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10ATHENS92
2010-01-22 08:34:00
UNCLASSIFIED
Embassy Athens
Cable title:  

2010 Investment Climate Statement (ICS) - GREECE

Tags:  ECON EFIN EINV KSPR KIDE KTDB ELAB OPIC GR USTR 
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R 220834Z JAN 10
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TAGS: ECON EFIN EINV KSPR KIDE KTDB ELAB OPIC GR USTR
SUBJECT: 2010 Investment Climate Statement (ICS) - GREECE

REF: 09 STATE 124006

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This cable transmits the 2010 Investment Climate Statement for
Greece.



--------------

INVESTMENT CLIMATE STATEMENT

January 2010

--------------





A.1. Openness to Foreign Investment

--------------



Greece, a member of the European Union, provides a reasonably
hospitable climate for foreign investment. On the upside, Greece's
membership in the EU's Economic and Monetary Union offers currency
stability, the infrastructure has improved significantly in the
last five years, and the ongoing liberalization of the energy and
telecommunication markets offer investment opportunities. Greek
businesses are among the leading investors in Southeast Europe, and
Greece is actively positioning itself as a hub for Balkan trade.



On the downside, after a decade of high GDP growth (between 1997
and 2007, Greece averaged 4 percent GDP growth, almost twice the EU
average),the financial crisis and resulting slowdown of the real
economy have taken their toll on Greece's rate of growth, which
slowed to 2 percent in 2008 and is projected to shrink by 1.5 to
2.0 percent in 2009 and by 0.3 percent in 2010. Key economic
problems with which the government is currently contending include
a burgeoning government deficit (12.7 percent of GDP in 2009)and
rapidly increasing public debt (113.4 percent of GDP projected for
2009),both of which are the highest in the Eurozone. The EU
recently moved Greece one step closer to sanctions under the
Excessive Deficit Procedure. Both markets and the EU have mandated
that Greece develop a plan to immediately restore fiscal discipline
and reduce its deficit to the 3 percent EU ceiling within an agreed

period of time (as yet, undetermined).



Greece's economy continues to be hampered by extensive government
regulation. Many international corporations state that bureaucracy
remains the number one impediment to doing business in Greece.
International organizations such as the OECD, Transparency
International, the World Bank (in its Annual Doing Business and
Governance Reports),and the World Economic Forum (in its Global
Competitiveness Report) cite issues with corruption and government
regulations that complicate investment and other commercial
activities. As a result of both factors, Greece has had relatively
modest levels of foreign investment as a percentage of the economy.

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It ranked 21 out of 30 OECD countries in level of FDI in 2008. The
position of Greece in the world indices of the above organizations
has deteriorated in the last year. Greece ranks 109 in 2010 World
Bank's Doing Business index (9 slots down from 2009 index). Its
economic freedom ranked as the 81st freest in the 2009 Heritage
Economic Freedom Index. It dropped to the 71th position on the
Transparency Corruption Perception Index in 2009 from the 57th in
2008 (in the last position together with Bulgaria and Romania among
the 27 country-members of the EU).



Historically, growth has been financed by private sector borrowing
and public sector spending and absorption of EU structural
adjustment funds, which totaled roughly 24 billion dollars from
2000-2006. The EU has allocated a similar amount of funding,
approximately 26.5 billion USD, for Greece for 2007-2013.



The GoG strongly encourages private foreign investment as a matter
of policy. Investments are screened by the Ministry of Economy,
Competitiveness and Shipping only when the investor wants to take
advantage of government provided tax and investment incentives;
foreign and domestic investors face the same screening criteria.
Although Greece previously restricted foreign and domestic private
investment in public utilities, it opened its telecommunications
market and is in the process of slowly liberalizing its energy
sector. Restrictions exist on land purchases in border regions and
on certain islands due to national security considerations. Greece
is the only EU country that does not have a land registry, which is
a barrier to investment. U.S. and other non-EU investors in
Greece's banking, mining, broadcasting, maritime, and air transport
sectors are required to obtain licenses and other approvals that
are not required of Greek and EU investors. Foreign investors can
buy shares on the Athens Stock Exchange on the same basis as local
investors.



Major investment laws are:



-Legislative Decree 2687 of 1953 which, in conjunction with Article
112 of the Constitution, gives approved foreign "productive
investments" (basically manufacturing and tourism enterprises)
property rights, preferential tax treatment and work permits for
foreign managerial and technical staff. The Decree also provides a
constitutional guarantee against unilateral changes in the terms of
a foreign investor's agreement with the Greek Government, but the
guarantee does not cover changes in the tax regime.



