht Treaty criteria for monetary union, sets targets which require significant structural reforms, including reduction of the public sector. This process is also being reinforced by EU directives which require the phasing out of the public sector monopolies for the most part by 2001.

The general government expenditures, which according to Maastricht Treaty definitions, include those of social insurance funds and local authorities, amounted to 40.6 % of GDP (including interest payments) in 1997. They are projected to drop to 36.6 % of GDP in 200

Implementation of privatization is being strenuously resisted by the labor unions and significant elements within the governing party PASOK. After privatizing a few small banks since 1993, the government sold a 25 % minority holding of the telephone monopoly (OTE) through public flotation or direct sale of stocks. Another 10-15 % of the OTE stock will be offered for sale in the fall of 1998. The government has also sold its direct minority holding in the National Bank of Greece, and a 23 % stake in Hellenic Petroleum. The third attempt to sell the Bank of Crete was successful. EFG Eurobank was the highest bidder. 20% of the Duty Free Shops have been sold and the balance is scheduled to be sold in July 1998. The state-controlled Commercial Bank of Greece has formally decided, despite a strong negative union reaction, to sell a majority stake in the Ionian Bank of Greece. The government has a plan stretching until the end of 1999 to privatize or sell minority stakes in 12 public sector enterprises and organizations including the port operations in Piraeus and Thessaloniki, Ionian Bank, the Bank of Central Greece and the 3 remaining manufacturing companies operating under the auspices of the Industrial Reconstruction Organization.

Balance of Payments

Greece's balance of payments has been characterized by chronic trade deficits and strong invisible receipts, and more recently by high private capital inflows. The export potential of the country has been restricted by the relatively small industrial base and a lack of adequate investment over the last 15 years. The stable drachma policy, pursued from 1994 until March 1998, further eroded Greece's competitiveness.

In the invisibles account, net transfers from the EU (3.8 % of GDP) and tourism receipts have been the largest items. EU net transfers will increase until 1999, as Greece absorbs EU structural funds totaling some $20 billion. Greece may get another EU structural funds package beyond 1999, but nothing has been officially decided yet. Tourism revenues increased in 1997 by 1.3 % over 1996. Emigrant remittances and transport receipts (mainly from shipping) make up the bulk of the remainder of invisible transfers. The current account deficit was $4.83 billion in 1997 or 3.7 % of GDP. In 1998 and 1999 it is projected to be about 4 % of GDP. Relatively high interest rates and the stable drachma policy have boosted the inflows of private capital through 1997, thus financing the current account deficit and adding to foreign exchange reserves.

In late 1997, the drachma came under some speculative pressure and the Bank of Greece had to draw down reserves to defend the drachma's value. Since the March 14, 1998, devaluation major capital inflows have resumed. Private companies have increasingly turned to foreign borrowing to finance their investment programs, taking advantage of the relatively lower interest rates for foreign exchange loans.

III. POLITICAL ENVIRONMENT

Greece is a parliamentary democracy. Under the constitution, the Greek President, at present Constantine Stephanopoulos, plays a largely ceremonial role. The Panhellenic Socialist Movement (PASOK) won 162 out of 300 Parliamentary seats in the September 1996 national elections and formed a government led by Constantine Simitis, who had replaced Andreas Papandreou as Prime Minister in January 1996 and as President of the ruling party in late June 1996. The Simitis Government has stressed that it intends to focus on the full integration of Greece into EU institutions and the absorption of EU funds, and has committed itself to ensuring that Greece meets the Maastricht targets for European Monetary Union.

The main opposition party is the conservative New Democracy (ND) party, whose current leader, Kostas Karamanlis, was elected to his post in March 1997. ND won 108 seats in parliament in national elections held in September 1996.

Greece's other political parties with parliamentary representation include the populist Democratic Social Movement (DHKKI), led by Dimitris Tsovolas; the socialist Coalition of the Left and Progress (Synaspismos), led by Nikos Constantopoulos; and the Communist Party (KKE), led by Aleka Papariga. The KKE is one of Europe's few remaining traditional Communist parties.

President Stephanopoulos was elected to a five-year term in April 1995 to replace Constantine Karamanlis. In October 1994, PASOK, often in alliance with Synaspismos, won a majority of contests in municipal and prefectural elections. New Democracy, however, retained its control of the mayoralties of Greece's two major cities, Athens and Thessaloniki. In the June 1994 Europarliamentary elections, 10 Seats went to PASOK, nine to New Democracy, and two each to the nationalist Political Spring Party, Synaspismos, and the KKE. Parliamentary elections are next scheduled for fall 2000.

The United States and Greece, both members of the North Atlantic Treaty Organization (NATO), enjoy excellent bilateral relations. Prime Minister Simitis paid an official visit to Washington in April 1996; President Stephanopoulos visited in May of that year. Common strong democratic traditions, and a large and active Greek-American community, further strengthen ties between the two countries.

Current major issues which affect the business climate in Greece include: a) how to reduce a bloated state sector without inflicting unacceptable levels of economic hardship; b) tax reform, including a need to crack down on endemic tax evasion; c) government moves to restructure the labor market as part of an effort to free up the economy and meet EMU convergence targets; d) continuing tensions with Turkey in the Aegean and elsewhere; and e) the continuing operation of indigenous terrorist groups that denounce American capitalism and Greek government privatization efforts, and have bombed American business facilities as well as assassinated American, Turkish, and Greek officials and Greek businessmen.

Although the need to impose strong economic measures is often acknowledged even by the critics of the government, cutbacks are frequently resisted by the opposition parties, professional associations, organized labor, and much of the mass media, as well as many politicians, from all parties, the latter who wish to keep political patronage jobs alive.

IV. MARKETING OF U.S. PRODUCTS AND SERVICES

Distribution and Sales Channels

It is estimated that 80 % of Greece's import trade is handled through sales agents or distributors. Sales agents operate on a purchase basis without affecting imports on their own account. Agency agreements are not required to be exclusive and can be signed for any period of time. Distributors operate on a wholesale (and in some cases, retail) basis with exclusive sales rights for certain districts or for the entire country. Importers usually maintain their offices in Athens, Piraeus, or Thessaloniki with branch offices, subagents, and traveling sales staff covering the rest of the country. Lately there have been instances of smaller importers joining together to form cooperatives.

Sales agents of foreign nationalities are required to obtain an operating license from a special committee of the local Chamber of Commerce. The issuance of the license is subject to verification that Greek nationals are accorded reciprocal treatment in the applicant's country of residence.

Reciprocity must be proven through a certificate from a Greek consular officer stationed in the applicant's country. Prospective sales agents are screened for reputation, experience and financial standing.

Retail and wholesale trade is characterized by small, family­owned and operated businesses, each of which deals in a narrow range of goods. There are 300,000 trading establishments in Greece. There are 7,700 corporations and limited liability companies engaged in wholesale trade and 3,200 corporations and limited liability companies handling retail trade.

There are a few department stores and supermarkets. A considerable volume of retail sales are still made by small, specialized shops. In the last few years, major European chains have either purchased existing large department stores and supermarkets or have established their own outlets.

Direct marketing is used in Greece but the limited use of personal checks stands in the way of its development. There are a few small mail or telephone order services in Greece. Door­to­door selling exists on a limited scale. Franchising is becoming increasingly popular in Greece, with most of the franchises in fast food. There is no special law governing franchising in Greece.

Licensing

Licensing agreements have to be filed with the Industrial Property Organization and the Greek tax authorities. All procedures for payment and transfer of royalties to EU and non-EU residents are handled by commercial banks operating in Greece. No foreign exchange regulations apply to royalties. The Ministry of National Economy and the Bank of Greece intervene only when a foreign firm requests an unusually high royalty percentage. Rates over 10 % are considered exorbitant and are not permitted.

Use of Agents and Distributors

The key to success in the Greek market is to have an experienced agent or joint venture partner with suitable experience and an extensive sales network. The ability to offer full after-sales support to the end-user and spare parts coverage is also crucial.

As the Greek government accounts for most major purchases, it is also essential that local agents or joint venture partners have the ability to participate in government tenders on behalf of U.S. suppliers. The decisive factor in government purchases is low price and strict adherence to specifications. Private sector purchasers are more likely to weigh price in relation to the quality of the equipment or services being purchased.

Before making a commitment to prospective agents or joint venture partners, U.S. firms are advised to obtain background information and credit reports. The International Company Profile (ICP) program of the U.S. Department of Commerce is designed to assist U.S. companies in this regard. For information on how to order an ICP, contact the District Office or Export Assistance Center of the U.S. Department of Commerce nearest to you.

Establishing an Office

In order to establish any type of business office in Greece, a certified true copy of the company's articles and relevant agreements must be filed with the Court of Misdemeanors. Then, the local tax office must receive a copy of these documents in order to record the newly established entity with the local Merchants' Social Insurance system. Finally, the local Chamber of Commerce issues the license number under which company will operate in Greece.

