Identifier
Created
Classification
Origin
09THESSALONIKI33
2009-07-27 14:20:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Thessaloniki
Cable title:  

THESSALONIKI: HOW NORTHERN GREECE CAN CONTRIBUTE TO BALKAN

Tags:  PGOV PHUM PREL ECON GR TU 
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RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSL RUEHSR RUEHVK RUEHYG
DE RUEHIK #0033/01 2081420
ZNR UUUUU ZZH
P 271420Z JUL 09
FM AMCONSUL THESSALONIKI
TO RUEHC/SECSTATE WASHDC PRIORITY 0461
INFO RUEHTH/AMEMBASSY ATHENS PRIORITY 0337
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHIK/AMCONSUL THESSALONIKI 0504
UNCLAS SECTION 01 OF 03 THESSALONIKI 000033 

SENSITIVE
SIPDIS

DEPT FOR EUR?SE

E.O. 12958: N/A
TAGS: PGOV PHUM PREL ECON GR TU
SUBJECT: THESSALONIKI: HOW NORTHERN GREECE CAN CONTRIBUTE TO BALKAN
STABILITY AND DEVELOPMENT

THESSALONI 00000033 001.2 OF 003


UNCLAS SECTION 01 OF 03 THESSALONIKI 000033

SENSITIVE
SIPDIS

DEPT FOR EUR?SE

E.O. 12958: N/A
TAGS: PGOV PHUM PREL ECON GR TU
SUBJECT: THESSALONIKI: HOW NORTHERN GREECE CAN CONTRIBUTE TO BALKAN
STABILITY AND DEVELOPMENT

THESSALONI 00000033 001.2 OF 003



1. (SBU) SUMMARY: Location, history, infrastructure,
economy and multi-ethnic character make northern Greece a
natural engine and source of ideas for Balkan stability and
prosperity. Unfortunately, inertia, corruption and lack of
leadership have sometimes made Greek Macedonia seem like more of
a problem than part of the solution. With continued USG
encouragement, however, this privileged but under-achieving
corner of the Balkans can contribute significantly toward wider
U.S. goals in southeast Europe, including strengthening regional
cooperation against terrorism and other transnational crime,
protecting the environment, promoting innovation and economic
development, and integration of Muslims and other minorities.
Such encouragement will also help nudge Greece to adopt a more
global outlook and assume greater leadership in its own
backyard. END SUMMARY


2. (SBU) Regional stability. Northern Greece borders Turkey,
Bulgaria, Macedonia and Albania and comprises the EU's eastern
frontier against illegal immigration, narcotics trafficking and
other cross-border threats from south Asia and the Middle East.
It has the capacity and resources (with support from the EU and
USG) to help develop and lead a more effective, regional
approach to fighting transnational crime. With thousands of
illegal immigrants crossing the border from Turkey every month,
many from Iraq, Afghanistan and other south Asian and Mideast
states, the U.S. has an interest in encouraging Greece to
strengthen law enforcement cooperation with Turkey and other
neighbors. The USG should continue to support regional training
seminars that bring together police and prosecutors from around
the Balkans (such as those organized by Post with FBI and
Homeland Security support since 2005 throughout northern Greece)
and help build capacity and cross-border cooperation. While
bilateral differences with Macedonia and Turkey complicate such
cooperation, Greece is increasingly motivated to work with
neighbors and the USG to fight urgent threats such as illegal
immigration and cyber-crime. In May, the recently opened

police academy in Verria, northern Greece, held its first
regional training seminar for police of neighboring countries
(except Macedonia). Northern Greece's senior police officials
have expressed a strong interest in working with Post to
co-organize additional regional seminars at the police academy
in the future.