-Law 3299/2004, the investment incentives bill, as amended by Law
3522/2006 and Law 3752/2009, provides grants to cover up to 60
percent of qualifying investments (generally those made in
less-developed regions of Greece). Through a combination of
incentives and corporate tax breaks, this law attempts to boost
entrepreneurship, foster technological change, and achieve regional
convergence throughout Greece. Law 3522/2006 introduces grants to
newly founded small enterprises (Greek and foreign) to assist them
with operational expenses for up to five years and attempts to
simplify and expedite procedures for the evaluation of investment
projects. Law 3752/2009 encourages investors to take advantage of
tax breaks instead of grants and increases incentives to investment
in energy from renewable sources, in modernization of tourist
installations and in high technology services.



-Law 3389/2005 on Public Private Partnerships (PPP). This law is
designed to facilitate public-private partnerships in the service
and construction sectors by creating a market-friendly regulatory
environment.



-Law 89/67 as amended in November 2005 by Law 3427/2005 provides
special tax treatment for offshore operations of foreign companies
established in Greece.



-Law 468/76 governs oil exploration and development in Greece. Law

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2289/95, amending this legislation, allows private (both foreign
and domestic) participation in oil exploration and development.



-Law 2773/99 opened up 34 percent of the Greek energy market in
compliance with EU Directive 96/92 concerning the regulation of the
internal electricity market. Law 3175/2003 harmonizes Greek
legislation with the requirements of the EU's Directive 2003/54/EC
on common rules for the internal market in electricity. Law 3426/05
completed Greece's harmonization with EU Directive 2003/54/EC and
provided for the gradual deregulation of the electricity market.



-Law 2364/95 as amended by Laws 2528/97, 2992/02, 3175/03 and
3428/05 governs investment in the natural gas market in Greece.



-Law 2246/94 and supporting amendments have opened Greece's
telecommunications market to foreign investment.



When Greece joined the European Monetary Union (EMU) Eurozone on
January 1, 2001, it committed to serious structural reforms to meet
EMU convergence criteria. To this end, the Greek Government has
opened the telecommunications market, and the energy market has
undergone some deregulation. Since 2001, about 34 percent of
eligible consumers of middle and high-tension voltage have had the
choice to obtain their electricity from producers other than the
parastatal monopoly, the Public Power Corporation (PPC). The
electricity market in Greece was to be completely deregulated by
mid-2007. The process, however, has been slow, and the goal not yet
realized. Only three private producers are operating at this time
due to problems in arranging financing and obtaining state
licenses.



The new center-left government of PASOK, elected in October 2009,
pledged fiscal and other structural reforms to enhance the
competitiveness of the Greek economy. The new administration
promised to gradually adopt policies and programs designed to
achieve fiscal consolidation and tax reforms, reduce red tape in
business transactions and expedite market deregulation. The new
Finance Minister recently announced plans to raise about 2.5
billion euros ($3.6 billion) from privatizations in 2010 to help
pay down the country's burgeoning public debt. It is not yet clear
which companies will be privatized under this plan. Greece has
stakes in about 20 listed companies including ATE bank, Postal
Savings Bank, gaming firm OAP and telecoms group OTE. The state
asset sale program will be clarified in the beginning of 2010.
Greece has raised about 8.7 billion euros from privatizations in
the period 2003-2009. Some of these privatizations have sparked
significant resistance from the public; however, the government
thus far is standing firm. The global economic environment may
also impact the private sector's ability to raise financial
resources to buy these firms. Foreign and domestic investor
participation in privatization programs is generally not subject to
restrictions. The previous Greek government had announced in
December 2007 that it would cap private investment in companies of
"strategic importance" (corporations which own, exploit, or manage
national infrastructure networks such as telecommunications, energy
etc.) at 20 percent unless special approval is granted by an
inter-ministerial privatization committee. The European Commission
contested the Greek law on investment in strategic firms and sent
Greece in November 2008 a final warning to change the law or face
European Court action. Thus far, the European Commission and the
Greek government are still in negotiations on how this issue should
be addressed.



A.2. Conversion and Transfer Policies

--------------



Greece's foreign exchange market is in line with EU rules on free
movement of capital. Receipts from productive investments can be
repatriated freely at market exchange rates. Remittance of
investment returns is made without delay or limitation.

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A.3. Expropriation and Compensation

--------------



Private property may be expropriated for public purposes, but only
in a nondiscriminatory manner and with prompt, adequate and
effective compensation. Due process and transparency are
mandatory, and investors and lenders receive compensation in
accordance with international norms. There have been no
expropriation actions involving the real property of foreign
investments in recent history.