All traditional types of business organizations exist in Greece along with some more clearly defined subtypes. These include the following:

• Corporation
• Limited liability company
• General or common partnership
• Limited partnership
• Sole proprietorship or individual enterprise
• Cooperative
• Joint venture or consortium

Under Greek law, joint ventures and consortia are not recognized as different kinds of legal entities. The law governing joint ventures has been developed through decisions of the courts and directives issued by the Ministry of Finance. In general, each participant in a joint venture is liable for his share of the total debt, including taxes. Current tax law recognizes the existence and special nature of joint ventures and provides specific rules as to how their accounting records should be maintained.

Foreign enterprises may establish operations in Greece under any of these categories. In the case of industrial projects, the foreign investor is generally required to organize a Greek corporation in order to enjoy all the benefits of Law 2687 (which covers foreign productive investment) and of other incentives provided by the Greek government.

If none of the above forms is appropriate, foreign firms may establish branch offices. This requires the written approval of the Ministry of Development. Such approvals are issued on the basis of a power of attorney that designates a person who permanently resides in Greece to act as the foreign corporation's legal representative in the country.

Selling Factors

The selling factors and techniques that are applicable to Greece are generally the same as those in other western European countries and the United States.

Advertising

Advertising and sales promotion are usually handled by one of many local advertising companies. Advertising companies use all types of media to reach target groups. The mass media in Greece includes four state-run and over fifty private TV channels, and more than five hundred radio stations. There are also eight major national daily newspapers and a large number of general and specialized industry magazines.

A listing of national dailies and some business magazines appears in Appendix E.

Pricing

Greece has fully liberalized price controls, except for pharmaceutical and agricultural products. When pricing a product, firms should consider payment and credit terms. Orders are usually small, and Greek importers will request special consideration if a U.S. supplier requires large orders.

Greek importers generally expect C.I.F. quotation, except when the purchasing company does a large amount of direct buying and provides its own insurance. American firms should be prepared to quote prices on whatever basis is preferred by the prospective buyer.

U.S. exporters should bear in mind that letters of credit and drafts are very expensive in Greece. Banks require that the cash equivalent be deposited before issuing any guarantees. Working capital loans are relatively expensive, and to avoid extra costs, Greek firms often seek cash against documents or extended credit terms of 30­60 days (or longer) from their suppliers.

Credit

U.S. banks and U.S. firms should exercise caution in extending credit to Greek businesses. It is important to obtain full credit background information on any prospective recipient of liberal financing terms. Greek firms with an unhealthy debt/equity ratio are very vulnerable to changing interest rates. It is advisable to run periodic credit checks, even on businesses that have good payment records.

There are no debt collection agencies in Greece. Only courts are empowered to collect debts, through a legal process that is usually long and expensive.

There are a large number of bilingual law firms in Greece which practice business law. A list of attorneys is available from the Office of Citizens Consular Services for Europe, Room 4811, U.S. Dept. of State, Washington, D.C. 20520. This list is also available from the consular sections of the U.S. Embassy in Athens and the U.S. Consulate General in Thessaloniki.

Government Procurement

Purchases by the Greek government of capital equipment and supplies play an important role in the country's commercial environment. Greece is a member of the European Union and a signatory of the GATT Government Procurement Code, and adheres to the polices on government procurement of those organizations.

The Ministry of Development controls the procurement of almost all public sector entities, such as ministries, state organizations, agencies, and so on.

It is a standard requirement that all bidders post a bond, usually 5 % of the bid value, for all tenders issued by the Greek government and quasi­governmental agencies. Bids not accompanied by bonds are invalid. Bonds are returned to unsuccessful bidders within 5 days of the award of a contract.

After a bid is approved, the successful bidder is invited to sign a contract that incorporates the terms and conditions of the bid, subject to any negotiated additions or amendments. At that time, a performance bond, usually equal to 10 % of the bid value, must be posted by the firm.

Bids for the construction of public works are governed by special legislation. Construction bids are normally only open to local firms. However, when projects are complex and require a high degree of technical expertise, or when externally financed, international bids are invited.

If a particular commodity or service can be supplied by a local firm, the tender may be limited to local firms. Another means of directing purchases to local firms is to stipulate that foreign bidders must submit their offers in joint ventures with local enterprises. In major projects, the utilization of local resources (engineering services, manpower supplies, manufacturing, or assembly) is an important factor in bid evaluations. Foreign as well as local bidders must quote and accept payment in Greek drachmas, unless otherwise specified in the tender documents.

Special legislation also governs military construction projects and the purchase of defense items. Most military tenders require offsets. Procurement sponsored by the North Atlantic Treaty Organization (NATO) is open to international competitive bidding in accordance with NATO bidding procedures.

Patents and Trademarks

Greek laws extend equal protection on patents and trademarks to both foreign and Greek nationals. Greece is a member of the Paris Convention for the Protection of Intellectual Property, the European Patent Convention, the World Industrial Property Organization, and the Berne Copyright Convention. Greek legislation is also in harmony with EU rules and regulations on the subject.

Although there is adequate legislation which covers the protection of patents, copyrights and trademarks, enforcement of the law is insufficient, and piracy of copyrighted products and trademarks still exists. For more information, please see "Protection of Property Rights" in the Investment Climate section of this report.

V. LEADING SECTORS FOR U.S. EXPORTS AND INVESTMENTS

A. Best Prospects for Non-agricultural Goods and Services

1. Computers and Peripherals (CPT)

Imports supply over 80 % of the computer and peripheral market. Over 70% of the market is dominated by U.S. suppliers directly from the US or their European subsidiaries. One of the most promising segments of the market is the public sector, which has embarked on a program of large purchases of computer equipment and software, financed by the EU. It is expected that over $2 billion will be spent in Greece for information technology projects during 1997-2001.

The Greek government is facing a crucial problem as the pace of implementation of almost all IT projects in the Greek public sector is incredibly slow. Unless Greek government agencies proceed immediately with the implementation of their information system projects, the Greek state runs the risk of losing all of the lucrative EU subsidies.

The main competitors of American companies are European companies, including Bull (France), Philips (Netherlands), and Siemens-Nixdorf (Germany). Two Greek assembly companies, Altec and Quest, cover a significant portion of the market.

	1997	1998	1999
A. Total Market Size	120.0	140.0	160.0
B. Total Local Production	18.8	21.4	24.4
C. Total Exports	1.2	1.4	1.6
D. Total Imports	100.0	117.2	134.0
E. Imports from the U.S.	72.0	82.1	93.5

The above statistics are unofficial estimates.

2. Medical Equipment (MED)

The Greek market for medical equipment and supplies is dominated by imports. Imports supply approximately 90 % of the Greek market, mainly from Germany (21%), the U.S. (17.6%), Italy (14%) and the Netherlands (7.8%).

Imports in 1997 were approximately $438.4 million and are estimated to increase to $473 million in 1998 with a real growth rate 8-10% annually over the next three years.

Local production of medical equipment is limited. Several small to medium-sized factories supply hospitals with furniture, inexpensive manual wheel chairs, bandages, gauze, and other rudimentary hospital supplies. Only one dynamic Greek company manufactures high-technology medical equipment, such as artificial kidney equipment and hemodialysis equipment.

It is anticipated that the total market for medical equipment and supplies will grow over the next three years at a real rate of 10 % per annum. This projection is based on an ambitious program announced by the Ministry of Health for the establishment of new hospitals, and on the need for modernizing most existing facilities.

There is an increasingly strong demand for advanced and sophisticated medical equipment for which U.S. manufacturers enjoy an excellent reputation. As a result, imports from the U.S. have increased from $11 million in 1989 to $63.2 million in 1997.

Medical equipment consumption is concentrated mainly in the public sector, which accounts for 65-70 % of total value of purchases of medical equipment and supplies. U.S. suppliers should be aware that agents and distributors of medical equipment sometimes experience long delays in payment from state-owned hospitals. These delays are generally covered by the local business partners.

The Greek government has received approximately $1.6 billion from the EU Delors Package II for medical projects. The funds will go toward the construction of new hospitals, the expansion and modernization of existing ones, and the purchase of medical equipment. The steady increase in number and quality of private clinics will also play a substantial role in the increase of imports of technologically advanced equipment.

Most promising subsectors are in surgical appliances and supplies, surgical/medical instruments, and electro-medical equipment.

	1997	1998	1999
A. Total Market Size	438.4	473.0	521.0
B. Total Local Production	11.4	11.6	11.7
C. Total Exports	10.0	10.1	10.2
D. Total Imports	440.0	475.3	520.0
E. Imports From the U.S.	63.2	68.0	75.0

The above statistics are unofficial estimates.

3. Building Products (BLD)

In September 1997, the International Olympic Committee (IOC) announced that Athens would have the honor of hosting the 2004 Summer Olympic Games. While observers agree that it is likely that most major contracts for Olympics-related works will go to Greek firms, major subcontracting opportunities will definitely develop for American firms.

In addition, interest of the Greek population in the ownership of real estate continues to drive the construction of new buildings and the renovation and expansion of existing structures. As a result, it is anticipated that the market in this sector will increase in real terms by 10-15 % annually over the next three years. The private sector and the Greek government are also trying to modernize existing houses, commercial buildings, hospitals, airports and ports.

