Identifier
Created
Classification
Origin
09ATHENS1621
2009-11-12 16:10:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Athens
Cable title:  

GREECE: Ambassador's Call on Minister of Economy Katseli

Tags:  PREL PGOV ECON EFIN EAID 
pdf how-to read a cable
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DE RUEHTH #1621/01 3161610
ZNR UUUUU ZZH
O R 121610Z NOV 09
FM AMEMBASSY ATHENS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 1033
INFO RHEFDIA/DIA WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMFISS/JOINT STAFF WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RUEHTH/AMEMBASSY ATHENS
UNCLAS ATHENS 001621 

SENSITIVE
SIPDIS
COMMERCE FOR ITA/MAC HILLEARY SMITH

E.O. 12958: N/A
TAGS: PREL PGOV ECON EFIN EAID
SUBJECT: GREECE: Ambassador's Call on Minister of Economy Katseli

UNCLAS ATHENS 001621

SENSITIVE
SIPDIS
COMMERCE FOR ITA/MAC HILLEARY SMITH

E.O. 12958: N/A
TAGS: PREL PGOV ECON EFIN EAID
SUBJECT: GREECE: Ambassador's Call on Minister of Economy Katseli


1. (SBU) SUMMARY: In a 90-minute tour d'horizon of the Greek
economy, Ambassador Speckhard's November 6 courtesy call on
newly-appointed Minister for Economy, Competitiveness, and Shipping
Louka Katseli revealed the challenges confronting the new Greek
government. Katseli described her newly-formed ministry as one
that will focus on "development instruments," private and public
investment, trade and export policy, foreign direct investment, and
shipping. Her charge in the short-term is to pull Greece out of
the recession; for the long-term, to enhance competitiveness
through structural reforms. Katseli admitted Greece has an
inhospitable business and investment climate , not only for
foreigners but for Greeks as well. She aims to change that by
reinvigorating the "Invest in Greece" one-stop shop mechanism,
addressing the regulatory framework, and increasing transparency.
The Ambassador stressed the need for greater reliability in the
business environment; bad U.S. company experiences are already
contributing to a credibility issue for Greece. A new focus on
electronic governance by the Papandreou government, Katseli
predicts, should help facilitate investment and boost collection of
traditionally-evaded taxes. Katseli expressed great interest in
her ministry's participation in the ECCC, acknowledging that the
strategic economic dialogue's success would hinge on broad Greek
participation. On the continuing Piraeus port strike, Katseli
assured the Ambassador that the COSCO contract would be honored,
acknowledging the signal this sent to potential foreign investors.
Katseli talked of better integrating shipping (the number two
contributor to GDP after tourism) into the broader Greek economy.
Recognizing Greek shippers' disappointment with the disbanding of a
dedicated maritime ministry, Katseli will personally handle the
portfolio although the piracy issue will be the preserve of the
Ministry of Citizens Protection. The minister bemoaned the fact
that Greece is no longer competitive in low-skill industries,
because of the high cost of wages; instead, Greece needs to exploit
its rich human capital and focus on building an innovative economy.

END SUMMARY.


2. (SBU) Ambassador Speckhard paid a courtesy call on Louka
Katseli, Minister of the newly-created Ministry of Economy,
Competitiveness, and Shipping, during which Katseli focused heavily
on the need to undertake structural reforms to improve the business
and investment climate of Greece. Her mandate is to quickly turn
around a sagging economy but she offered few specifics, with the
exception of the 800 million euro increase in public investment in
the 2010 budget, on how the GoG would achieve this. Ultimately,
Katseli hopes to tackle a burdensome regulatory framework, improve
transparency, root out corruption, and streamline a cumbersome
bureaucracy to attract greater Foreign Direct Investment (FDI).
The Ambassador underscored the need for Greece to create an
environment of predictability, which investors demand. Katseli
anticipates presenting a bill to Parliament in 2010 to simplify the
regulatory framework. Another of her early initiatives will be to
put the decision-making power back in "Invest in Greece," the
country's one-stop shop.