A.4. Dispute Settlement

--------------



No investment disputes have come to the Embassy's attention for
many years, the last couple of cases dating back to the mid-90s.
Greece accepts binding international arbitration of investment
disputes between foreign investors and the Greek State, and foreign
firms have found satisfaction through this arbitration.
International arbitration and European Court of Justice judgments
supersede local court decisions. Greece has an independent
judiciary, but the court system is a time-consuming means for
enforcing property and contractual rights. Foreign companies
report that Greek courts do not always provide unbiased and
effective recourse. The judicial system provides for civil court
arbitration proceedings for investment and trade disputes.
Although an investment agreement could be made subject to foreign
legal jurisdiction, this is not common, particularly if one of the
contracting parties is the Greek State. Foreign court judgments
are accepted and enforced, albeit slowly, by the local courts.
Although the Greek government has been energetically prosecuting
corrupt judges and attorneys in the last few years, problems with
corruption still exist.



Commercial and bankruptcy laws in Greece are in accordance with
international norms. Under Greek bankruptcy law, private creditors
receive compensation after claims from the state and insurance
funds have been satisfied. Monetary judgments are usually made in
Euros unless explicitly stipulated otherwise. Greece has a
reliable system of recording security interests in property.



Greece is a member of both the International Center for the
Settlement of Investment Disputes and the New York Convention of
1958 on the Recognition and Enforcement of Foreign Arbitral Awards.



A.5. Performance Requirements/Incentives

--------------



Greece is in compliance with WTO TRIMS requirements. Investment
incentives are available on an equal basis for both foreign and
domestic investors in productive enterprises. More generous
incentives are given to investments in less-developed regions. The
Investment Incentives Law (Law3299/2004) provides new and
already-established companies incentives worth up to 55 percent of
the overall investment made in these regions. In December 2006,
the law was amended by Law 3522/2006, which increases the incentive
to cover up to 60 percent of an investment in less-developed areas.
This amendment also introduces grants to newly founded small
enterprises to assist them with operational expenses for up to five
years. The amended law is also intended to simplify and expedite
procedures for the evaluation of investment projects.

The incentives provided are combinations of grants, interest
subsidies, subsidies for the creation of new jobs as well as for
leasing equipment, and tax exemptions. The Incentives Law was
amended again in March 2009 (Law 3752/2009) to encourage tax breaks
instead of grants and to facilitate investment in energy from

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renewable sources, in modernization of tourist installations and in
high technology services.



Additional tax incentives are extended to foreign investors if they
establish export-oriented or import substitution businesses (Law
2687/53).



There are no performance requirements for establishing,
maintaining, or expanding an investment. Performance requirements
come into play, however, when an investor wants to take advantage
of tax and/or investment incentives. In evaluating applications
for incentives, the Greek authorities consider local content,
import substitution, export orientation, creation of new jobs,
energy conservation, environmental protection and technology
transfers. Companies that fail to meet the specified performance
requirements may be forced to give up the incentives initially
granted. All information transmitted to the government for the
approval process is, by law, to be treated confidentially. Offset
agreements, co-production, and technology transfers are commonplace
in Greece's procurement of defense items.



U.S. and other foreign firms may participate in government-financed
and/or subsidized research and development programs. Foreign
investors do not face discriminatory or other de jure inhibiting
requirements. However, many potential and actual foreign investors
assert that the complexity of Greek regulations, the need to deal
with many layers of bureaucracy, and the involvement of multiple
government agencies discourage investment.



Foreigners from EU countries may freely work in Greece. Foreigners
from non-EU countries may work in Greece after receiving residence
and work permits. There are no discriminatory or preferential
export/import policies affecting foreign investors, as EU
regulations govern import and export policy, and increasingly, many
other aspects of investment in Greece.



A.6. Right to Private Ownership and Establishment

--------------



Foreign and domestic private entities have the right to establish
and own business enterprises. They may engage in all forms of
remunerative activity, including the right to establish, acquire,
and dispose of interests in businesses.



Private enterprises enjoy the same treatment as public enterprises
with respect to access to markets and other business operations,
such as licenses and supplies. Liberalization of the banking system
and increased compliance with EU norms has made credit also equally
accessible to private and public enterprises.



A.7. Protection of Property Rights

--------------



Greek laws extend protection of property rights to both foreign and
Greek nationals, and the legal system protects and facilitates
acquisition and disposition of all property rights. Regarding real
property, the continued lack of a land registry, and more
importantly, the multiple layers of authority concerning land use
and zoning permits is one of the most significant disincentives to
greenfield investments. On IPR, Greece is a member of the Paris
Convention for the Protection of Industrial Property, the European
Patent Convention, the World Intellectual Property Organization,
the Washington Patent Cooperation Treaty, and the Bern Copyright
Convention. As a member of the EU, Greece has harmonized its
legislation with EU rules and regulations. The WTO-TRIPS agreement
has been incorporated into Greek legislation since February 28,