The Greek government has also announced a number of priority infrastructure projects, which have an estimated cost of $8 billion, that are expected to be completed by 1999.

The "do-it-yourself" market is also a growing market in Greece.

Although there is extensive local production and heavy competition from the EU-suppliers, U.S. products enjoy excellent reputation for their quality and durability. Italian, German and French manufacturers of building products have a predominant presence in this market. U.S. companies are represented through local firms that act as agents, distributors and importers. Most European companies have established joint-ventures with local businessmen or are in the process of establishing wholly-owned subsidiaries.

Glazed ceramic flags and pavings, hearth or wall tiles, sawn or chipped, sliced or peeled wood, painters fillings and faucets, indoor walls and floors are among the most promising products to be imported to Greece.

Greece requests an ISO certificate as well as EU certificates for building products/equipment. U.S. companies need to have such certificates to enter the Greek market.

	1997		1998	1999
A. Total Market Size	4,523	4,865		5,295
B. Total Local Production	3,333	3,567		3,853
C.Total Exports	17	18		19
D.Total Imports	1,207	1,316		1,461
E. Imports from the U.S.	55	61		68

The above statistics are unofficial estimates.

4. Telecommunication Services (TES)

The deregulation of the telecommunications market that has been mandated by the EU will not take effect in Greece until 2001 because of a special exemption. Value-added services continue liberalization, though at a markedly slow pace.

The Hellenic Telecommunications Organization (OTE), Greece's state-owned telephone service provider, has undertaken a massive program of service expansion and upgrading in order to compete after deregulation. OTE's multi-million dollar modernization program foresees the upgrade of its telecommunications network, including the addition of value-added services such as cellular telephony, data communication, paging, cable TV, satellite communications, and Internet services.

The Greek cellular telephony market is a huge success story. Deregulated in 1992, the market continues to boom. The two private cellular telephony providers, PANAFON and TELESTET, have close to 500,000 subscribers each. In the spring of 1998 OTE's subsidiary, COSMOTE, finally introduced its mobile telephony service, which uses DCS 1800 technology. The three companies have invested a total of close to $1 billion.

Following is a list of telecom services with excellent market potential:

• Leased circuits for the transmission of data, voice, and video, security systems links, and other applications in the banking, insurance, and services sector.
• VSATs (very small aperture terminals) that are used primarily for remote areas communications via satellite. Hotels, plants, multi-national or national company outlets are the best customers for VSAT services.
• Transportable TV signal transmission stations.
• Fast public switched data networks.
• ISDN high-speed digital networks.
• Paging systems compatible with the HERMES pan-European paging system.
• Videotex for graphic display applications and video conference applications.
• Marine communications via satellite.
• New cellular telephony applications in GSM environment.

	1997	1998	1999
A. Total Market Size	68.0	76.1	85.2
B. Total Local Production	13.6	15.2	17.0
C. Total Exports	1.2	1.4	1.6
D. Total Imports	55.6	62.3	69.8
E. Total Imports	11.1	12.4	13.9

The above statistics are unofficial estimates.

5. Commercial and Residential Air Conditioning and Refrigeration (ACR)

It is anticipated that the market in this sector, now estimated at $245 million, will increase in real terms by 8-10 % annually over the next three years. Adding to the opportunities in the private sector is a huge Greek government infrastructure program that includes the installation or upgrading of air conditioning systems in facilities around the country. Facilities targeted for construction or improvement include major airports, subways, hospitals, and government buildings. Experts believe that the U.S. share of this market, now valued at around $11.0 million, could grow as much as 10 % per year. Some trade sources put the U.S. share of the ACR higher than official statistics, near $36.0 million.

In general, imports supply about 90 % of the market, mainly from the Far East, the European Union (EU), and the United States. Commercial and residential air conditioning and refrigeration equipment (ACR) accounts for about 55 % of these imports. Local production has increased and supplies mainly air handling units, fan coils, and chillers, designed for small and medium-size industrial and commercial firms.

The refrigeration portion of the domestic air-conditioning and refrigeration market is currently being strengthened by countless modernization projects. Applications for new projects involving cold storage rooms, freezing tunnels and other refrigeration systems and equipment have reached $40.0 million in the first quarter of 1997. The Greek government is also trying to install and/or upgrade the cooling chamber, freezing tunnels, and food storage equipment used by agribusiness cooperatives to assist them in competing in the European market. The refrigeration portion of the domestic market will also be strengthened by future modernization projects and by the replacement, due to heightened environmental concerns, of old equipment.

There are around 15-20 ACR manufacturers in Greece, out of which five are major companies. There are 50-60 which are medium size companies dealing with imports. Twelve companies deal with refrigeration equipment.

There are no restrictions on the importation of air conditioning and refrigeration equipment from the U.S., nor are there any non-tariff barriers affecting their imports. However, all imported ACR equipment needs the CE mark and certificate.

There are three U.S. subsidiaries of ACR equipment producers in Greece: Carrier Hellas, Trane Hellas, and Lennox - D. Daskalopoulos. Although most of the major foreign air conditioning firms are represented in Greece, U.S. manufacturers of ACR equipment can still find capable distributors interested in selling products new to the market. U.S. air conditioning companies are known in Greece for the high quality, durability and low maintenance costs of their products.

Very good sales prospects exist for products under Harmonized System (HS) codes 84.14.90.90, 84.15.82.90, 84.18.60.90, 84.18.61.90, 84.18.99.80, and 84.15.90.90, including machinery and equipment for cooling chambers, compressors, condensing units, water chillers, air coolers, and packaged units.

	1997	1998	1999
A. Total Market Size	226.0	245.0	258.0
B. Total Local Production	21.0	24.0	25.5
C. Total Exports	22.0	22.0	23.5
D. Total Imports	227.0	247.0	250.0
E. Imports from the U.S.	11.0	11.0	12.5

The above statistics are unofficial estimates.

6. Franchising (FRA)

The system of franchising was first applied in Greece in the mid 1970's, but the rapid growth it is presently experiencing did not start until the early 1990's. While there are several successful franchise systems operating in Greece, there is room for many more and some industries are still practically untapped.

"Quick service eating outlets" is the area with the highest concentration of franchise systems operating in Greece. Many of the key players, like McDonald's, Pizza Hut, and Dunkin Donuts, are active, but as changing lifestyles allow less and less time for meal preparation at home, new opportunities are appearing. Clothing, housewares, giftwares, and a broad range of services such as computer training are other areas where franchise systems are proving successful in taking over from traditional independent outlets.

Greece has a large and dynamic middle class that can provide in abundance two of the basic elements for the success of franchising: ambitious prospective businessmen to become franchisees, and clients to frequent the new businesses. 40% of Greece's population lives in or around Athens. Most businesses are concentrated in that area and in a few other major cities like Thessaloniki, Patras, Larisa, and Heraklion. During the summer, more than 10 million tourists visit Greece, presenting an excellent market for some franchise businesses.

The Franchise Association of Greece plans to develop some statistics on the activity of its members but nothing is available now.

7. Residential Natural Gas Equipment and Accessories (OGM)

Residential Natural Gas Equipment and Accessories (RNGE) at present is an undeveloped sector in Greece despite its considerable potential. However, the sector is attracting more and more attention, heating and cooking units getting the most notice.

Even though no more than 8,500 end-users are now served with natural gas, rapid development is foreseen over the next eight to ten years. Eventually around 500,000 homes will use natural gas for heating, out of which over 400,000 will also use natural gas for water heating and cooking in Greece. Refrigerators using natural gas have also good opportunities in this new market.

In accordance with two Presidential Decrees, issued in 1987 and 1988, builders must provide natural gas facilities for heating, hot water, and cooking in all new houses, as well as in commercial and industrial buildings, built in the Attica, Viotia, Thessaloniki, Larissa, and Volos areas.

In addition, Greek policy concerning the acquisition of new RNGE units is contained in a number of laws that permit a tax exemption of 75 % of the cost of new residential natural gas burning equipment.

Imports of natural gas heating equipment and accessories are minimal, the data available from the Greek National Statistical Service for 1997 and previous years include only imports and exports of city gas and liquefied petroleum gas (LPG) distribution equipment, instruments, and household appliances. According to this data the total Greek market for residential gas equipment is estimated at $35 million for 1997. Imports supply approximately 85% of the heating generators and 90% of the cooking equipment market. Apart from a small percentage of LPG/city gas stoves, no household appliances using city gas, gas burners, and water heaters are manufactured in Greece.

The size of the market for RNGE equipment is estimated to reach $110 million by 2002 with the completion of the medium pressure, and the development of the low pressure, natural gas distribution networks in Attiki, Thessaloniki, and Larissa/Volos regions.

According to industry data, the U.S. share of the market for residential gas burning equipment was estimated at around 3.0 % in 1997. It is estimated that over the next five years the U.S. market share will grow at a real rate of 8 % per annum because of the interest in RNGE expressed by Greek companies in the sector in representing U.S. manufacturers. This data does not include RNGE equipment and parts produced by European subsidiaries of U.S. firms.

