NORTHERN NOTES MAY 2009

UNCLAS SECTION 01 OF 03 THESSALONIKI 000029

SENSITIVE
SIPDIS

DEPT FOR EUR/SE

E.O. 12958: N/A
TAGS: ECON PGOV PHUM PREL SMIG SNAR SOCI GR
SUBJECT: NORTHERN NOTES MAY 2009

REF: A) THESSALONIKI 01, B) THESSALONIKI 027

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Following is a summary of major developments in northern Greece:



THESSALONIKI PORT LOSES SHARE OF INTERNATIONAL MARKET, INCREASES
PROFITS




1. (U) On May 05, local media reported that the port of
Thessaloniki's international role is gradually diminishing.
Media stated that in the first quarter of 2009, only 8% of the
containers handled by the Cargo Station were in transit for
other countries, compared to 19% the year before. However,
Minister of Merchant Marine Anastasios Papaligouras reported at
a speech in Thessaloniki on May 14, that the number of Greek
containers handled at the port since January 2009 had increased
by 50%, compared to the same period last year. On May 26, Port
Authority Executive Director Ioannis Tsaras said in a press
conference that despite a 17.47% reduction of the Port's overall
turnover in the first quarter of 2009, profits increased by
77.72%. The port has recently suffered from a year-long labor
slowdown, that ended on April 1, soon after the cancellation of
an earlier tender for the privatization of the port's Cargo
Station(Ref A.)



ZONE OF INNOVATION PRESIDENT RESIGNS, RESTRUCTURING ANNOUNCED




2. (U) On May 11, the board of the Zone of Innovation
accepted the resignation of former President Iakovos Vassalos
(Ref B.) Speaking to the press, Minister of Macedonia-Thrace
Stavros Kalafatis was confident that the above development would
not delay further the project, announcing the package of
incentives for investing businesses in the Zone will be sent to
the EU Competition Committee for approval "very soon." Also, he
revealed plans to replace some members of the Zone's board of
directors and to create two centers, to the east and west of the
city, so as to facilitate the balanced development of
Thessaloniki. Minister Kalafatis recently stated to post that
the Zone of Innovation remained one of his "top priorities."



CONVERSION OF SUGAR INDUSTRY UNITS TO BIO-ETHANOL PRODUCTION,
"STILL AN OPTION"




3. (U) On May 31, local press published an interview by the
Executive Director of Sugar Industry S.A. Dimitrios Darnakas, in
which he openly questioned the GoG's political will to support
the country's sugar industry. Furthermore, he revealed that the
company has recently commissioned a feasibility study concerning
the conversion of the sugar industry plants in the cities of
Larisa and Xanthi to bio-ethanol production units. Consultants
who participated in the failed effort to privatize the sugar
factories have told post that conversion to bio-ethanol
production is possible but very unlikely given market
conditions.





TAX EVASION SCANDALS DISCOVERED IN CENTRAL MACEDONIA




4. (U) On May 11, the Thessaloniki Special Economic Squad
revealed seven unconnected cases of tax evasion, involving seven
different companies, based in Thessaloniki. The companies had
set up offshore branches in Cyprus, evaded taxes estimated at
about 7m ($9.8m) and were fined a total of 15m ($21m). In
another case, twelve mostly Athens-based companies were claiming
to be exporting goods to Bulgaria via the Thessaloniki customs
office, so that they could receive VAT returns worth 7.3m
($10.2m.) Four Thessaloniki customs officers, seven businessmen
and twelve company owners have been charged and fines of a total
of 110m ($154m) were imposed.