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1995 (Law 2290/1995). The Greek government has also signed and
ratified the WIPO Internet treaties, which were incorporated into
Greek legislation in 2003 (Laws 3183 and 3184/2003)

Greece's legal framework for copyright protection is contained in
Law 2121 of 1993 on copyrights and Law 2328 of 1995 on media.
Implementation and enforcement of these provisions, however, is not
rigorous, and intellectual property problems continue in Greece.
Greece was a special mention country on the Special 301 Watch List
from 1994 until 2003, during which time Greece worked to resolve
specific areas of violation, particularly those related to the
broadcasting of copyrighted materials on the national airwaves.
Violations, particularly in copyrighted audio-visual products,
software and apparel and footwear continue to raise industry
concerns. Despite the existence of adequate IPR legislation,
Greece lags in implementation of enforcement of these laws. The
judiciary is not focused on the issue and has little training on
IPR issues. The lack of enforcement resulted in Greece being
placed on the U.S. Special 301 Watch List once again in 2008 and

2009.



Audiovisual, music, and software industries bear the brunt of IPR
violations in Greece. This is likely to rise with increased
internet penetration. Unlicensed sharing of a licensed copy among
multiple computers is the largest problem for the software
industry, while street vending of pirated DVDs and CDs is a common
practice. Efforts by local authorities to safeguard copyrights
have been inconsistent and at present provide inadequate
protection. An audit program initiated in early 2009 by the
Ministry of Finance tax police unit (YPEE) was effective in
discouraging the use of unlicensed software by enterprises;
however, this program was short-lived and is no longer in effect.
The new government has not yet indicated its intention to launch
similar initiatives, but the Ministry of Citizens' Protection has
announced a new department, expected to begin operations in the
first quarter of 2010, to combat various forms of economic crime,
including violations of intellectual property. A formal
interagency coordinating committee on IPR issues established in
2008 published a National Action Plan in February 2009 to combat
IPR infringement and coordinate efforts among ministries to improve
enforcement of IPR rights. Unfortunately, the government has not
implemented its own recommendations.


Trademark violations, especially in the apparel sector, are an area
of some concern. Although Greek trademark legislation is fully
harmonized with that of the EU, U.S. companies believe the
importation and sale of counterfeit products may be increasing.
Although in the past, U.S. companies reported a lack of support in
combating this problem, recently, they report they are receiving
more.

Intellectual property appears to be adequately protected in the
field of patents. Patents are available for all areas of
technology. Compulsory licensing is not used. The law protects
patents and trade secrets for a period of twenty years. There is a
potential problem concerning the protection of test data relating
to non-patented products. Violations of trade secrets and
semiconductor chip layout design are not problems in Greece.



A.8. Transparency of the Regulatory System

--------------



As an EU member, Greece is required to have transparent policies
and laws for fostering competition. Foreign companies consider the
complexity of government regulations and procedures and their
inconsistent implementation to be the greatest impediment to
investing and operating in Greece. On occasion, foreign companies
report that they encounter cases where there are multiple laws
governing the same issue, resulting in confusion over which law is
applicable.



In order to simplify and expedite the investment process, a
quasi-state investment promotion agency, the Hellenic Center for
Investment (ELKE),was established in 1996. ELKE, reorganized and
renamed Invest in Greece Agency in March 2008, is designed as a
one-stop shop for investors in cutting through red tape and

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acquiring the numerous permits needed to proceed with investments.
For investors seeking government incentives under Law 3299/2004,
the Agency is responsible for helping investors with projects
valued at over 8.8 million euros ($11.9 million),or over 3 million
euros ($4 million) in cases in which there is at least 50 percent
foreign participation. It also advises the government on
streamlining investment and promoting Greece as a favorable
investment destination, and improving the investment climate in
Greece. The new investment incentives laws 3522/2006 and 3752/2009
that amended 3299/2004 are also intended to simplify and expedite
the evaluation of projects.



Greek labor laws limit working hours, limit overtime, restrict
part-time employment, and are restrictive regarding the dismissal
of personnel. A labor law (3385/2005) passed in July 2005 gives
greater flexibility to employers to ask employees to work without
overtime premium pay during peak times, in return for compensatory
time off during non-peak times. Under current regulations, both
private and public companies are prohibited from firing or
laying-off more than two percent of their total workforce per month
without government authorization.



Greece's tax regime lacks stability, predictability, and
transparency. The government often makes small adjustments to tax
levels and has not hesitated to impose retroactive taxation.
Although foreign investors object to the frequent changes in tax
policies, foreign firms are not subject to discriminatory taxation.