There are no restrictions on the importation of RNGE equipment and parts from the United States nor are there any non­tariff barriers affecting their import.

Although most of the major foreign RNGE equipment manufacturers are represented in Greece, U.S. firms can still find capable importers and distributors interested in selling products that are new to the market. U.S. RNGE equipment, products, and parts are known in Greece for their high quality and durability.

Very good sales prospects exist for products under Harmonized System (HS) codes 84.03.10.00, 85.16.60.00, 84.18.21.00 including gas heating generators and burners, kitchen stoves, water heaters and refrigerators.

In addition, joint venture or licensing arrangements for the local production of RNGE accessories and parts have excellent sales and prospects.

	1997	1998	1999
A. Total Market Size	35.0	46.0	53.0
B Total Local Production.	4.0	5.0	5.5
C. Total Exports	1.0	1.0	1.5
D. Total Imports	32.0	39.0	49.0
E.Imports from the U.S.	1.0	1.1	1.5

The above statistics are unofficial estimates.

8. Food Processing and Packaging Machinery and Equipment (FPP)

The Greek food industry is very dynamic and profitable, and the food processing industry and packaging industry is one of the most important sectors of Greek industrial activity. In total, it accounts for about 20 % of total manufacturing activity in Greece.

According to industry sources, there are about 10,000 food processing units and 700 beverage units. These units employ about 100,000 workers or approximately 17 % of the total industrial workforce. Fruit and vegetable canning and processing entities as well as bakeries are the sector's largest employers, followed by sugar and confectionery, beverage, and meat processing. This sector processes about 70 % of Greece's agricultural production. The largest concentration of food processing units are in Macedonia, Thessalia, Crete, and the Peloponese.

The Greek market for food processing and packaging machinery and equipment is estimated by industry experts to be around $197.7 million in 1997. The Greek market is dominated by imports, which cover about 83 % of the total market. Over 65 % of the imported machinery and equipment is Italian or German. Greek manufacturers hold a 20 % share of the market, with domestic production limited to simple equipment.. There are no official equipment production statistics available.

The U.S. market share was around 6.7 % in 1997 and, based on projections by market sources, is expected to grow over the next three years at a real rate of 10-12 %. This market share does not include equipment imported from European subsidiaries of U.S. firms. The principal equipment imported from the U.S. continue to be machinery for processing fruits and vegetables.

U.S. food processing and packaging machinery and equipment has an excellent reputation for quality and durability. U.S. manufacturers operate in Greece mainly through local agents and importers.

There are no restrictions on imports of food packaging machinery and equipment, nor any non-tariff barriers affecting imports from the U.S.

Prospects are good in all of the food-beverage processing and packaging machinery and equipment sector. The best sales opportunities are in: bakery, pastry and pasta equipment; fruit and vegetable processing, freezing and canning; juice extraction and canning; food filling, sealing, capping, wrapping machinery; meat processing equipment; fish canning; processing-packaging of snacks; and soft drink bottling lines. In addition, joint venture/licensing arrangements, and local assembly/production of equipment have excellent sales prospects.

	1996	1997	1998
A. Total Market Size	178.8	197.7	221.4
B. Total Local Production	35.7	39.5	44.3
C. Total Exports	5.3	6.8	6.6
D. Total Imports	148.4	165.0	183.7
E. Imports from the U.S.	12.0	13.2	14.6

The above statistics are unofficial estimates.

9. Defense Products (DEF)

Almost every ten years the government of Greece implements a major multi-million dollar purchase plan that aims to modernize the Greek Armed Forces. For the period 1998-2004 the Ministry of Defense (MOD) has been allocated $16 billion.

The Greek Armed Forces have released a very long list of goods that it hopes to purchase within the next two years and pay for within the next decade. The list of purchases that MOD is currently considering, is discussing with suppliers, or has at the evaluation stage follows:

Air Force:

• Purchase of a new generation fighter aircraft;
• An airborne early warning and control system;
• Ground air defense system;
• New trainer aircraft.

Army:

• The purchase of 250 new tanks;
• Purchase of four more Apache helicopters;
• Purchase of six M577 track vehicles;
• Purchase of 80 M901A1 tow vehicles;
• Purchase of a MLRS Battalion;
• Hawk missile upgrade;
• Purchase of 71 ATACMS units;

Navy:

• Purchase of two new submarines;
• Upgrade of Glafkos-type submarines and purchase of new sub-batteries;
• Purchase two landing craft air cushioned (LCAC) hovercraft;
• Purchase of new frigates;

Competition for many of these contracts will be stiff. Industry sources report that the French, German, Russian, and other European Governments have already been strongly promoting their industries and push their products through strong political pressure. Market analysts insist that defense companies proposing purchases to MOD should include in their package very favorable financing terms, including advantageous rates and deferred interest.

	1997	1998	1999
A. Total Market Size	390.0	470.0	564.0
B. Total Local Production	60.0	70.0	84.0
C. Total Exports	0.0	0.0	0.0
D. Total Imports	351.0	423.0	507.6
E. Imports from the U.S.	210.6	253.8	304.5

The above statistics are unofficial estimates.

B. Best Prospects for Agricultural Products

1. Nursery Products

The current yearly demand for plant material (floricultural and ornamental) of $214 million is expected to double over the next six years as public sector projects increase and Athens prepares for the 2004 Olympic Games. Expanded landscape activity in Greece is expected at all levels from home gardens to large public developments including re-landscaping existing buildings, land rehabilitation, soil stabilization and highway beautification projects. In the next 6-7 years public works projects are expected to create demand for 95-100 million shrubs and trees suitable for public space landscaping, in addition to several new waste disposal sites which will need 60 to 65 million plants for landscape rehabilitation. Floricultural products (cut flowers and flowers in pots for interiors and outdoors) are also a fast growing market.

The EU accounts for over 90% of current imports. Domestic nurseries account for nearly 85% of all plant propagation material including arboricultural nursery products.

The potential for U.S. products, technology and investment in the Greek nursery sector is high. The most accessible market is for seeds (flowers, grass, environmental grasses for erosion control, wild flower seed mixtures), various propagation material, bulbs, grafting material and numerous species in pots.

	1997	1998	1999
Total Market Size	214	214	250
Total Local Production	18	18	20
Total Exports	0	0	0
Total Imports	196	196	230
Imports from the U.S.	0	0	0

The above statistics are unofficial estimates

2. Planting Seeds

The Greek seed market includes crops like cotton, corn, wheat, sugar beets, alfalfa, industrial tomato and vegetables for immediate fresh consumption. The value of the field crop seed market is estimated at just over $100 million (value at retail price level paid by farmers), while the vegetable seed market is estimated at $30 million. U.S. exporters should continue to target the traditional market for field seed imports, particularly those of corn hybrids, alfalfa, cotton seed, vegetables. U.S. exporters should explore the potential markets GMO seeds as well as other high value certified seeds (i.e., environmental grass seeds, hybrid vegetable seeds, forage plant seeds and other genetics not produced domestically, like strawberry seedlings and various cuttings).

	1997	1998	1999
Total Market Size	130	135	137
Total Local Production	35	37	40
Total Exports	0	0	0
Total Imports	95	98	97
Imports from the U.S.	27	28	29

The above statistics are unofficial estimates

3. Frozen Fish

Frozen fish consumption in Greece has increased 15% in the last few years, but at 24 kg per capita, is still relatively low compared to other European countries. Steady improvements in living standards coupled with the recent changes in consumption patterns towards healthier food have helped fuel this increase in demand for fish, especially frozen fish, which is cheaper than fresh fish, to a total market of 230,000 MT. The majority of frozen seafood is sold packed, with fillets and codfish being preferred. The main U.S. competitors are the EU and African countries as well as some local fish farms. Greece is one of the largest importers of U.S. frozen squid.

	1997	1998	1999
Total Market Size	100	102	105
Total Local Production	15	16	6
Total Exports	0	0	0
Total Imports	85	86	9
Imports from the U.S.	25	25	26

The above statistics are unofficial estimates

4. Tree Nuts

Consumption trends in Greece show a gradual increase in tree nut utilization in the food and confectionery industry while the snack food sector remains stable. Good quality tree nuts are mostly used as snack food. Greeks are one of the highest nut consumers in the world, with about 8 kg per capita consumption. Imports are usually necessary, with almonds purchased from the U.S. (approximately 1,400 MT) and pistachios purchased from Iran (approximately 2,200, out of total 2,600 MT imports). Other U.S. tree nuts (walnuts and pecans) are imported in small quantities. Walnuts face competition from the Turkish product and those purchased from around the Balkan area.

1997 1998 1999

Total Market Size	33	34	35
Total Local Production	30	30	30
Total Exports	5	5	5
Total Imports	8	9	9
Imports from the U.S.	3	3	3

The above statistics are unofficial estimates

5. Wood Products

Greece is the largest consumer of wood sheet materials per capita in Europe and is both a producer and importer of medium-density fiberboard (MDF), chipboard and plywood. Imports showed an upward trend in 1997 with an increase observed for US hardwood (25% for the first half of 1997 compared to the same period in 1996). White oak is the main wood sold accounting for 50% of exports. The veneer market provides a good opportunity for US hardwood veneer and the market can still be expanded, despite the short term increase in competition from some European suppliers.