3 (SBU) PM Papandreou is keen to facilitate investment, Katseli
said, and attracting US FDI is at the top of that list. To this
end, Katseli will participate in the Capital Link Investment Forum
in New York December 2-3. [NOTE: We are currently trying to
recruit a USG official, possibly from Treasury or OPIC, to address
the forum, which is for institutional investors. The Ambassador
separately offered USG assistance with setting up appointments for
Katseli with USG officials in Washington around the early December
timeframe. Post would welcome meetings with E, USTR, Commerce, the
Competitiveness Council, and the National Labor Relations Board.
END NOTE]


4. (SBU) Responding to the Ambassador's comment on the changing
nature of commercial laws and congestion in the Greek commercial
courts, Minister Katseli acknowledged the pressing need to
introduce mediation and arbitration in Greece. Greek lawyers
currently are not paid for arbitration efforts, creating a
disincentive to go that route. Instead, lengthy legal conflicts
often ensue. Turning to the Port of Piraeus strike, Katseli stated
that COSCO's contract would be honored, despite campaign rhetoric
that some privatizations would be re-examined. However, she
indicated the new government would be reviewing the tax
concessions, which were a supplementary agreement and have come
under scrutiny and criticism because the EU and WTO could determine
them to be illegal indirect state subsidies.


5. (SBU) Katseli, while no longer handling the port strike
negotiations, hopes otherwise to work closely with the shipping
industry to better integrate that sector into her vision for the

broader development of the Greek economy. [NOTE: Oddly, tourism,
which is Greece's biggest contributor to GDP, is under the Ministry
of Culture and not an econ-related ministry. END NOTE] Katseli has
plans to upgrade ports and logistic centers, and make the shipping
sector more attractive to Greek job seekers. Katseli admitted that
Greek ship owners initially were unhappy that they were placed
under the rubric of the Ministry of Economy; however, she hopes to
assuage their concerns by personally handling the portfolio. When
the issue of maritime piracy was raised, Katseli flatly said that
would be handled by the Ministry of Citizens' Protection.


6. (SBU) Katseli talked enthusiastically about building the Greek
economy by focusing on certain sectors, such as shipping, in which
Greece had a competitive advantage. She sees potential in high
tech, renewable energies, and other innovative sectors which can
utilize Greece's vast human capital. Greece should be able to play
a larger regional economic role, as a gateway to the Balkans,
Middle East, and Africa, Katseli said. The 43 enterprise zones in
Greece are woefully underdeveloped, but through public-private
partnerships, Katseli hopes to develop the zones into profit
centers.


7. (SBU) The Ambassador encouraged Katseli to have her staff engage
on the ECCC (Economic and Commercial Cooperation Commission),in
order to make the strategic dialogue more fruitful. Although the
MFA has the lead, it is imperative that the ministries of Finance,
Environment/Energy, and Hellenic Aid also be active participants.
Katseli took the invitation to heart. She proposed to identify
staff to work with the MFA to make the ECCC agenda substantive and
relevant. Katseli agreed maintaining the planning momentum already
begun to ensure a successful ECCC event in the April/May timeframe.
[NOTE: MFA prefers to hold the ECCC in the February/March
timeframe. END NOTE]


8. (SBU) COMMENT: Katseli, inexorably tied to her husband's
socialist economic policies when he was a former PASOK Minister of
the Economy/Finance and because of her previous calls to overturn
privatizations, may have a difficult time overcoming the
presumption that she will be pro-labor at a time when the Greek
economy needs greater flexibility in the labor market. Katseli
needs to signal that she unequivocally supports a pro-business
approach to the economy. She is a bright woman, with impressive
academic credentials, who seems to understand what structural
reforms need to be accomplished to jumpstart the economy, create
jobs, and stimulate growth. But, she may already have lost some
gravitas and credibility when she was unable to decisively resolve
the Piraeus Port strike. In fact, her authority was seemingly
undercut when, during the first two week phase of the strike, the
Deputy Minister for Transportation was brought in to negotiate.
Last week, when the strike flared up again, Deputy Prime Minister
Pangalos was brought in as the heavyweight. Despite professed
support for forging a business- and investment-friendly
environment, Katseli and the PASOK government will only be able to
rehabilitate themselves and Greece's reputation with solid and
decisive actions. END COMMENT.
Speckhard