Generally, in sectors open to private investment, foreign
investment is not prohibited or restricted in any way. Proposed
laws and regulations are usually published in draft form for public
comment before being debated in Parliament. The International
Financial Reporting Standards (IFRS) for listed companies was
introduced in fiscal year 2005, in accordance with EU directives.
These rules improved the transparency and accountability of
publicly traded companies.



A.9. Efficient Capital Markets and Portfolio Investment

--------------



Greece has a reasonably efficient capital market that offers the
private sector a wide variety of credit instruments. Credit is
allocated by public and private banks on market terms prevailing in
the Eurozone and credits are equally accessible by private Greek
and foreign investors. Two American banks operate in Greece
(Citibank and Bank of America),serving both the local and
international business communities. There is sufficient liquidity
in the market to enter and exit sizeable positions.



An independent regulatory body, the Hellenic Capital Market
Commission, supervises brokerage firms, investment firms, mutual
fund management companies, portfolio investment companies, real
estate investment trusts, financial intermediation firms, clearing
houses and their administrators (e.g., the Athens stock market),
and investor indemnity and transaction security schemes (e.g., the
Common Guarantee Fund and the Supplementary Fund) and encourages
and facilitates portfolio investments. Owner-registered bonds,
bearer bonds and shares are traded on the Athens Stock Exchange,
which has held "developed country" status since 2001, according to
key western investment firms. It is mandatory for the shares of
banking, insurance and public utility companies to be registered.
Greek corporations listed on the Athens Stock Exchange that are
also state contractors are required to have all their shares
registered.



Private Greek and foreign banks hold about 70 percent of the
banking system's assets. Following an ambitious privatization
program, only two banks remain under state control: Agricultural
Bank of Greece and Postal Savings Bank (there is limited state
participation through government controlled social security funds

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in another two banks: National Bank of Greece and Bank of Attica).
According to the Bank of Greece, Greece's central bank, private
banks in Greece have healthy loan-deposit ratios (over 90 percent).
State banks operate on free market criteria and limit their
exposure to public enterprises of questionable financial health.
Total combined assets of the five largest banks are estimated at
360 billion dollars (based on 2007 data).



Despite the Greek banks' limited exposure to risky financial
products at the center of the 2008-2009 global financial crisis,
credit markets in Greece have been affected by the ensuing freeze
in the capital markets. Following the examples elsewhere in Europe
and the U.S., the Greek government announced in October 2008 that
it would support the Greek credit system to restore flows in credit
markets with a combination of state guarantees, state participation
in the share capital and liquidity increase in the total amount of
28 billion euros (about $38 billion). The majority of Greek banks
have made use of the 28-billion euros rescue plan in 2009 thus
strengthening their liquidity and capital base; however, as in
other countries, as a response to tightened risk criteria, credit
expansion has slowed tremendously. In addition, as a result of the
slowing economy, the non-performing loans (NPLs) ratio increased to
7.2 percent in the nine months of 2009 compared to 5.0 percent in
2008 The results of stress tests conducted in 2009 by the Bank of
Greece in the context of the annual regular consultation with the
IMF were encouraging, indicating that the Greek banking sector had
enough buffers to weather the expected slowdown. The merely
marginal exposure of Greek banks to assets directly or indirectly
linked with the initial causes of the international crisis, the
satisfactory level of their capital adequacy, their relatively
strong deposit base, the tightening of credit standards and the
continuous audits by the Bank of Greece have all helped alleviate
the adverse impact of the crisis on banks' key aggregates. As a
result, the Greek banking system remains fundamentally sound, given
the current conditions.



There are a limited number of cross-shareholding arrangements in
the Greek market. To date, the objective of such arrangements has
not been to restrict foreign investment. The same applies to
hostile takeovers (a practice which has been recently introduced in
the Greek market).



A.10. Competition from State-Owned Enterprises (SOEs)

-------------- --------------



Greek State-Owned enterprises (SOEs) are active in utilities,
defense industry and banking. In sectors where the SOE is
practically a monopoly, i.e. water and sewage, urban
transportation, private companies are not allowed to enter the
market. The electricity market, which was to be completely
deregulated by mid-2007, still presents problems to the entry of
private producers. Only three private producers are operating at
this time due to problems in arranging financing and obtaining
state licenses. In sectors which have been opened to private
investment, such as the telecommunications market and the banking
sector, private enterprises compete with public enterprises under
the same terms and conditions with respect to access to markets,
credit and other business operations, such as licenses and
supplies.



The SOEs in Greece are governed by a board of directors the
majority of the members of which and senior management are
appointed by the government. The appointment of senior management
is subject to parliamentary approval. Representatives of labor
unions and minority shareholders are also sitting on the board.
The Chairman of the Board and the Managing Director are usually
technocrats with political affiliation with the ruling party.
Although they enjoy a fair amount of independence, they report to
the line Minister. SOEs are required by law to publish annual
reports and to submit their books to independent audit. There are
no sovereign wealth funds (SWF) in Greece but public pension funds
may invest up to 20 percent of their reserves to state or corporate
bonds.

