Last July, the building in the centre of

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1 GREECE'S leading role in the Balkans THE PROVISIONS OF THE HELLENIC PLAN FOR THE ECONOMIC RECONSTRUCTION OF THE BALKANS (HiPERB) 84 Having "extroversion" as its motto, the HiPERB program, the flagship of Athens' economic diplomacy in the Balkans, which aspires to upgrade the role of Greece in the region and transform our troubled neighborhood into an area of "peace, stability and economic growth," has been extended till The investment of more than 15 billion euros of Greek capital till this date in the Balkan countries is only the beginning By Aristotelia Peloni Last July, the building in the centre of Sarajevo that once housed the government services of Bosnia and was relentlessly bombed during the recent war in the former Yugoslavia, was turned from a symbol of war and suffering into a symbol of peace and friendship among nations. The Greek-Bosnian Friendship Building, which was inaugurated by the Prime Minister, Mr. Kostas Karamanlis, and the then Deputy Foreign Minister responsible for economic diplomacy, Mr. Evripidis Stylianidis, was constructed thanks to the contribution of the Greek state, which assumed 80.4% of the total cost, equivalent to approximately 13.5 million.

2 The building, which will house the services of the central government of Bosnia-Herzegovina and the offices of the South-East European Cooperation Process, is the first large project that was funded by Greece in the region, and one of the most important public works of the Hellenic Plan for the Economic Reconstruction of the Balkans (HiPERB). The HiPERB, which was approved by the Greek Parliament in 2002 with a total budget of 550 million euros and a duration of five years a month ago, the Parliament ratified its extension till 2011, in order to ensure the better utilization of the funds from the seven recipient countries (Albania, Bosnia-Herzegovina, Bulgaria, Montenegro, FYROM, Romania, Serbia) is part of Athens' strategy for political, economic and social stability in Southeast Europe, and conveys Greece's declared intention to support the European perspective of the Balkan countries, and to establish our country as a strategic player and principal investor in the region. "The Hellenic Plan for the Economic Reconstruction of the Balkans (HiPERB) is one of the most comprehensive and ambitious development programs pursued by Greece, with a total budget of 550 million euros and a duration of ten years ( ). The aim is to remove growth barriers for Balkan countries, to strengthen bilateral economic relations and to promote Greek business activity in the region," said the Deputy Foreign Minister Mr. P. Doukas, who took over the venture from his predecessor, Evripidis Stylianidis. Almost half of the 550 million euros of the HiPERB budget are allocated to Serbia and Montenegro ( 265 million), while 75 million are allocated to FYROM, 70.4 million to Romania, 54.3 million to Bulgaria, 49.9 million to Albania, and 19.5 million to Bosnia-Herzegovina (3% covers the administrative and management cost of the program). The largest part of these funds (79%) is allocated to Public Investments (large projects), 20% is allocated to private production investments (through Development Law 2601/1998), while the remaining 1% is allocated for the co-funding of small projects through the Greek embassies in each country. "The criterion for the selection of the projects is their reciprocity for the Greek economy and Greek foreign policy, without overlooking their usefulness for the recipient countries," stressed the Deputy Minister, Petros Doukas, who criticized the former PASOK governments saying that "the progress of the HiPERB in the two-year period was insignificant." He explained that "the New Democracy government managed to fully 'reactivate' the HiPERB and, as a result, our total commitment amounts today to million or 52.9% of the total HiPERB budget (as compared to 6.8% in 2004), of which million concerns public investments (or 56.5% of the budget, as compared to only 1.3% in 2004)". The next project to be materialized through the HiPERB is the Pan-European Corridor 10, which will link the port of Thessaloniki with Skopje, Belgrade and Central Europe. The upgrade of the Corridor into a modern highway of European standards will significantly increase the speed of road transport between Greece and 85