	1997	1998	1999
Total Market Size	250	260	265
Total Local Production	60	65	65
Total Exports	0	0	0
Total Imports	190	195	200
Imports from the U.S.	24	25	27

The above statistics are unofficial estimates

VI. TRADE REGULATIONS AND STANDARDS

Trade Barriers

Greece has both EU­mandated and Greek government­initiated trade barriers. Apart from the EU, it maintains specific barriers in services such as law, aviation, and motion pictures.

Law: Greece maintains nationality restrictions on a number of professional and business services, including legal advice. Restrictions on legal advice do not apply to EU citizens, and U.S. companies generally circumvent these barriers by employing EU citizens

Aviation: The Greek flag carrier, Olympic, used to have a monopoly in the provision of ground services to other airlines. As of January 1, 1998, all major airports in the EU had to offer at least two ground handling options. However, in practice Olympic remains the only ground handling option other than self-handling.

Motion Pictures: Greek film production is subsidized by a 12 % admissions tax on all motion pictures. Enforcement of Greek laws protecting intellectual property rights for film, software, music, and books is problematic.

Agricultural products: Greece has not been responsive to applications for introduction of bioengineered (genetically modified) seeds for field tests despite support for such tests by Greek farmers.

Greece insists on testing U.S. wheat shipments for karnal bunt disease. It will not accept U.S.D.A. certificates stating that wheat comes from areas free from the disease. The testing method used provides a high incidence of false positive results and thus serves as a de facto ban on imports of U.S. wheat.

Customs Valuation

As a member of the European Union, Greece subscribes to the EU's common external tariff, common agricultural policy, joint transportation policy, and to the directives on the free movement of goods, labor and capital. Trade between EU members is duty-free. Import duties on products from non-EU countries (including the U.S.) is 5 - 7 % for most manufactured products. In general, duties are lower on most raw materials and higher on some other product categories, such as textiles. Import duties are applied on C.I.F., ad valorem basis. In addition to import duties, imports are subject to other minor surcharges totaling less than 1 %.

Agricultural products from non-EU countries are subject to a more complicated protection system administered by the EU. The system includes higher surcharges that make non-EU agricultural products non-competitive on price. Greece occasionally bans imports of some types of products that compete with similar domestically produced ones. Greece also sometimes prevents or delays customs clearance due to phytosanitary problems.

Commodity imports into Greece are generally free and no import licenses are required. The EU applies certain quota restrictions on products from low-cost countries. U.S. businessmen wishing to market products that they manufacture in low-cost countries, such as China, are advised to review the quota system with their importers.

Banks require one original invoice from the foreign supplier in order to carry out a transaction. Temporary duty relief can be granted for raw materials imported into Greece for processing and re-exportation to non-EU countries. Goods imported into Greece for demonstration can be imported under a carnet, which can be issued by most U.S. Chambers of Commerce.

Labeling

Labeling and marking requirements are in accord with EU requirements. Labels must be in Greek. The Greek labels can be attached to the product between clearing customs and being offered for sale.

Standards

Greece follows standards requirements according to guidelines set by the EU. ISO 9000 is accepted and used by many local firms and is a requirement for many government procurement contracts.

Special Import Provisions

Pharmaceutical imports require a special approval that is granted by the National Pharmaceutical Organization. New-to-market food products require similar approval by the General State Laboratory.

Products complying with the Food Code do not require a special permit to be imported and marketed in Greece, with the exception of seeds, meat and poultry products, nuts, and dairy products.

Seeds: In order for a seed variety to be imported into Greece it should be listed in the European Variety Catalog. If not, it must be registered in the national Catalog of Greece, which requires tests taking 2-3 years, depending on variety and species. Seeds must be accompanied by certain certificates required by the EU.

Meat and Poultry: Imports of meat and poultry products from third countries into Greece are allowed only from EU approved plants.

Nuts: Imported nuts are subject to an aflatoxin test performed by the Supreme Chemical Laboratory.

Dairy Products: Imports of dairy products (i.e., ice cream and frozen yogurt) from third countries are allowed only from plants inspected by Greek veterinarians.

Free Trade Zones

Greece has three free-trade zones, located at the Piraeus, Thessaloniki, and Heraklion port 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 2504/88 and 2562/90. Transit goods may be held in the zones free of bond. The zones also may be used for repacking, sorting, and relabeling 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.

VII. INVESTMENT CLIMATE

Openness to Foreign Investment

The Greek government encourages private foreign investment as a matter of policy. Investments are screened only when the investor wants to take advantage of government provided tax and investment incentives. In such cases, foreign and domestic investors face the same screening criteria. Greece restricts foreign and domestic private investment in public utilities (with the exception of cellular telephony and energy from renewable sources). There are also restrictions on land purchases in border regions and on certain islands (on national security grounds). U.S. and other non-EU investors receive less advantageous treatment than domestic or EU investors in the banking, mining, broadcasting, maritime, and air transport sectors.

Major investment laws are:

1. 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, work permits for foreign managerial and technical staff, and permission for the export of capital, dividends, interest, and other current payments. The Decree also provides a constitutional guarantee against unilateral changes in the terms of a foreign investor's agreement with the Greek government. (This does not include taxation regime changes).
2. Law 2601/98 revised the investment incentives regime replacing Law 1892/90 and its subsequent amendment 2234/94. Under the new law, new businesses (with less than five years of operation) may choose any of the following combinations of incentives: a) grants and interest subsidies as well as subsidies for leasing equipment, b) tax exemptions and interest subsidies. The emphasis of the new law is on assistance for large projects, mergers of small and medium size manufacturing companies and on the development of new products.
3. Laws 89/67, 378/68, 27/75 and 814/78 provide special benefits (such as tax and import duty exemptions) for offshore operations of foreign companies established in Greece.
4. Law 468/76 governs oil exploration and development in Greece. Law 2289/95, amending this legislation, allows private participation in oil exploration and development.

Greece's privatization plans are limited to the sale or partial flotation of 12 state corporations, the sale of three banks and the sale of the three remaining companies under the supervision of the state Industrial Reconstruction Organization (IRO). The Greek Government's plans include the sale of minority holdings of the Public Power Corporation, the Telecommunications Organization (OTE), and Olympic Airways Catering. The state banks also plan to rid their portfolios of shares of companies that are not in the financial services sector. The stage at which foreign or domestic investors participate in privatization programs is not restricted.

Conversion and Transfer Policies

Receipts from productive investments can be repatriated freely at market exchange rates. Remittance of investment returns is made without delays or limitations. Most of the remaining capital controls were abolished in August 1997.

On March 16, 1998, the Greek currency was included in the European Union's Exchange Rate Mechanism (ERM). This was preceded by a drachma devaluation of 12.3 %. The government plans to maintain drachma/ECU parity throughout 1998 and 1999.

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 expropriatory actions involving the real property of foreign investments in recent history. However, a 1996 government decision to revoke a casino license for Athens has generated lawsuits in Greece and the United States, seeking compensation for the loss of the lucrative license.

Dispute Settlement

Investment disputes involving U.S. companies have been related to the Greek government's proclivity to change the terms of negotiated contracts (e.g., casino licenses).

Greece has an independent judiciary. The court system is a highly time-consuming means for enforcing property and contractual rights. Foreign companies report their experience that Greek courts do not always provide unbiased and effective recourse. This is clearly the case regarding U.S. copyright holders. Although an investment agreement could be drafted subject to foreign legal jurisdiction, this is highly unlikely, particularly if one of the contracting parties is the Greek state. Foreign court judgments are accepted and enforced by the local courts.

Greece accepts binding international arbitration of investment disputes between foreign investors and the Greek state. Both these arbitrations and European Court of Justice judgments supersede local court decisions. 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 local currency unless explicitly stipulated otherwise. Greece has a reliable system of recording security interests in property.

Greece is a member of the International Center for the Settlement of Investment Disputes, but no new cases have been forwarded to the Center for settlement since 1982. Greece is also a member of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

Performance Requirements/Incentives

Investment incentives are available on an equal basis for foreign and domestic investors in productive enterprises. The monetary value of an incentive is inversely proportional to the level of development of a given region; in other words, the less developed the region where the investment will occur, the more generous the incentive. Under the new investment incentives law 2601/98, new businesses (with less than five years of operation) may choose any of the following combinations of incentives:

• Grants and interest subsidies, as well as subsidies for leasing equipment.
• Tax exemptions and interest subsidies.

Businesses with more than five years of operation qualify only for interest subsidies and tax exemptions. Additional tax incentives are extended to foreign investors if they establish export-oriented businesses, or if they save foreign exchange through import substitution (Law 2687/53). The Hellenic Center for Investment (ELKE) or "One-Stop Shop" is responsible for reviewing projects valued over 3 billion drachmas ($10 million), or 1.5 billion drachmas ($5 million) if there is foreign participation, for which government incentives are sought.