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A.11 Corporate Social Responsibility (CSR)

--------------



Awareness of corporate social responsibility has been growing over
the last decade among both producers and consumers. Several
enterprises, particularly large ones, in all fields of production
and services have accepted and promoted CSR principles. A number
of non-profit business associations have been established in the
last few years (Hellenic Network for Corporate Social
Responsibility, Eurocharity, etc.) in order to disseminate the
values of CSR and promote it in both the business world and society
as a whole. Their members have incorporated in their practices
programs that contribute to the economic and sustainable
development of the communities in which they operate; minimize the
effects that their activities may have on the environment and the
natural resources; create healthy and safe working conditions for
their employees; provide equal opportunities for employment and
professional development; and provide their shareholders with
satisfactory returns through responsible social and environmental
management. Firms that pursue CSR in Greece definitely enjoy
public acceptance and respect.



A.12. Political Violence

--------------





Greece is a parliamentary democracy currently governed by a pro-EU,
center-left government. The country witnessed massive riots in
December 2008 following the accidental shooting of a young student
in an encounter with the police. Anarchists and students attacked
and destroyed police stations and businesses. Since that time,
there has been a resurgence of domestic terrorism. Active groups
include both established entities such as Revolutionary Struggle
and newly emerged organizations such as the Sect of
Revolutionaries. These groups currently target security forces,
government ministries, politicians and Greek business. However they
have also launched attacks against US and other western businesses.


Revolutionary Struggle (RS),an anti-establishment radical leftist
group, has claimed responsibility for a large number of attacks on
police, banks, and other targets, including an RPG attack on the
U.S. Embassy in January 2007, and the bombing of the Athens Stock
Exchange in September 2009. The Sect of Revolutionaries claimed
responsibility for the murder of a police officer in Athens in June
2009, in addition to a number of other attacks on police and other
targets throughout the year. Unknown assailants attacked a police
station in suburban Athens with AK-47s in October 2009, critically
wounding several officers, and a powerful bomb went off outside the
building of the National Insurance Company in Athens in December

2009. Self-styled anarchists have continued to attack what they
call "imperialist-capitalist targets" with tools such as firebombs
and Molotov cocktails. Since these incendiary attacks typically
occurred outside normal business hours, only a few people have been
seriously injured and there have been no deaths. Several U.S.
businesses have been targeted.



A.13 Corruption

--------------



Bribery is considered a criminal act and the law provides severe
penalties for infractions, although diligent implementation and
enforcement of the law remains an issue. The problem is most acute
in the area of government procurement, as political influence and
other considerations are widely believed to play a significant role
in the evaluation of bids. As a signatory of the OECD Convention
on Combating Bribery of Foreign Government Officials and all
relevant EU-mandated anti-corruption agreements, the Greek
Government is committed to penalizing those who commit bribery in
Greece or abroad. The OECD Convention has been in effect since

1999.

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The Greek Government has tried to fight corruption in public
administration and has established a number of inspection bodies to
investigate cases of corruption. The main authority is the Public
Administration's Inspectors and Auditors Unit, established in 1997,
at the Ministry of Interior. Independent inspection divisions
exist at various Ministries and in the Greek Police and the
Hellenic Coast Guard. Investigation procedures and preliminary
inquiries on financial crimes come under the jurisdiction of a
special unit in the Ministry of Economy and Finance, the Special
Audits Service (Greek acronym: YPEE). The responsibility for the
prosecution of bribery cases lies with the Ministry of Justice. In
cases where politicians are involved, the Greek Parliament decides
whether parliamentary immunity should be lifted to allow a special
court action to follow. The Greek Chapter of Transparency
International closely follows developments to press for
investigation and prosecution of corruption cases. Greece dropped
to the 71th position on the Transparency Corruption Perception
Index in 2009 from the 57th in 2008 (in the last position together
with Bulgaria and Romania among the 27 country-members of the EU).



International and domestic NGOs as well as U.S. firms believe that
anticorruption efforts need to increase. Mutual accusations of
corruption between political parties are frequent and the new
center-left government, elected in October 2009, based its
pre-electoral campaign on promises for increased anti-corruption
efforts. To show how seriously the new government is taking its
anti-graft platform, the Deputy Minister of Interior was forced to
resign weeks after his appointment on suspicion of favoritism in
transfers of policemen and other personnel in the Ministry.



There were a number of corruption cases in the previous
government's tenure which led to the resignation of four Ministers
and had a tremendous impact on the popularity of the leading party
which eventually lost the elections.