3 Western Europe, as well as other destinations. The 108 kilometer project, whose total budget amounts to 625 million, will be co-funded by Greece with 150 million. The project will soon be tendered, in order to begin in 2008 and be completed within the next five-years. The HiPERB promotes the materialization of a second project, the Sagiada, Konispoli and Agioi Saranda road axis that will connect the Greek region of Epirus with south Albania. The 40.5 kilometer project, which is budgeted at 37.6 million, will put an end to the isolation of 18 ethnic Greek communities and will boost cross-border trade. Today, Greece's total commitment amounts to million (!) or 52.9% of the total HiPERB budget, of which million concern public investments. Moreover, the corresponding commitment for small projects amount to 1.9 euros or 36.8% of the budget, while private production investments have already covered 38% of the relevant budget. As far as Private Production Investments are concerned, Albania and Bulgaria have already absorbed their entire allocation, followed by Romania with an absorption rate of almost 87%, FYROM with almost 20% and Serbia with 10.1%. Therefore, the total investments that have been approved to date amount to 40.7 million, and include the materialization of 57 Greenfield projects in the region, which will create approximately 4,000 new jobs. 86 Investments in the Balkans As noted by diplomatic sources, the HiPERB supplement Greek investment in the countries of Southeastern Europe, which exceeds 15 billion. Greek entrepreneurs are among the pioneers and claim the role of key regional players, especially in Bulgaria, Romania, and Serbia, where Greek businesses are among the three largest foreign investors. The markets of Romania, Turkey, Bulgaria, Serbia and Albania, where the Greek banks are activated, present a challenge for Greek bankers because of their strong growth rates. In such a high-growth environment it comes as no surprise that the National Bank, Alpha Bank, Eurobank and Piraeus Bank will seek to consolidate their presence in the region during the next few years, in order to become major players in a market with a population of more than 100 million, including Turkey. Albania Greece controls almost 27% of total foreign investment in Albania and is ranked first in terms

4 The markets of Romania, Turkey, Bulgaria, Serbia and Albania, where the Greek banks are activated, present a challenge for Greek bankers because of their strong growth rates. of invested capital, which exceeds $800 million. There are almost 270 Greek, or Greek-controlled, enterprises, mainly activated in: telecommunications, commercial banking, contracting and construction, tobacco trading, oil and oil products trading and distribution, textiles, foods, apparel and footwear. Greek-interest businesses in Albania include the ever-expanding banks National, Emporiki, the subsidiary of Piraeus, Tirana Bank, and Alpha and the mobile operators Albanian Mobile Communications (controlled by Greece's Cosmote) and Vodafone (controlled by Vodafone Greece). Titan cement proceeds to a major investment of approximately 200 million for the construction of an industrial unit. Greek banks such as Alpha Bank, National, and Emporiki, command substantial market shares in terms of loans, deposits and profitability. Bulgaria Total Greek investment in Bulgaria from 1992 to 2006 exceeded by far the amount of 1.5 billion, capturing 10% of direct foreign investment in this country, and the third place after Austria and the Netherlands. More specifically, Greek banks control 23.6% of all banking capital. Greek investment activity has remained stable during the past six years, with average investments of almost 200 million per annum, the highest being those of the year There are approximately 1,500 active Greek businesses in the country. Greek business activity in Bulgaria is rather strong in services (mainly banking), network industries, food/beverages, metals, commerce and distribution, and apparel. The Athens Stock Exchange has expressed interest for the privatization of 44% of the Sofia Stock Exchange, and for further cooperation with the burse. In the construction sector, the joint venture of general contractors MT ATE, Ermon SA, and Domokat SA undertook in 2004 the 4.85 million project for the study, construction and fitting of the Razlog waste water treatment plant. Proodeftiki SA is reconstructing the Sadovo-Razlog road. Terna SA was selected for the reconstruction and electrification of a 37.7 km section of the Plovdiv- Svilengrad railway line in the Krumovo-Parvomai area. FYROM For the past 11 years, Greece has been holding the first place among foreign investors in the FYROM. The total amount of Greek investments that have been, or are being, materialized is almost 950 million. Greek investment is mainly focused in: foods-refreshments (bakery products, ice-cream, beer, non-alcoholic beverages), energy-oil, cement, mining, marble, banking, tobacco, ready-made apparel and accessories (outsourcing), and the establishment of trading companies and representative offices. Romania Greece is among the top three foreign investors in the country (the largest Greek investments in the Balkans have been made in Romania), with almost 800 active enterprises, and total invested capital that is estimated at more than 3 billion. In 2002, OTE acquired the majority stake of Romtelecom (54%) after tough negotiations and following the approval of the Romanian government for the purchase of the additional stake. On , Cosmote and Romtelecom signed a deal for the acquisition of the mobile operator Cosmorom; Cosmote would participate in the share capital increase of Cosmorom with 120 million. In 2005, OTE sold all its mobile subsidiaries in the Balkans to Cosmote. Thus, Cosmote came to own 70% of Cosmote Romania (Cosmorom). According to recent data from the central bank of Romania, following the acquisition of an 81.6% stake in Banca Romanesca by the National Bank of Greece, Greek banking holds the second place, after Austria, among foreign investors in this sector with 15.4%. Moreover, ATE signed a deal for the acquisition of a 57.13% stake in MindBank. Serbia Our country is the number one foreign investor in Serbia. Direct Greek investment since

