Identifier
Created
Classification
Origin
05ATHENS2693
2005-10-14 08:47:00
CONFIDENTIAL
Embassy Athens
Cable title:  

DEPUTY FINANCE MINISTER ON ATTRACTING INVESTMENT

Tags:  ECON EFIN PREL GR AMB 
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C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 002693 

SIPDIS

E.O. 12958: DECL: 10/12/2015
TAGS: ECON EFIN PREL GR AMB
SUBJECT: DEPUTY FINANCE MINISTER ON ATTRACTING INVESTMENT
AND ON MACEDONIA NAME ISSUE


Classified By: Ambassador Charles Ries for Reasons 1.4 (b,d)

C O N F I D E N T I A L SECTION 01 OF 02 ATHENS 002693

SIPDIS

E.O. 12958: DECL: 10/12/2015
TAGS: ECON EFIN PREL GR AMB
SUBJECT: DEPUTY FINANCE MINISTER ON ATTRACTING INVESTMENT
AND ON MACEDONIA NAME ISSUE


Classified By: Ambassador Charles Ries for Reasons 1.4 (b,d)


1. (C) Summary. The Ambassador discussed Greek efforts to
attract more investment, as well as the Macedonia name issue,
with Deputy Minister for Finance and National Economy
Christos Folias on October 12. On economics, Folias
recounted the GoG's economic reform efforts, stressing that
his major priority now was reducing Greece's famed level of
red tape. He hoped to have a concrete proposal submitted to
Parliament by the spring of 2006. On Macedonia, Folias
recommended, "speaking personally", that the U.S. should push
the UN to float once again the name "Novo Makedonija
(Skopje)" as acceptable to both Greeks and Macedonians. As
for process, Folias recommended giving the two sides a
specific time limit within which they would be required to
find a solution to the problem: "We need to solve this
problem and move on."

-------------- --------------
Macedonia Name Issue: Why Not Novo Makedonija (Skopje)?
-------------- --------------


2. (C) Stressing that he was speaking personally, Folias
said he was disappointed that the Macedonia name issue was
weighing on positive U.S.-Greek bilateral relations. He felt
Greece had made a mistake in the 1990s when the name Novo
Makedonija (Skopje) had originally been proposed, and thought
that the name should once again be put into play. This was a
name both sides could accept: the Macedonians because it
contained the word "Makedonija," and the Greeks because it
was written in a foreign and non-English language. He
thought Greece would never accept the dual name proposal
recently put forth by the UN's Matthew Nimitz. As for
process, he also panned Nimitz's methods, proposing instead
to issue a clear timetable to resolve the issue, and putting
the appropriate decision-makers into a secluded place to
hammer out a compromise. In any case, Folias stressed,
resolving this issue was clearly in the direct interest of
both Macedonia and Greece. The Ambassador said he
appreciated Folias' honesty and openness, and stressed that
the U.S. priority was to find a solution acceptable to both
sides, not pushing any particular name.


-------------- ---
Folias Outlines Greek Economic Reform Priorities
-------------- ---


3. (SBU) Folias said that, as a former businessman, he was
personally committed to Greek economic reform. (Bionote:
Folias ran a family dairy business and is a partner in the
very successful Greek fast food chain "Goody's". He also
served four years in the European Parliament.) Folias
admitted that he had experienced the myriad of bureaucratic
impediments that were keeping both domestic and foreign
direct investment far lower than it should be. He recalled
the problems he used to go through getting the various
approvals necessary to implement his business plans, such as
having to pay Greek bureaucrats to "find" papers he had sent
them that they had subsequently "lost." This experience
helped him deal with his own Ministry of Finance staff, who
were wont to tell him reasons why his reform plans would not
work.


4. (SBU) The Deputy Minister was optimistic that Greece's
reforms were already bearing fruit. In the five months since
the passage of the Investment Incentive Law, the GoG had
already approved incentive packages for 600 projects worth
1.35 billion Euro. Corporate taxes were on track to fall
from 35% in 2003 to 25% in 2006. This correspondingly lower
cost of business would attract yet more investment,
particularly from foreigners.


5. (SBU) Folias said he saw Greece as a high-income
destination for foreign capital, one that did not rely on
cheap labor. The key to attracting investment depended on
reducing red tape, he opined. He had instructed his staff to
document exactly what steps investors had to go through to
get project approvals. Once he had this information, he
planned to take two additional steps: the first was to cut
the necessary steps down to a minimum. The second was to set
up a central point of contact for potential investors.
Folias admitted that he had first hoped to create a "one-stop
shop" for such investors, but this had run aground on the
opposition of other ministries. Instead he was now looking
at creating an "Investment Shopping Center", which would
house representatives from all relevant ministries and fall
under the aegis of the PM's office. Interested investors
would meet one person at the Center who would be in charge of
shepherding the investment application through the rest of
the Hellenic bureaucracy, all of which would have branch
offices in the Center. He hoped to have this plan submitted
to Parliament by the spring of 2006.
--------------
U.S. Road Show
--------------


6. (SBU) Folias said he had just returned from a Greek
business "road show" in Russia, and hoped to duplicate that
show's success later in the U.S. The Ambassador counseled
Folias that, rather than take a large group of Greek
businessmen to the U.S. it might be more effective to find a
small number of GoG decision-makers who could efficiently
present Greece's reform record to the U.S. business
community.

--------------
Getting Greece's Use of EU Funds in Order
--------------


7. (C) Folias, whose portfolio includes overseeing EU
structural funds for Greece as well as inward investment,
told the Ambassador that he had encountered a difficult
challenge upon assuming his portfolio. Because of Greece's
difficulty in implementing projects funded by EU structural
funds in the correct manner, the EU had asked Greece at the
beginning of 2005 to return 1.25 billion Euros in previously
allocated funds. Folias was proud of having convinced the EU
to reduce this amount to 518 million Euros, to be paid in a
series of four tranches ending in 2008. He viewed the EU as
a partner for Greece, one which should speak intelligently,
but honestly, to the Greek people about changes that needed
to be made. Folias noted he had recently told Danuta
Huebner, the EU's Commissioner for Regional Policy, that
during her upcoming visit, she should not repeat Commissioner
Almunia's maladroit handling of the Greek press, but this did
not mean that she should be mealy-mouthed: "We need to hear
the truth."

RIES