Athens News Agency: Daily News Bulletin in English, 98-03-20

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From: The Greek Press & Information Office, Ottawa Canada <grnewsca@sympatico.ca>

ATHENS NEWS AGENCY BULLETIN (No 1444), March 20, 1998

Greek Press & Information Office
Ottawa, Canada
E-Mail Address: grnewsca@sympatico.ca

CONTENTS

[01] Gov't unveils new plan to save embattled Olympic Airways

[02] ... Reactions

[03] Greece, Bulgaria call for Balkan summit on multinational force

[04] ... Discussion of Kosovo, Bosnia

[05] PM calls for intensification of DEKOs' restructuring

[06] Economy to absorb drachma devaluation jolt

[07] Interest rates expected to drop in coming months

[08] Cyprus' Omirou on official Athens visit

[09] Pangalos in Washington today

[10] Pangalos response to Cem plan conveyed to Ankara

[11] Agenda-2000 meeting in Athens

[12] Sweden's European Affairs Minister's visit

[13] Pangalos on Greece's EMU participation

[14] Report on Greece's hashish users

[15] EU farmers' income fell by 2.8 per cent in '97, 4.4 in Greece

[16] PM to inaugurate one-day seminar on agriculture

[17] DEH loan worth $500 million

[18] Euphoric Greek stocks hit new all-time high

[19] Money markets still high on ERM entry, rates drop

[20] Gov't welcomes market reaction to ERM entry

[21] Farmakis says no new Gov't measures on social security funds

[22] HEPO event on Greek-Algerian trade relations

[01] Gov't unveils new plan to save embattled Olympic Airways

Athens, 20/03/1998 (ANA)

Transport Minister Tassos Mantelis told a news conference that a restructuring program for 1998-2002 aims to save 50 billion drachmas a year from the national carrier's operating costs.

Due to European Union directives, the state could no longer subsidize the ailing state-run airline and no other funds were available, Mr. Mantelis stressed.

"If we extend the airline's operation for five years, a 50-billion-drachma deficit will emerge without taking into account necessary investments, which would take the deficit to 150 billion," he said.

He blasted the former OA boards of directors for what he called overspending, especially on labor. OA's board will present its final decisions on cost-cutting to employees' representatives tomorrow.

An evaluation of the national airline's first revitalization plan showed a failure to meet targets, with labor costs in 1997 alone jumping to 25 billion drachmas, Mr. Mantelis said.

The figure represented 48 per cent of the airline's total spending against 25-29 per cent in other such companies, or around 51 per cent in 1995-1997, he said.

"The government has decided that there is a final chance for OA to be saved. Therefore, we all have to make the right decisions for structural changes and good industrial relations."

Elaborating on what must follow, Mr. Mantelis said the attitude of employees towards the citizen/client must change, routes must be restructured on the basis of customers' demands, flight timetables must be strictly adhered to, while commercial policy must change and a strategic investor-ally must be found soon.

In addition, Olympic must exploit subsidiaries, he noted.

Specifically, Olympic Aviation will conduct flights to the Balkans, apart from its current domestic flights, with Thessaloniki as its base. Moreover, alliances must be found for catering-fuel, handling and repairs units.

Consequently, the company's general assembly of shareholders will be convened this morning, while Mr. Mantelis will convey decisions taken by the inner cabinet to its administration.

Additionally, OA employees will be called to discussions to find ways of saving the 50 billion a year from the restructuring program.

If all this is done and after the value of the company is assessed, the government intends to give a 6 per cent share to employees during an initial phase and on Dec. 31, 2000, while an additional 4 per cent will be given if the plan goes smoothly.

As a result, uncertainty will stop among employees and their work will be safeguarded.

Mr. Mantelis clarified that these measures are being taken exclusively for Olympic Airways, which is considered an exceptional case, and has nothing to do with other public utilities.

Replying to press questions, Mr. Mantelis explained that the government does not intend to dismiss any employee. Moreover, the state will immediately pay nine billion drachmas it owes to the national carrier, while it will also call on other parties to pay their debts. It estimated the deficit to amount to 6-6.5 billion drachmas in 1997.

He also replied that at this phase there is no strategic investor interested in the company. He again recognized the government's responsibilities for Olympic's deficits, adding that entry to the Athens Stock Exchange is not anticipated at this period.