There are no performance requirements imposed as conditions for establishing, maintaining, or expanding an investment. However, performance requirements do exist when an investor wants to take advantage of tax and/or investment incentives. Local content, import substitution, export orientation, and technology transfers are taken into consideration by the Greek authorities in evaluating applications for investment incentives. Companies that fail to meet the specified performance requirements may be forced to give up the incentives they were initially granted. All information transmitted to the government for the approval process is treated confidentially.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 various government agencies discourage investment.There are no restrictions on the entry of foreigners into Greece. Foreigners from EU countries may freely work in Greece. Foreigners from non-EU countries may work in Greece after receiving a residence and work permit. 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.

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. Greece restricts foreign as well as domestic private investment in public utilities. Recent privatization plans are limited to the sale of minority holdings in public utilities (e.g., Telecommunications Organization, Athens and Thessaloniki Water and Sewage Companies). Private power production for sale to the national grid is currently limited to "non-traditional" energy sources (e.g., wind and solar). There are also restrictions on land purchases in border regions and certain islands (on national security grounds). Some restrictions exist for U.S. and other non-EU investors in: (1) mining, (2) banking, (3) maritime and air transport, and (4) broadcasting.

Private enterprises enjoy the same treatment as public enterprises with respect to access to markets and other business operations, such as licenses and supplies. Access to credit has traditionally been easier for public enterprises, which could borrow easily from state-controlled banks. Liberalization of the banking system and increased compliance with EU norms, however, have gradually forced state banks to operate in a more market-oriented manner, making it easier for the private sector to obtain credit.

Protection of Property Rights

Greek laws extend protection of property rights to both foreign and Greek nationals. At least on paper, the Greek legal system protects and facilitates acquisition and disposition of all property rights. As for intellectual property, 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 Berne 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 as of February 28, 1995 (Law 2290/95).

Despite Greece's legal framework for and voiced commitment to copyright protection, piracy of copyrighted material, especially audio-visual works for television, remains widespread. Greece took an important step toward addressing this problem by enacting a new copyright law in February 1993 (Law 2121/93), which contains a high standard of protection for all copyrighted works. Furthermore, Law 2328/95 (media law) establishes a new systematic legal framework for the radio-television market, whose anarchic development encouraged copyright piracy. However, that law it is not yet fully implemented.

The inability of rights holders to obtain effective action against TV stations pirating copyrighted works resulted in Greece being elevated to the USTR's "Priority Watch List" under the "Special 301" provision of the 1988 Trade Act, in December 1994. Just prior to an out-of cycle review by USTR in December 1996, the Greek government presented an "Action Plan" of specific steps it would take by April 1997 to reduce audio-visual piracy. While some of these steps were taken, the Greek government lagged behind severely in licensing television stations in accordance with the provisions of the 1995 media law; the process, while finally underway, is less than half-way through as of June 1998. As a result, the U.S. Government has launched a WTO TRIPS non-enforcement challenge. Consultations under WTO auspices were started in June 1998.

Although Greek trademark legislation is fully harmonized with that of the EU, another intellectual property protection problem is the lack of effective protection of trademarks, particularly in the apparel sector. Claims by U.S. companies of counterfeiting appear to be on the increase.

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. Patents and trade secrets are protected by law 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.

Transparency of the Regulatory System

As an EU member, Greece is required to have transparent policies and effective laws for fostering competition. In practice, however, the process is not transparent due to overlapping laws and confusion in their application. Foreign companies consider the complexity of government regulations and procedures -- and their inconsistent implementation by the Greek civil administration -- to be the greatest impediment to operating in Greece.

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 functions as a one-stop shop for assisting investors in cutting through red tape and acquiring the numerous permits needed to proceed with investments. It also advises the government on ways to streamline the investment process and generally to improve the investment climate in Greece.

Greek government laws and policies generally do not negatively affect the efficient mobilization and allocation of investment. However, labor laws remain quite restrictive regarding the dismissal of personnel. Under current regulations, both private and public companies are prohibited from firing or laying-off more than 2 % of their total workforce per month without a special prior dispensation from the government. Reforms in labor legislation are planned for 1998.

Foreign investors often complain about frequent changes in tax policies (there is a new tax law practically every year). Tax laws sometimes include discriminatory provisions, e.g., the 1998 tax bill increased corporate tax rate from 35 to 40 % for all corporations that have registered shares but do not trade them on the Athens Stock Exchange (ASE). Though in principle this change would not violate Most Favored Nation or National Treatment obligations, one practical result is to provide a tax subsidy to Greek firms based on their utilization of the ASE.

Efficient Capital Markets and Portfolio Investment

Greece has an efficient capital market and the private sector has access to a variety of credit instruments. Credit is allocated by private banks -- and increasingly by public ones too -- on market terms, and is equally accessible by private Greek and foreign investors. A number of American banks operate in Greece, serving both the local and international business community.

An independent regulatory body, known as the Capital Market Committee, supervises the Athens Stock Exchange and encourages and facilitates portfolio investments. Both owner-registered, and bearer bonds and shares are traded in the Athens Stock Exchange. 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.

A few state-controlled banks dominate the Greek banking industry. Private Greek and foreign banks do, however, comprise an increasingly competitive and generally profitable private sector, holding about one third of the banking system's assets. Private banks in Greece are in good financial health and are expanding their market share. State banks have a large exposure to public enterprises of questionable financial health. Total combined assets of the five largest banks are estimated at $80 billion.

There is 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. In sectors open to private investment, foreign investment is not prohibited or restricted, by either law or regulation or by private sector efforts or practices.

Political Violence

Greece is a stable parliamentary democracy currently governed by a socialist government. There are, however, several indigenous terrorist groups that regularly denounce American capitalism and "imperialism." The most notorious are "17 November" and "ELA", which have a history of committing murders and bombings directed against American (including killing five U.S. government employees), Turkish and Greek government targets. There have been several terrorist attacks against the property of American and other foreign businesses in recent years but no private American businessman has been the victim of a terrorist attack. American businesses keep a generally lower profile in Greece compared to other EU countries. In 1998 (through May), six U.S. businesses have been attacked.

Corruption

Bribery is considered a criminal act and the law provides severe penalties for infractions. However, diligent implementation and enforcement of the law remains an issue. The problem is most acute in the area of government procurement. It is a widely-held belief that political influence and other considerations, such as loyalty to old suppliers, plays a significant role in the evaluation of bids. Bribery cannot be deducted from taxes, but "facilitative payments" by companies of up to 3 billion drachmas ($10 million) or 1% of gross revenues (whichever is less) received abroad can be deducted from taxable income. This provision will be terminated by legislation currently being drafted which will implement the OECD Convention on the Fight against Bribery of Foreign Government Officials.

The judicial authorities are responsible for investigating and prosecuting corruption cases. In cases where politicians are involved, the Greek Parliament decides whether parliamentary immunity should be lifted to allow a special court action to follow. In recent years, there have been a number of investigations of alleged corruption; there was even a special court action against politicians, including the then-Prime Minister, in 1989. However, nobody has been convicted to date.

Greek law cannot be extended to apply to criminal acts outside the Greek territory, therefore, a bribe to a foreign official would be subject to the laws of the country where the bribery takes place. As a signatory of the OECD Convention on the Fight against Bribery of Foreign Government Officials, the Greek government is committed to penalizing those who commit bribery abroad. The Convention should be ratified by the end of 1998.

Bilateral Investment Agreements

Greece has bilateral investment protection agreements with Armenia, Georgia, Ukraine, Russia, Latvia, Lithuania, Uzbekistan, Croatia, Slovenia, Poland, Hungary, Romania, Bulgaria, Albania, Serbia ("FRY"), the People's Republic of China, Morocco, Tunisia, Zaire, Egypt, and Cuba. An Agreement with Chile has also been signed but has not been ratified by the Greek Parliament. Investments by EU member states are governed and protected by EU regulations.

Greece and the United States have 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 have the 1950 Treaty for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. Despite the existence of this Treaty, which provides national treatment with respect to all taxes imposed on citizens and subjects of the other contracting state, Greek tax laws sometimes include discriminatory provisions. For example, the 1994 legislation increased the corporate tax rate from 35 to 40 % for all foreign companies and all Greek corporations not listed in the Athens Stock Exchange. In practice, this meant that U.S. and other foreign bank branches (due to their status as branches rather than locally incorporated subsidiaries) were required to pay a taxation rate of 40 %, while Greek banks paid only 35 %.

This discriminatory provision was remedied by the tax law of 1997, which raised the tax rate on profits of all banks to 40 %. However, the 1998 legislation also included a new discriminatory provision as it increased corporate tax rate from 35 to 40 % for all corporations which have registered shares but do not trade them on the Athens Stock Exchange (ASE). Though in principle this change would not violate Most Favored Nation or National Treatment obligations, one practical result is to provide a tax subsidy to Greek firms based on their utilization of the ASE.

OPIC and other Investment Insurance Programs

Full 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, it should be noted that since the Greek drachma was included in the European Union's Exchange Rate Mechanism (ERM) on March 16, 1998, currency inconvertibility is a non-issue for Greece.