5 88 amounts to 1.8 billion. Total Greek invested capital amounts to 2.1 billion. It has to be noted that there are 150 Greek-Serbian, as well as 120 purely Greek, companies. The major Greek companies operating in Serbia include, among others, the Greek Telecommunications Organization OTE (acquired 20% of Telecom Serbia in 1997), Intracom (supplies Telecom Serbia with card-phones), the National (12 branches), Alpha (branches and Serbian Jubanka), Eurobank Ergasias (branches and Post Banka), Piraeus (Atlas Banka) and ETEVA (representation office) banks, Hellenic Petroleum ((Yugopetrol and the EKO-YU petrol stations), and three companies from the foods sector: Delta (Delyug productive unit), Coca-Cola Hellenic Bottling Company (Fresh Co) and Athens Brewery.

6 As stated on the subject by the general secretary for International Economic Relations and Development Cooperation at the Ministry of Foreign Affairs, "the objective of the general secretariat is to nurture systematic contact with our business partners abroad, through a repetitive, consistent, positive message about Greece. By means of this contact we seek to create favorable conditions for the exporting activity of Greek enterprises abroad, to support their globalization, and attract investors to Greece. In other words, to fulfill the objectives of our economic diplomacy." The events, which are organized on an annual basis, are part of the program for developing the relationship of the Ministry with the country's business partners. The effort began in the previous year, through their systematic recording and the creation of a central database, which includes more than 4,700 of the most important business partners of Greek enterprises. Using this infrastructure project as a starting point, this year the Ministry is utilizing more effectively the network of the Financial and Commercial Affairs offices located in our embassies and consulates, which materializes an integrated action plan, designed to promote the extroversion of the Greek economy. The events are addressed to entities and persons that, directly or indirectly, affect the objectives of Greek economic diplomacy (importers and wholesalers, buyers from large distribution chains, state organization representatives, participants in joint ventures with Greek companies, major tour operators etc) and are in the form of one-day conferences, or dinner presentations, depending on the country and the occasion. In order to enhance the extroversion of Greek economic diplomacy, Greek authorities abroad are for the first time organizing events to honor the country's business partners 48 actions dedicated to the extroversion of the Greek economy and the support of Greek exports and investments abroad. The events will be used as a means of informing our business partners about the opportunities offered by the Greek economy with the aim of further boosting commercial and economic relations, while their topics are adapted to the specific targets set for each country. A recent example is the 20-day promotional event for Greek food products that was held in the Balducci's specialized store network of the US, an event organized by the Economic and Commercial Affairs offices on the other side of the Atlantic. The chain has ten stores in Washington DS, New York, and the states of Virginia, Maryland, and Connecticut. 89