He did not consider 10 per cent of shares being provided for employees as meaning offsetting for money lost during the five-year restructuring period and estimated that with the 50 billion which will be saved over the next five years by the company's cutbacks, a surplus in the region of 115 billion drachmas will be achieved. Out of this amount 65 billion will be deducted for amortization and the remaining 50 billion will be considered as an amount for investment.

According to initial reactions by employees, the company's future is considered ominous following the announcements made by the minister.

[02] ... Reactions

Athens, 20/03/1998 (ANA)

The main opposition New Democracy party's head of its economics department, George Alogoskoufis, said the carrier needed privatization and a recovery program at the same time, stressing that the government was responsible for the current mess after throwing out a 1994 ND plan for streamlining the carrier, and is therefore in no position to implement the necessary changes.

"It is the same failed recipe and there is no guarantee that the new program will succeed," he said.

The Communist Party of Greece (KKE) referred to a new round of selling out public utilities, beginning with OA.

"The government deserves a great 'Shame!' for its hypocrisy and demagogy with which it is trying to hide its pro-monopolistic policy and present it as in line with popular interests," a KKE statement said, adding that the distribution of shares to employees aimed only at making them pay for the losses caused by the government's policy.

Coalition of the Left leader Nikos Constantopoulos told a radio interview that the government intended to introduce measures that constituted an onslaught against workers and the social insurance system.

He expressed the view that the government had equated Greece's entry into EMU to the misery of the Greek people.

[03] Greece, Bulgaria call for Balkan summit on multinational force

Athens, 20/03/1998 (ANA)

The task of the multi-national force will be to keep the peace in the region, under the aegis of international organizations, and other humanitarian missions. Greece, Turkey and Romania have submitted proposals concerning the headquarters of the force following discussion of the issue at a recent meeting of defense ministers in Sofia.

National Defense Minister Akis Tsohatzopoulos and his Bulgarian counterpart Georgy Ananiev agreed on the need for the meeting during talks in Athens yesterday.

Mr. Ananiev arrived in Greece on Wednesday for a three-day visit at the invitation of Mr. Tsohatzopoulos.

A Greek proposal that the meeting of Balkan defense undersecretaries be held in Tirana will be examined by Mr. Tsohatzopoulos and his Albanian counterpart Sabit Brokaj at a working lunch next week in Ioannina.

As an alternative venue for the meeting, Sofia has been proposed.

Meanwhile, Mr. Tsohatzopoulos said after his talks that Greece and Bulgaria were active taking steps to confront any problems in the region through their participation in the multi-national force in Bosnia "which confirms the sense of responsibility wit h which our two countries are cooperating in order to resolve problems of security and stability in the region".

[04] ... Discussion of Kosovo, Bosnia

Athens, 20/03/1998 (ANA)

Within this framework, the possibility will be examined of exploiting mutual possibilities for the modernization of BMP-1 tanks used by both countries.

The ministers said Greece and Bulgaria were in favor of the peacekeeping mission in Bosnia staying on after the end of its mandate.

On the crisis in the Yugoslav province of Kosovo, the two countries expressed their concern and stressed they were in favor of a peaceful settlement, so as to ensure stability in the region.

Mr. Ananiev also thanked Greece for its support for Sofia's efforts to join NATO.

[05] PM calls for intensification of DEKOs' restructuring

Athens, 20/03/1998 (ANA)

Addressing inner Cabinet members yesterday, Mr. Simitis categorically stressed that new taxation measures will not be taken to find additional revenues, saying that what must continue is the strict and accurate carrying out of the budget.

According to reports, he said both the downward trend in the deficit and the inflation rate must continue, adding that participation in Economic and Monetary Union (EMU) will depend on these two main indicators - which will also pull interest rates down and have a positive effect on investments.

Referring to the issue of the drachma joining the EU's Exchange Rate Mechanism, Mr. Simitis commented on its positive repercussions in local and international markets. He also replied to criticism against the government.

Mr. Simitis said that the allegation that the income of working people will decrease by 14 per cent, a claim repeated by opposition parties, is not tenable. He added that it is untrue, inaccurate and groundless.