Labor

There is an adequate supply of skilled, semi-skilled, and unskilled labor in Greece, although some highly technical skills may be lacking. Illegal workers predominate in the unskilled labor sector in many urban areas. Over 350,000 illegal workers took advantage of a recent government program to legalize their residence and work status. The current unemployment rate is between nine and ten 10% Labor-management relations in the private sector are generally good, but difficulties exist in the public sector, as is evidenced by the high level of strikes, labor stoppages, and related job actions by public sector employees.

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.

Foreign Trade Zones/Free Ports

Greece has three free-trade zones, located at Piraeus, Thessaloniki and Heraklion port 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 2504/88 and 2562/90. Transit goods may be held in the zones free of bond. The zones also may be used for repacking, sorting and relabeling 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.

Foreign Direct Investment Statistics

Statistics on foreign direct investment are not available. Greek statistical data were previously based on records of investment approvals kept by the Ministry of National Economy or the Bank of Greece. The lifting of foreign exchange restrictions resulted in less monitoring of investment inflows and the Ministry of National 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 indicated that a new data system based on surveys is being set up.

Although there is no official estimate of total foreign investment in Greece, the total stock of foreign investment is estimated at around $6 billion, or approximately 6 % of GDP (in 1997). We estimate the total stock of U.S. investment to be about $2.3 billion, about one-third of the total stock of foreign investment. U.S. firms employ about 7,500 people.

Major Foreign Investors

The largest single U.S. investment in Greece is an approximately 40 % stake by the U.S. company Whiteshield in the North Aegean Petroleum Company (NAPC). NAPC, a venture worth over $750 million, is involved in the drilling of crude oil west of the island of Thassos in northern Greece.

Other major U.S. investments in Greece:

(Based on 1996 total assets as reported by the companies. Source: 1998 ICAP - Greek Financial Directory)

NAME OF AMERICAN COMPANY	TOTAL ASSETS
(NAME OF GREEK COMPANY)	(1996, US $ MILLIONS)

Mobil Oil	170.2
Hyatt Hotels Corp.	106.2
Pepsico	101.6
Philip Morris Group	97.8
(Jacobs-Suchard Pavlides)
(Kraft Hellas)
Procter & Gamble	97.2
Texaco	82.9
Searle (Vianex)	75.4
Bristol-Myers Squibb	74.9
Johnson & Johnson	64.0
Abbott Laboratories	62.3
Hertz (Autohellas-Hertz)	48.8
IBM	48.4
General Dynamics/Lockheed (HBDIC)	47.8
Heinz (Copais)	44.4
Colgate Palmolive	42.9
McDonald's	36.4
Dow Chemicals	33.5
Marriott (Asty)	28.3
3M	27.2
Rank Xerox	15.1
S.C. Johnson and Son	11.9
TOTAL	1,290.0

Major non-U.S. foreign investments in Greece are:

NAME OF FOREIGN COMPANY	TOTAL ASSETS
(NAME OF GREEK COMPANY)	(1996, US $ MILLIONS)

FRENCH

Pechiney (Aluminium de Greece)	401.7
Promode (Continent)	172.4
Alcatel (Alcatel Cables)	50.8
L'Oreal (Anelor)	41.0
Air Liquide	30.6
TOTAL	696.5

ITALIAN

Concretum
(Heracles General Cement)	493.3
(Halkis Cement)	88.8
Fulgorcavi Halia
(Fulgor Greek Electric Cables)	101.4
Italcimenti
(Halips Building Materials)	88.4
Barilla (Misko)	34.2
TOTAL	806.1

GERMAN

Siemens Tele Industrie A.G.	81.6
Bayer	48.8
Praktiker	34.8
AEG	34.3
Hoechst	33.9
Beiersdorf (BDF Hellas)	32.9
Triumph International	18.9
Schiesser(Schiesser-Pallas Ltd)	17.6
Stiebel Eltron	14.3
Kumpers & Co
(Kortag Textilwerke)	11.8
TOTAL	328.9

BRITISH

Metal Box
(Hellas Can Packaging Mfrs)	139.7
United Distillers	88.3
Rothmans	56.4
Knorr (CPC Hellas S.A.)	19.9
TOTAL	296.3

NETHERLANDS

Amstel-Heineken
(Athenian Brewery)	369.3
Unilever
(Elais Oleaginous Products)	104.4
(Lever Hellas)	104.6
Shell	184.6
TOTAL	762.9

VIII. TRADE AND PROJECT FINANCING

The Banking System

The banking and financial sectors have been liberalized considerably since 1987, primarily because of directives from the EU, and are now basically free of state interference.

The Greek banking system consists of a central bank (The Bank of Greece), 41 commercial banks, 3 investment banks, 1 specialized bank, 7 local cooperative banks, the postal savings bank and the Consignments and Loans Bank. Twenty­three of the commercial banks are foreign, including five American banks. Of the Greek commercial banks, the largest is the National Bank of Greece, which accounts for about one­third of the country's banking business.

State­controlled banks and specialized financial institutions together control about 71 % of deposits and 68 % of loans. Foreign­owned banks (including other EU­based banks) control about 9 % of deposits and 12 % of loans. Greek­owned private banks retain control of the remaining 20 % of deposits and 20 % of loans.

The Bank of Greece, the central bank, has the exclusive right to issue paper currency. It also acts as the depository for government accounts, and for the mandatory reserve requirements of commercial banks and legal entities. The bank acts as a financial and fiduciary agent for the government's monetary policy decisions. It also supervises the commercial banks and other financial institutions.

The establishment of a foreign bank in Greece must be approved by the Bank of Greece. EU Single Market legislation and banking directives have contributed to the liberalization and deregulation of the Greek banking industry.

Foreign Exchange Controls

Foreign exchange controls have been progressively relaxed since 1985. Medium and long­term capital movements have been fully liberalized. Most restrictions on short­term capital movements were lifted in 1994. Remaining restrictions on short­term capital movements were lifted on August 1, 1997, although some controls still exist to facilitate enforcement of money laundering laws and tax collection. Greece's foreign exchange market is now in line with EU rules on the free movement of capital.

General Financing Availability

Greek capital markets allocate credit on market terms, and while a sound business may have no problem with financing availability, interest rates range from 13 (prime rate) to 19 %.

Banks constitute the main source of financing. The bond market is still embryonic. The Athens Stock Exchange is increasingly used as a source of capital financing. The Greek government has initiated legislation to encourage a venture capital market. Capital­market growth has been hampered by the predominance of small, family­owned firms, and the tendency either to invest in real estate and government bonds or to hold savings in bank deposits.

Checks are predominately used for commercial transactions. Credit cards are widely available and used for retail transactions. Most of the liabilities of the commercial banks are in the form of savings deposits. The majority of bank loans are short­and medium­term; only one­fifth of bank loans are long­term.

Export Financing and Insurance

No special terms govern export financing. Methods of payment are subject to individual agreements. Credit institutions may freely determine interest rates. The Bank of Greece influences interest rates by using the discount rate and other interest rates in its transactions with commercial banks as tools to control the money supply.

EXIMBANK's exposure in Greece is extremely limited. OPIC has not been active in Greece but it recently signed an agreement with its Greek counterpart (Greek Export Credit Insurance Organization) for the creation of a joint fund for risk insurance in the Balkans and Central and Eastern Europe.

Project Financing Availability

Most of the current infrastructure projects in Greece are co­financed by the EU (approximately $20 billion in the 1994­99 period). The European Investment Bank also participates in the financing of many of the large infrastructure projects in Greece.

Banks with Correspondent U.S. Banking Arrangements

• National Bank of Greece: The Atlantic Bank of New York, Chase Manhattan, Citibank, Chemical Bank
• Ionian Bank: Chase Manhattan, Banker's Trust, American Express, Bank America International, Citibank, Chemical Bank
• Bank of Attica: Bank of New York
• Bank of Piraeus: Bank of New York
• Commercial Bank: Chemical Bank, Bank of America International, Chase Manhattan, Citibank, Banker's Trust
• Credit Bank: Bank of New York, Banker's Trust, Bank of America, Chase Manhattan, Chemical Bank, Citibank, Morgan Guarantee Trust Bank
• Ergo Bank: Banker's Trust, Bank of New York, Citibank, American Express
• Egnatia Bank (Thessaloniki): Bank of New York
• Eurobank: Banker's Trust
• European Popular Bank: Marine Midland Bank
• General Hellenic Bank: Bank of New York
• Macedonia­Thrace Bank: Atlantic Bank of New York, American Express, Bank of New York, Chase Manhattan, Continental Bank, Citibank, Fidelity Bank
• Xiosbank: Citibank

IX. BUSINESS TRAVEL

Business Customs

Greek business people are astute bargainers. Success in business dealings depends on a combination of patience and quick judgment. Greeks are warm and cordial in their personal relationships. A wealth of good restaurants and places of entertainment makes it easy for a business visitor to reciprocate the courtesies shown.