3. (SBU) Environmental cooperation. Greece and its northern
neighbors could face a number of common environmental
challenges, e.g. water resource management, more effectively
through regional cooperation. The Thessaloniki-based scientific
NGO Balkan Environment Center has the potential to lead regional
efforts. With substantial funding from the EU and technical
assistance from U.S. experts, the Center has played a small but
promising role in protecting northern Greek wetlands and coastal
waterways, through methods and technology that the Center's
director says are readily adaptable to similar challenges in
other Balkan countries. The Center has offered to help
neighbors establish similar NGOs that would eventually comprise
a Balkan/eastern Mediterranean network of NGOs promoting
environmental research and solutions development. A major
advantage of such cooperation would be eligibility for
substantial EU funding for regional (Inter-reg) projects to
protect the environment. The USG should press for such
collaboration throughout the wider region. An "Earth Day"
teleconference meeting organized by Post between the leadership
of the Balkan Environment Center and the northern Israel-based
environmental research NGO, the Galilee Society, produced an
agreement by both centers to cooperate on water resource
management, renewable energy research and product development.
With USG support and encouragement, the Balkan Center could
serve as a catalyst and leader for similar collaboration around
the Balkans and eastern Mediterranean.


4. (SBU) Trade and investment. Northern Greek businesses are
already major contributors to economic development in the
Balkans, and have the potential to create even more jobs and
joint ventures. Supporting thousands of jobs in neighboring
countries, northern Greek business people have often been the
trailblazers in developing new markets for goods and services in
the region. Even in countries that have strained or ambiguous
relations with Greece, northern Greek businesses are eager to
enhance their presence. The Northern Greece Exporters
Association organized two large trade missions to Kosovo over
the past year, and members of the Northern Greece Industrialists
Association, including Alumil, one of the largest manufacturers
in Greece, own factories in Macedonia. Northern Greece's
greatest potential contribution to regional economic
development, however, may lie in its ability to serve as a base
for foreign companies aiming to access new markets in the
Balkans. With its large pool of skilled workers, good road,
rail and port infrastructure and relative stability, northern

THESSALONI 00000033 002.2 OF 003


Greece is the logical "gateway" to the wider Balkans. In order
to realize this long-standing potential, however, the USG should
continue to press Greece to address long-standing obstacles to
trade and investment, e.g. excessive bureaucracy, corruption,
monopoly practices and labor inflexibility. Promising
investments and joint ventures in northern Greece involving
American partners such as Benjamin Moore Paints,
Macedonia-Thrace Brewery and Solar Thin Films highlight northern
Greece's potential as a Balkan gateway for American investment.


5. (SBU) Integration of the Muslim minority: Greece has the
potential to change its reputation from EU laggard to a model
for the treatment of minorities in southeast Europe, but must
first adopt a clear policy on minorities and overcome a tendency
to view its Thrace (northeastern Greece) Muslim minority as a
Turkish fifth column. Despite major strides by Greece in the
past thirty years to end ghetto-like conditions and blatantly
discriminatory practices against Thrace Muslims, many remain
poorly integrated and suspicious of the GoG. While content to
be Greek, many Thrace Muslims view Turkey as their motherland
and protector, a role Turkey cultivates through its highly
active and well-funded Consulate in Thrace. Pro-Turkey Muslim
clerics and politicians have exploited seemingly discriminatory
Greek policies to rally their supporters around divisive
nationalist agendas. To win the trust and allegiance of Thrace
Muslims and discourage the emergence of extremist or separatist
voices, Greece needs to improve the quality of education and
economic prospects in predominantly Muslim areas of Thrace,
where unemployment exceeds 40 percent and many Muslims feel like
second class citizens. Greece must also bring its laws and
policies on two specific minority issues into line with
international standards, e.g. to allow Muslims to self-identify
(e.g. as Turks) and to select their religious leaders without
government interference. Greece should be encouraged to take
such steps as a continuation of constructive measures announced
by the MFA in February 2007, without linkage to the wider
bilateral dialogue with Turkey. Recent UN, EU and COE reports
and ECHR decisions criticizing Greece's treatment of Muslims
provide face-saving political cover for policy changes that will
become only more difficult with time.