He said that in the short term the impact on income will be such as the impact on inflation, which will be small to minimal and will be absorbed during the year.

In the long term, he added, the improving robustness of the Greek economy will lead to better economic conditions to the benefit of all working people.

The conclusion drawn by the premier is that considerable additional incomes will be achieved with positive repercussions in the investments and development sectors and, consequently, employment with the creation of new jobs.

On the question of the government's overall policy, Mr. Simitis said it is determined to move ahead so as to win the big bet of the country's participation in EMU and in the "tough" nucleus of the European Union's decision-making.

[06] Economy to absorb drachma devaluation jolt

Athens, 20/03/1998 (ANA)

He also expressed his satisfaction at the market's calm reaction to the devaluation, which was linked to the drachma's simultaneous entry into the European Union's exchange rate mechanism.

Mr. Papantoniou said the Greek currency's entry into the ERM, a result of successful government economy policy, had brought the country more than one step closer to EMU.

"We are on the threshold of EMU, the Europeans consider us already as part of the European family," Mr. Papantoniou said.

He urged Greek banks to stand on their own feet and said that the lesson offered by the recent Asian crisis was that a country needed a healthy banking system along with macro-economic stability to prosper.

Mr. Papantoniou said the government will stick to its inflation target of 2.5 per cent by the end of the year, and the Greek economy's main challenge in the next three years was competitiveness.

"I am beginning to worry not about the country's participation in EMU but the economy's condition when we enter. We have to be competitive to exploit the benefits of economic and monetary union," he said.

Mr. Papantoniou said measures were needed to improve efficiency in the public sector through drastic structural reforms in order to spur competitiveness.

The Greek state was bloated and needed shrinking, a process that would not hurt the state or its ownership in public utilities.

Mr. Papantoniou urged banks to lower the spread between lending and deposit rates and restructure their portfolios.

He said that a decision to privatize Ionian Bank would be reached soon.

[07] Interest rates expected to drop in coming months

Athens, 20/03/1998 (ANA)

Mr. Karatzas defended the credit policy implemented by banks, saying that the spread between loan and deposit rates was only seemingly high.

He was responding to criticism by Mr. Papantoniou.

He also rejected criticism that banks' profits were too high.

"Greek banks have often shown lower returns compared with European ones because of lower lending rates in terms of assets, huge portfolios in state securities and higher operating expenses," he said.

Mr. Karatzas said banks were seeking greater transparency in their relations with customers, and they would co-operate with government authorities to improve services.

Referring to the drachma's participation in European economic and monetary union and its final replacement by the euro, Mr. Karatzas said that there would be both positive and negative effects in the country's banking sector.

He urged banks to speed up modernization and preparations for implementation of a single European currency.

[08] Cyprus' Omirou on official Athens visit

Athens, 20/03/1998 (ANA)

In the morning, he visited installations of the Military Academy. In the afternoon, Mr. Omirou attended the inauguration of the exhibition "Alexandros 2000" along with his Greek counterpart Akis Tsohatzopoulos.

This morning, Mr. Omirou will meet Foreign Under-secretary Yiannos Kranidiotis and then hold talks with Mr. Tsohatzopoulos.

Mr. Omirou will also visit the 252 Air Force hospital and in the evening he will attend an official dinner given in his honor by Mr. Tsohatzopoulos at the Armed Forces Officers Club.

In statements at Larnaca airport before his departure, Mr. Omirou reminded the US and Europe that they should not show selective sensitivity about peace and stability in the region and ignore the continuing occupation of part of Cyprus by Turkey.

"Cyprus acknowledges the right to the US and Europe to be interested in creating and maintaining peace and stability in this part of the world but we cannot accept a selective sensibility which is not founded on factual events," Mr. Omirou said.

In a thinly veiled criticism of those who attempt to persuade the government to abort a planned deployment of Russian anti-aircraft missiles, Mr. Omirou said: "instead of addressing themselves to the Turkish side whose expansionist designs destabilize the region, we are advised to cancel and postpone our arms acquisition programs, including the defensive missiles system S-300."

[09] Pangalos in Washington today

Washington, 20/03/1998 (ANA - T. Ellis)

Mr. Pangalos will meet US counterpart Madeleine Albright late in the afternoon at the US State Department for discussions on Greek-Turkish relations, as well as the Cyprus problem and developments in Kosovo.