Greek is spoken by 96 % of the people and is used for all business and official purposes. Language is not a major barrier to foreign business visitors since a relatively high percentage of local officials and business people speak English or French.

Athens time is 7 hours ahead of eastern standard time. Government office hours are 7:30 a.m. - 3:00 p.m., Monday through Friday from October to May. The hours change May through September to 7:00 a.m. - 2:30 p.m., Monday through Friday. Private sector office hours are 8:00 a.m. - 5:00 p.m. (with one hour for lunch). Manufacturing establishments operate from 7:00 a.m. - 3:00 p.m., Monday through Friday. Banking business hours are 8:30 a.m. - 2:00 p.m., Monday through Friday.

Travel Advisory and Visas

U.S. citizens may enter Greece with a valid U.S. passport and may stay for up to 3 months. No visas or other formalities are required. Should visitors wish to remain longer, they must submit an application to the immigration authorities at least 20 days before the end of the initial 3-month stay.

Used personal effects of foreigners residing permanently abroad may be imported duty free. Included in the duty free allowance are up to 200 cigarettes, 50 cigars and one liter of liquor. One each of the following articles may also be brought in duty free, provided they are reexported: still and movie cameras, with suitable film; binoculars; portable radios; portable record players with up to 20 records; and portable typewriters. Travelers must get special permission from Greek police authorities before bringing firearms and ammunition into the country. Flower bulbs, plants, and fresh fruit may not be brought into the country by travelers.

Foreign currency in any amount can be imported freely. However, travelers carrying foreign currency or drachmas exceeding the equivalent of 10,000 ECUs (approximately $12,500) must declare it upon entry. Travelers' checks and other checks, letters of credit, and unendorsed bank drafts issued in the traveler's name need not be declared when entering Greece, since they can be exported freely from Greece.

The export of foreign exchange was liberalized in May 1994. Greek and foreign travelers, however, have to declare any amount exceeding the equivalent of 2,000 ECUs (approximately $2,500) upon their departure.

Greek residents need a certificate from the tax authorities (confirming that the carrier has no outstanding tax obligations) to export foreign currency exceeding the equivalent of 10,000 ECUs.

Mailing abroad of Greek currency, foreign exchange, or checks is forbidden.

Holidays

Greek holidays to take into account when planning a business itinerary include the following:

1. New Year's Day, January 1, 1999
2. Epiphany, January 6, 1999
3. Kathara Deftera, February 22, 1999 (varies annually)
4. Independence Day, March 25, 1999
5. Good Friday, April 9, 1999 (varies annually)
6. Holy Saturday, April 10, 1999 (varies annually)
7. Easter Sunday, April 11, 1999 (varies annually)
8. Easter Monday, April 12, 1999 (varies annually)
9. May Day, May 1, 1999
10. Whit Monday, May 31, 1999 (varies annually)
11. Assumption Day, August 15, 1999
12. OXI Day, October 28, 1999
13. Christmas Eve, December 24, 1999 (half day holiday)
14. Christmas Day, December 25, 1999
15. Boxing Day, December 26, 1999
16. New Year's Eve, December 31, 1999 (half day holiday)

There are also several regional holidays celebrated:

1. Liberation of Ioannina, February 20, 1999 (Ioannina only)
2. Dodecanese Accession Day, March 7, 1999 (Dodecanese only)
3. Liberation of Xanthi, October 4, 1999 (Xanthi only)
4. St. Demetrios Day, October 26, 1999 (Thessaloniki only)
5. St. Andreas Day, November 30, 1999 (Patras only)

Business Infrastructure

The Greek inland surface transportation is through a road and railroad network. Main streets and highways are paved, while secondary roads are generally rough and ungraded. Most roads are two-lane, except for parts of the National Road which have four lanes. The road network is considered to be good, and is being constantly expanded.

The length of the railroad network is 2,500 kilometers. Of this, 1,500 kilometers is of standard gauge and connects Greece with the former Yugoslavia and Western Europe in the north, and with Turkey and the Middle East in the east. The remainder consists of narrow gauge tracks used for national routes.

The bulk of Greek industry is located around 20 sea ports. The largest ports are in Athens (Piraeus), Thessaloniki, and Patras. Almost no direct passenger ship service is available between the U.S. and Greece. Cargo services from the United States are provided by American Export Lines, Farrell Lines, Prudential, and Sea Land Service on a regularly scheduled basis with port calls at Piraeus, Thessaloniki, and Patras. Seaborne cargo shipped from the East coast of the United States reaches Greece in 11 or 12 days.

Airline connections to Greece and to other points in Europe and the rest of the world are excellent. Athens is served by 50 airlines. American international air service to Greece is provided by Delta and Tower Air. Olympic Airways, the government-owned national carrier, no longer enjoys its full monopoly. Private Greek-owned companies can now operate non-regular, charter flights (passenger and cargo) domestically and internationally. EU liberalization has also opened the Greek domestic market to EU carriers, though non-Greek airlines are still barred from serving the Greek islands.

Greek telecommunications are being upgraded. Digital service and cellular telephony are available. Direct telephone service to 88 countries is available. Fax machines have become a standard business tool in Greece.

The Hellenic Telecommunications Organization (OTE), a state-owned enterprise, will continue to exclusively operate all telephone and radio communications in Greece until the year 2003. All value-added services will be deregulated in 1998 in compliance with EU directives. Private cellular telephony was introduced in 1992 and today serves over 300,000 subscribers.

OTE has recently put in operation a fast PABX network available to the business community. ISDN was introduced recently, and is available only a very limited basis.

OTE is also responsible for satellite communications. Coastal and transoceanic radio-telegraph, telephone, and teletype communications are served through six INMARSAT coastal stations.

A satellite station also links Greece with the Intelsat system. Submarine coaxial cables link Greece with France, Cyprus, Lebanon, Italy, and Syria. Radio-electric networks for TV transmission connect Greece with the former Yugoslavia, Bulgaria, Italy, and Turkey, while a tropospheric scanner links Greece with Cyprus and Libya.

Modern and comfortable accommodations can be found in most areas that a foreign traveler is likely to visit. Growing tourist travel makes advance hotel reservations advisable, particularly during late spring and summer. Prices for accommodations compare favorably with those in other Western European countries.

Athens has several general hospitals and clinics, including specialized pediatric and maternity hospitals. The level of care at these facilities is good, with the only weakness being that the level of support care is considered fair. Most hospitals are equipped with modern diagnostic equipment and trained technicians. General hospitalization, emergency, and most routine surgery can be handled at local facilities. Athens has many English-speaking doctors, trained in the U.S. or Western Europe, who practice in all specialized fields.

Local restaurants and tavernas are safe and good places to eat, though the enforcement of regulations concerning the storage and sale of food is less strict than in the U.S. Local fruits and vegetables are excellent and do not require any special preparation beyond cleaning or cooking. Most types of meats can be procured locally and are safe. Pasteurized milk is safe for consumption. The water in cities throughout Greece is potable. Bottled water is recommended in small villages and the islands, as the water source may be limited and not well treated.

X. APPENDICES

Population:	10.6 million
Population growth rate:	0.5 %
Religion:
Greek Orthodox:	95-97 %
Muslim:	1.5 %
Government system:	Presidential Parliamentary Republic
Languages:	Greek
Work Week:	Monday - Friday

	1997	1998	1999 4/
GDP	120,948.0	116,800.0	123,590.0
GDP growth rate 1/	3.3	3.5	3.8
GDP per capita 1/	11,428.0	10,980.0	11,560.0
Govt spending as pct of GDP 1/
- Excluding interest payments	30.2	29.8	29.4
- Including interest payments	39.8	38.7	37.6
Inflation (%) 1/	6.5	4.5	2.5
Unemployment (%) 1/	10.2	9.7	9.2
Foreign exchange reserves 2/	13,337.0	20,000.0	20,000.0
Avg. exchange rate for USD 1.00 2/	273.1	306.0	310.0
Foreign debt (General govt debt, Maastricht definition)2/3/	31,500.0	32,000.0	32,500.0
Debt service ratio (ratio of principal and interest and interest payments on foreign debt to foreign debt to foreign income) 2/	28.1	29.0	29.0
U.S. military assistance 5/ (loans)	122.5	N/A	N/A

For comparisons across years, note that these figures are not adjusted for exchange rate fluctuations.

Sources: 1/ Ministry of National Economy; 2/ Bank of Greece; 3/ Includes government, public organizations and local authorities debt; excludes debt of public enterprises and banks; 4/ U.S. Embassy estimates; 5/U.S. Fiscal Year.

	1997	1998	1999	Source
Total country exports	10934.3	12028.8	12990.0	(a, c
Total country imports	25560.4	27605.2	29814.7	(a, c)
U.S. Exports	854.0	39.4	033.3	(c, b)
U.S. Imports	453.0	498.3	548.1	(c, b)
U.S. share of imports	3.3%	3.4%	3.5%

	1997	1998	1999	Source
Total imports of mfg. goods	19000.7	20520.7	22161.3	(a, c)
Imports of mfg. goods from U.S.	747.7	806.5	418.0	(a, c)
U.S. share of mfg. imports