Corruption in the judiciary has been confronted more drastically
than in the political world. The Greek judiciary is under
continuing corruption investigation resulting in dismissals,
suspension from duty, disciplinary action, even imprisonment in
about 100 cases of corruption. Greece is also investigating
whether German engineering group Siemens bribed companies and
officials to win deals. A prosecutor has filed charges and an
investigating judge has launched an inquiry.



A.14 Bilateral Investment Agreements

--------------



Greece has bilateral investment protection agreements with Albania,
Algeria, Argentina, Armenia, Azerbaijan, Bosnia, Bulgaria, Chile,
China, Croatia, Cuba, Cyprus, Czech Republic, Egypt, Estonia,
Georgia, Germany, Hungary, India, Iran, Jordan, Kazakhstan, Korea,
Latvia, Lebanon, Lithuania, Mexico, Moldova, Morocco, Poland,
Romania, Russia, Serbia, Slovenia, South Africa, South Korea,
Syria, Tunisia, Turkey, Ukraine, Uzbekistan, and Zaire.
Investments by EU member states are governed and protected by EU
regulations.



Greece and the United States signed the 1954 Treaty of Friendship,
Commerce and Navigation, which covers a few investment protection
issues, such as acquisition and protection of property and
impairment of legally acquired rights or interests. Also, Greece
and the United States signed the 1950 Treaty for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with Respect
to Taxes on Income.



A.15 OPIC and other Investment Insurance Programs

-------------- --------------

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Full Overseas Private Investment Corporation (OPIC) insurance
coverage for U.S. investment in Greece is currently available only
on an exceptional basis. OPIC and the Greek Export Credit
Insurance Organization signed an agreement in April 1994 to
exchange information relating to private investment, particularly
in the Balkans. Other insurance programs that also offer coverage
for investments in Greece include the German investment guarantee
program HERMES, the French agency COFACE, the Swedish Export
Credits Guarantee Board (EKN),the British Export Credits Guarantee
Facility (ECGF),and the Austrian Kontrollbank (OKB). Greece
became a member of the Multilateral Investment Guarantee Agency
(MIGA) in 1989.



For the purposes of OPIC Currency Inconvertibility insurance,
currency inconvertibility is no longer an issue as Greece has been
part of the Eurozone since January 1, 2001.



A.16 Labor

--------------



There is an adequate supply of skilled, semi-skilled, and unskilled
labor in Greece, although some highly technical skills may be
lacking. The total number of immigrants is estimated as high as
1.2 million, nearly one-fifth of the work force, and approximately
thirty percent of them are undocumented or hold residence permits
that have expired. Illegal immigrants predominate in the unskilled
labor sector in many urban areas. Greece has started a process to
regularize the status of some immigrants, necessary to integrate
them into society. Approximately half of the estimated 1.2 million
aliens in the country are from neighboring Albania.



The 2009 unemployment rate in Greece is estimated to have increased
to almost ten percent (from eight percent in 2008) as a result of
the economic crisis. Labor-management relations in the private
sector are generally good. Strikes, labor stoppages, and related
job actions occur mostly in the public sector, where job security
is guaranteed by legislation.



Greece has ratified ILO Conventions protecting workers' rights.
Specific legislation provides for the right of association and the
rights to strike, organize, and bargain collectively. Greek labor
laws prohibit forced or compulsory labor, set a minimum age (15)
for the employment of children and determine acceptable work
conditions and minimum occupational health and safety standards.



A.17 Foreign Trade Zones/Free Ports

--------------



Greece has three free-trade zones, located at Piraeus, Thessaloniki
and Heraklion port areas. Greek and foreign-owned firms enjoy the
same advantages in these areas. Goods of foreign origin may be
brought into these zones without payment of customs duties or other
taxes and remain free of all duties and taxes if subsequently
transshipped or re-exported.

Similarly, documents pertaining to the receipt, storage, or
transfer of goods within the zones are free from stamp taxes.



Handling operations are carried out according to EU regulations
2504/1988 and 2562/1990. Transit goods may be held in the zones
free of bond. The zones also may be used for repackaging, sorting
and re-labeling operations. Assembly and manufacture of goods are
carried out on a small scale in the Thessaloniki Free Zone.
Storage time is unlimited, as long as warehouse charges are
promptly paid every six months.

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A.18 Foreign Direct Investment Statistics

--------------



Statistics on foreign direct investment are not collected
systematically, resulting in a wide variation in estimated data on
investment levels. By all estimates, though, FDI levels in Greece
are the lowest in the EU. Greek statistical data were previously
based on records of investment approvals kept by the Ministry of
National Economy or the Bank of Greece, but there has been less
monitoring of investment since the lifting of foreign exchange
restrictions, and the Ministry of Economy now keeps records of only
the investments that seek government assistance. Bank of Greece
records of capital inflows do not distinguish among greenfield
investments, acquisitions, foreign borrowing by Greek companies,
and other capital transfers. The Greek Government has claimed for
several years now that a new data system based on surveys is being
set up.



