NORTHERN NOTES JANUARY 2008

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SUBJECT: NORTHERN NOTES JANUARY 2008

REF: 07 THESSALONIKI 0329

Following is a summary of recent political and economic
developments in northern Greece:

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THESSALONIKI PORT PRIVATIZATION
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1. Things heated up in January with regard to the
long-discussed privatization of the cargo facility at the Port
of Thessaloniki. In early January, Minister of Merchant Marine
George Voulgarakas provided a detailed description of the plans
for the port's privatization and stressed the significant
investment and the physical improvements that the successful
bidder would bring to the port. Voulgarakas was careful not to
describe the plan as a "privatization" but rather as a
"concession" of the container facility for a period of time.
Local PASOK MPs disagreed with his characterization and met with
port executive director Yiannis Tsaras a few days later to
express their opposition to the port's privatization. On
January 15, 500 workers gathered outside the main gate of the
port, protesting the plans for privatization. Police used
teargas to disperse the group and there were no arrests. The
next day, the tender offer was approved by the Thessaloniki Port
Authority board and Thessaloniki Mayor Vassilis Papageorgopoulos
endorsed the plan, referring to it as a "leasing" of the
container facility. Port workers remained unconvinced of the
benefits of the plan and conducted two one-day strikes at the
end of the month, effectively shutting down the facility. The
port is operating with about a three day delay in
unloading/loading of cargo.


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DRAFT LAW ON THE WAKFS FACES RESISTANCE FROM BOTH SIDES
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2. The draft law introduced in early December (Reftel) relating
to the Muslim minority and specifically to Wakfs (Muslim
charitable foundations) continued to encounter stiff criticism
from both Muslim leaders and Orthodox Christian groups in
January. 6,228 Christian citizens of Thrace signed a petition
against the draft law which they sent to Prime Minister
Karamanlis and the Ministers of Foreign Affairs, Finance and
Interior. The specific objections of the petitioners related to
the diminished role of the legal (appointed) muftis and also to
the provision for a .5% quota for Muslim employees in the public
sector. Christian PASOK MP Stavros Keletsis, elected from
Evros, also voiced objections to the .5% quota, arguing that the
provision is unconstitutional and would lead to similar requests
by other civil servants.


3. Muslim leaders in Thrace continued to voice concerns about
the proposed law as well. Muslim PASOK MP Cetin Mantatzi from
Xanthi, in an interview with Komotini daily Chronos, objected to
the fact that the minority was not consulted in the development
of the draft law. He also criticized provisions of the proposed
law that he says remove administration of the wakfs from the
local communities and their mosques and place it in the hands of
regional or municipal committees. Mantatzi noted that while he
feels the .5% quota is a positive step, the law should include
an additional provision that would permit Muslims hired under
the law to serve for at least their first five years in Eastern
Macedonia and Thrace.

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MINISTRY OF MACEDONIA AND THRACE CHAMPIONS INNOVATION ZONE
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4. The Ministry of Macedonia and Thrace took the lead in
January in moving forward with plans for the Zone of Innovation
in northern Greece. The Ministry completed a proposal for
significant incentives for potential corporate investors in the
Thessaloniki Zone of Innovation, which reportedly include
generous subsidies and a tax exemption for up to ten years. On
January 30, Minister of Macedonia and Thrace Margaritis Tzimas
attended a meeting of the Federation of Industries of Northern
Greece and his remarks focused on plans for the Zone. Tzimas
confirmed that his Ministry had forwarded to Athens a draft law
proposal regarding incentives and he said that he hoped that the
proposal would become law before the end of the year. He also
said that his ministry was engaged in negotiations with the
Ministry of Defense to acquire half of the property at Sedes Air
Force base in Thermi, outside of Thessaloniki, where the Zone
might be located. The management of the Innovation Zone
continues to work on its strategic plan which is now expected to
be finished in May 2008.


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HELLENIC VEHICLE INDUSTRY (ELVO) STALLS

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5. ELVO, the Hellenic Vehicle Industry, is fighting for
survival. Forecasts for 2008 project operating income of 25
million Euros and ongoing operating expenses of 36 million
Euros. The only production contract that the company currently
has is for production of Leopard II tanks. Workers at ELVO want
the Government of Greece to award the company a new contract for
the manufacture and alteration of utility vehicles for the Greek
army and they also hope that ELVO could play a part in the
manufacture of 420 Toma armored vehicles which are part of an
equipment acquisition deal recently announced between Russia and
Greece. To emphasize their position, ELVO workers protested
outside a Federation of Industries of Northern Greece speech
given on January 31 by Finance Minister Alogoskoufis.

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GREEK SUGAR INDUSTRY WOES CONTINUE
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6. Workers from Sugar Industry plants in Greece held a two-day
meeting in Xanthi in early January to discuss plans for
conversion of the plants to bio-ethanol production, plans that
are currently stalled. The original schedule called for the
plants to be converted to bio-ethanol production almost a year
ago, but the process for seeking investors is at a standstill,
despite the fact that in late December, the Minister of
Development asked that the bidding process be expedited. To
compound the problem, Greek sugar beet producers have reduced
production so there is now inadequate raw material available.
At mid-month, Chronos newspaper in Komotini reported that the
Greek Sugar Industry was considering assigning Bulgarian farmers
to produce sugar beets to fill the gap. Bulgarian farmers are
said to be eager to do that.

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ILLEGAL IMMIGRANTS
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7. Law enforcement officials continue to focus on illegal
immigration problems in northern Greece. In mid-January,
Thessaloniki daily Makedonia reported that police statistics
showed a 62% increase in illegal immigration incidents in Evros
(on the Turkish border) in 2007 compared with 2006 (327 vs. 202
separate incidents.) Illegal immigrants are reportedly paying a
high price to enter Greece. In late January, three illegal
immigrants entering Greece from Turkey with the help of a
Turkish smuggler told police that they had paid $20,000 each for
transport from Turkey to Athens and four illegal immigrants
arrested on the road to Komotini in Thrace reported that they
had each paid $3,500 to a Greek tour bus driver to transport
them. Also in Evros, doctors at the University Hospital of
Alexandroupolis said they were treating eight people for
tuberculosis. Six of them were illegal immigrants and a seventh
was a border patrol officer a fact which raised concerns about
health conditions at immigrant detention centers in Evros where
the facilities are severely overcrowded because of the large
increase in illegal immigration activity.

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NARCOTICS
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8. Local press reports that cheap cocaine, significantly "cut"
and selling at half the street price prevailing in Athens, is
selling well in northern Greece and is being used by
increasingly younger teens, as evidenced by the recent death of
14 year old girl in Ptolemaidha. Significant drug arrests in
northern Greece during January included the following:

-- Three foreign nationals were arrested after a police
operation in a neighborhood in Stavroupolis (municipality west
of Thessaloniki.) The police confiscated 3.706 grams of
heroine, 10.3 grams of cocaine, an electronic scale, a loaded
handgun, three mobile phones, and 690 in cash.

-- In the area of Korino in Pieria, police arrested four foreign
nationals for possessing 725 grams of heroine and 36.5 grams of
hashish.

-- After a routine control check in the area of Menemeni
(municipality west of Thessaloniki,) police arrested a 37-year
old foreign national truck driver, for possession of 625 grams
of heroine, a scale and a mobile phone.
YEE