6. (SBU) Logistics hub. The Port of Thessaloniki, Greece's
second largest, is planning a significant expansion in 2010 that
will help it carve out a predominant logistics role in southeast
Europe. The port is recovering from over a year of costly
strikes and work slow-downs by port workers opposed to GoG
efforts to modernize and privatize port operations. The worker
protests and financial crisis contributed to the collapse of a
Euros 420 billion deal signed in 2008 with Hutchison Whampoa to
upgrade port infrastructure and privatize cargo handling
operations. The GoG now plans a more modest upgrade financed by
a Euros 220 million loan from the European Investment Bank.
Improvements will include construction of a large new pier that
will accommodate larger ships. Even with the new pier and other
improvements, the Port will need to convince port workers to
accept modern, competitive labor practices and win back freight
forwarders and other shipping clients in southeast Europe who
turned to other ports in recent years due to strikes and other
delays in Thessaloniki. Port officials believe Thessaloniki has
the potential to serve as a faster, cheaper alternative to
western European ports that currently handle the majority of
shipments of goods from Asia. European Commission
Transportation officials reportedly favour such re-routing to
relieve congested shipping and trucking routes. A rejuvenated
port combined with a nearly completed major renovation of the
Egnatia highway system connecting northern Greece with its
Balkan neighbors will facilitate trade and transport throughout
the region. Also, the ongoing development of the
Burgas-Alexandroupoli oil pipeline and Turkey-Greece-Italy gas
interconnector and (potentially) the recent resumption of oil
drilling in the Bay of Kavala will enhance northern Greece's
importance as a regional logistics and energy hub.


7. (SBU) Zone of Innovation. Ten years of GoG efforts to
create a Zone of Innovation, or "Salonika Valley", for
information technology and other innovative industries in
northern Greece have been hindered by bureaucracy, poor
leadership and local politics. Many of the necessary
ingredients, however, for attracting entrepreneurs and
innovative ventures to northern Greece already exist, including
Greece's largest university, a successful scientific research
and consulting center (EKETA),a large pool of well-educated
workers, a core group of Greek IT companies who have invested
their own capital in the future of the Zone, land and
infrastructure dedicated to the Zone, and a package of tax,
labor and other incentives approved by the GoG - all in a
desirable and logistically well-situated geographic location.
Several U.S. companies, including Silicon Valley giant Applied

THESSALONI 00000033 003.2 OF 003


Materials, have visited Thessaloniki and expressed interest in
participating in the Zone, if and when it becomes a reality.
The USG should continue to remind the GoG that in addition to
creating special incentives, it will need to remove the largest
barriers to foreign investment in Greece, i.e. bureaucracy and
lack of transparency, and let qualified business people take
over key positions on the Zone's board of directors, currently
composed of academics, lawyers and politicians with little
business experience.


8. (SBU) Relations with Macedonia. Though most northern
Greeks object passionately to the use of the name Macedonia by
anyone but themselves and resist compromise on the name dispute
with the Republic of Macedonia, business people and technocrats
here understand the need to solve the dispute as soon as
possible and to strengthen ties with their northern neighbors
even in the absence of a settlement. Business leaders claim
their existing investments and plans for additional investments
in Macedonia are jeopardized by tensions and uncertainty
generated by the name dispute. The USG can help bring
like-minded pragmatists on both sides together for practical
cooperation on a wide range of initiatives. Both the Northern
Greece Industrialists Association and Northern Greek Exporters
Association are willing to send or host trade missions for
discussions with Macedonian counterparts, but need the U.S. to
play a neutral matchmaking role. Greek MFA officials based in
Thessaloniki who are responsible for economic development are
willing to direct Hellas Aid funds to support practical
cooperation, e.g. on the environment, with Macedonia. Because
of strained relations with Macedonia, the MFA officials propose
that USAID participate in the project as a third party, even if
USAID's contribution is only symbolic. Also, the
Thessaloniki-based Balkan Environment Center claims that there
are 5 million Euros of untapped EU (Inter-Reg) funds available
for Greek-Macedonia scientific/environmental cooperation. The
USG should urge both governments to reach an agreement on such
cooperation, e.g. a long-standing proposal for monitoring
cross-border water pollution on the Axios River. Also helpful
would be more practical exchanges between academics from both
countries. A network of social science faculty from around the
Balkans, including Macedonia, recently established by
Thessaloniki's University of Macedonia with Post's assistance,
is one example of how the U.S. can play "honest broker" between
neighbors separated by a common name.


9. This message was drafted by former CG Hoyt Yee, who departed
Thessaloniki on July 4.
KING