NORTHERN GREEK INDUSTRIES REVEAL SHARP FALL IN COMPETITIVENESS


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5. (U) In a press conference, the Federation of Industries
in Northern Greece presented last year's report by the
International Institute for Management Development (IMD)
according to which Greece has lost another ten positions in the
competitiveness index. It suffered the second biggest drop
after Estonia and is now in the 52nd position out of 57
countries covered in the report. Last year's drop follows that
of 2007, when Greece conceded another six places to move down to
42nd from 36th in 2006. The report states that the sharpest
fall was in the areas of government and entrepreneurial
effectiveness. New Federation of Industries of Northern Greece
President Pentzos spoke of the need for the government and
businesses to address "long-standing problems."



STUDENT TESTED POSITIVE FOR SWINE FLU




6. (U) A 20-year old student who arrived from Edinburgh,
Scotland, was the first confirmed case of swine flu in
Thessaloniki. The student is a classmate and friend of a
21-year old who was also admitted to a hospital in Athens on May

25.



TRAFFICKING RING IN NORTHWEST GREECE DISMANTLED




7. (U) On May 16, Hellenic Police arrested two Greek men
and a woman in the northwestern Greece town of Ptolemaida, in
connection to the operation of a human trafficking ring. One of
the men is accused of illegally keeping eight foreign women who
worked in his bar in Ptolemaida. The arrests followed a
statement to the police by one of the above women - confirmed to
post by an anti-trafficking NGO - according to which the bar
owner confiscated the women's travel documents, threatened their
lives and forced them into prostitution. In a different case,
police in Xanthi arrested a Greek citizen for forcing into
prostitution an Albanian woman.



BIG INCREASE OF ASYLUM SEEKERS IN THESSALONIKI




8. (U) On May 12, the Immigration Office of Thessaloniki
announced a dramatic increase in the number of submitted
asylum-seeking applications. More specifically, in the first
quarter of 2009, the Office received 418 applications, compared
to 807 in 2008 and 363 applications in 2007.



ILLEGAL IMMIGRATION - STATISTICS AND ARRESTS




9. (SBU) On May 23, FRONTEX (EU body for co-operation on
border security) conducted an exercise in both Greek and
Bulgarian territory under the name "Thrace 2009." The exercise
concluded that Hellenic Police lack the technical capabilities
that would allow for improved results in their effort to combat
illegal immigration on the Greek-Turkish border [Note: On a
recent visit by post to the Greek-Macedonian border, the local
Police Director told post his force is "adequately equipped."
End Note]. In an interview with local press, Hellenic Police
Deputy Director Nikolaos Menexidis stated that in the first four
months of 2009, 1,082 illegal immigrants and 22 smugglers were
arrested on the Greek-Turkish border. In the past month, 93
illegal immigrants were arrested, including two Albanians, 16
Iraqis and seven Chinese and also, 11 smugglers, including two
Turkish, one Albanian and one Lithuanian.



NARCOTICS - THESSALONIKI "AT HEROIN CROSSROADS"




10. (U) Local media describe the popular among smugglers
"Balkan drug route," which starts from heroin-producing
countries (most often Afghanistan) and passes through Turkey,

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Greece, Albania and Italy. As proof of the above, media notes
that 20.9 kilos of heroin have been confiscated in Thessaloniki
since January 2009.



SECURITY ISSUES/VIOLENT INCIDENTS




11. (SBU) On May 16-18, there was a series of arson attacks
with Molotov bombs and gas canisters in different parts of
Thessaloniki. One of the strikes was against the offices of
Retired Army Officers, near the U.S. Consulate General and next
to the offices of the Jewish Community of Thessaloniki. No
arrests were made. On May 20, the organization "Nuclei of Fire"
claimed responsibility for an arson attack against a building
under construction that will soon house a new Police Station.
Small damage was caused and no arrests were made. On May 21,
around 30 people attacked policemen with sticks and rocks, while
the latter were questioning two drivers whom they had stopped.
The attackers quickly retreated to the University campus, from
where they had come and police were not able to enter in
pursuit, due to the university asylum law. A policeman was
injured and two people were detained. On May 24, unknown
perpetrators threw a Molotov bomb at an ATM, damaging it
slightly.
YEE