According to the UN's trade and development organization's World
Investment Report (which is based on Bank of Greece records, with
all the limitations as mentioned above),FDI inflows into Greece in
2008 were 5.1 billion dollars (1.45 percent of GDP),significantly
higher than the 1.9 billion dollars reported in 2007. (The increase
in FDI inflows in 2008 was almost fully covered by the Deutsche
Telekom's 4.3 billion dollar purchase of the Greek
Telecommunications Organization OTE.) Outflows for direct
investment abroad were 2.7 billion dollars in 2008 (0.75 percent of
GDP) and 5.3 billion dollars in 2007.



Although there is no official estimate of total foreign investment
in Greece, the total stock of foreign investment is estimated at
around $35 billion, or approximately ten percent of 2008 GDP.
Until the Greek government provides more reliable data, this
estimate should serve only as a guideline. Again highlighting the
absence of reliable data, the U.S. Embassy estimates the total
stock of U.S. investment to be about $6 billion, a little more than
one-sixth of the total stock of foreign investment. U.S. firms
employ about 11,200 people.



Greece's investment abroad is mainly directed to the Balkans.
According to the Greek Ministry of Foreign Affairs, Greek direct
investment in the Balkans is estimated at 7.2 billion dollars, one
third of which is invested in Serbia, one third in Romania, and the
remaining one third in Bulgaria, Albania and the Republic of
Macedonia.



Major U.S. investments in Greece:



(Based on 2007 total assets as reported by the companies. Source:
2009 ICAP - Greek Financial Directory)




NAME OF AMERICAN COMPANY TOTAL ASSETS


(NAME OF GREEK COMPANY) (2007, U.S. $ MILLIONS)






Carlyle Group (Neochimiki) 959.3 *


Philip Morris Group 931.8

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(Papastratos)

(Kraft Hellas)


Coca Cola Hellas Bottling 882.6 **


Duke Energy (Attiki Gas Supply) 523.7


Searle (Vianex) 318.4


Johnson & Johnson 246.3


Crown Cork and Seal 242.9


(Crown Hellas Can Packaging Mfrs)


Abbott Laboratories 239.2


Schering-Plough 188.4


First Data (First Data Hellas) 154.9


Procter & Gamble 142.5


Bristol-Myers Squibb 120.9


Pepsico 111.4


IBM 92.0


Colgate Palmolive 63.9


Hewlett-Packard 44.4


3M 42.3

Xerox 40.6


Marriott (Asty) 39.7


Ideal Standard 38.1

Heinz (Copais) 36.0

Mobil Oil 35.5

Dow Chemicals 34.0

Georgia-Pacific 32.6

S.C. Johnson and Son 27.8

McDonald's 19.2



TOTAL 5,608.4



* estimate - new investment 2008

** amount represents 23.81 percent U.S. ownership of the Greek
subsidiary's total assets

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Major non-U.S. foreign investments in Greece are:



NAME OF FOREIGN COMPANY TOTAL ASSETS

(NAME OF GREEK COMPANY) 2007, U.S. $ MILLIONS





GERMAN



Deutsche Telekom AG (OTE) 4,320.0 *

Siemens Tele Industrie A.G. 621.1

Thyssen Krupp (Hellenic Shipyards) 446.5

Praktiker 193.7

Bayer 174.6

Beiersdorf 58.4



TOTAL 5,814.3



CHINESE



China Ocean Shipping - COSCO 4,600.0 *

(Piraeus Port Container)



BRITISH



Vodafone 2,036.2


BC Partners (Regency Entertainment) 1,572.0


Dixons Overseas Limited 430.3

(Kotsovolos)

British American Tobacco 121.8



TOTAL 4,160.3





FRENCH



Carrefour 1,569.4

Lafarge 1,297.9

(Heracles General Cement)

L'Oreal 131.3

Alcatel (Nexans Hellas) 104.0

Air Liquide 80.6

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TOTAL 3,183.2





DUTCH



Amstel-Heineken 681.4

(Athenian Brewery)

Shell 576.2

Unilever (Elais - Unilever) 523.4





Friesland 112.8





TOTAL 1,893.8








ITALIAN





Fulgorcavi Halia 199.1


(Fulgor Greek Electric Cables)

Italcimenti 186.4

(Halyps Building Materials)

Barilla (Misko) 77.8



TOTAL 463.3





* estimate - new investment 2008
Speckhard