Later in the day, the Greek foreign minister will meet with US President Bill Clinton's national security adviser Sandy Berger.

Mr. Pangalos will remain here until March 25 and will have meetings with several other US officials.

On Monday, Mr. Pangalos will lunch at the Greek embassy with officials from the US National Security Council, the US State Department and the Pentagon, while later he will attend a dinner hosted by US Senator Ted Stevens (R-Alaska).

Mr. Pangalos will also visit Chicago and will conclude his US visit in New York, where he will observe the annual Greek Independence Day parade along 5th Avenue.

[10] Pangalos response to Cem plan conveyed to Ankara

Athens, 20/03/1998 (ANA)

Mr. Pangalos' letter answered a renewed five-point proposal from his Turkish counterpart Ismail Cem, which was subsequently rejected last week by Greece.

According to press reports, the letter states that Turkey did not adhere to a constructive stance in bilateral relations and the Greek proposal that Turkey seek recourse to the International Court at The Hague on whatever differences it may have.

However, Mr. Pangalos, reiterated his invitation to Mr. Cem to attend a Western European Union (WEU) ministerial meeting to be held in Rhodes this May, which could be an opportunity for the two to meet.

Last week Mr. Cem had invited Mr. Pangalos to Ankara.

[11] Agenda-2000 meeting in Athens

Athens, 20/03/1998 (ANA)

The purpose of the meeting was to better prepare Greece and to coordinate ministries in order to better serve the national interests during the negotiations on EU enlargement.

The meeting was attended by foreign under-secretary Yannos Kranidiotis, who spoke on the main elements of the strategy for Cyprus' EU membership. Foreign and national economy undersecretaries Stelios Perrakis and Elias Plaskovitis, and development and agriculture ministry officials also attended the meeting.

Mr. Papandreou stressed the need for enlargement, pointing out that Cyprus was the first candidate for membership in the EU. He also outlined the difficulties that would be entailed in enlargement as regards the financial aspect and institutional adaptation.

He said priority should be placed on moves towards democracy on the part of the candidate countries, adding that Bulgaria and Romania should not be shut out of the enlargement process.

[12] Sweden's European Affairs Minister's visit

Athens, 20/03/1998 (ANA)

The two ministers also discussed the Cyprus issue, although Mr. Lund, replying to questions, said the issue of Cyprus' purchase of Russian S-300 missiles had not been raised. He said, however, that he personally did not think the missiles should be installed on the island.

Sweden supports a solution for the Cyprus issue within the framework of the UN resolutions and it has frequently spoken in favor of a withdrawal of all foreign forces from the island republic. Sweden was also one of the first countries to support Cyprus' accession to the EU.

Meanwhile, Mr. Papandreou said after the meeting that it had been decided to set up a group consisting of both Greek and Swedish representatives to co-operate with Baltic and Balkan countries in their attempts to work towards becoming members of the EU.

Mr. Papandreou said he would be going to Paris and Bonn next week to represent Greece at the Contact Group on Kosovo, an issue which he also discussed with Lund.

[13] Pangalos on Greece's EMU participation

Athens, 20/03/1998 (ANA)

The minister, who was speaking on "Greek economic diplomacy in the framework of the globalisation of markets" at the Institute of International Economic Relations, also stressed the importance of developing business and trade relations with the countries of the Balkans and the former Soviet Union, but also with countries of a large market size, such as China, Brazil, Indonesia and Japan.

[14] Report on Greece's hashish users

Athens, 20/03/1998 (ANA)

Speaking before the standing all-party parliamentary committee on narcotics, Romeos acknowledged that the influx of narcotics to the country had increased in recent years, particularly of hashish. "If we wanted to, we could round up all the users in one night, but this will not solve the problem because it's difficult to separate the users and the dealers," Romeos said.

He proposed that any assets or money seized in drug cases should be given to the police to be used to help them combat the problem.

On the increased number of police patrols, particularly at night, announced earlier this week, Mr. Romeos said the measure had already borne fruit.

Wednesday night, he said, the police conducted 400 patrols in the capital, during which 2,000 people were taken to local stations for questioning and 40 arrests were made.

As of Monday, Romeos added, the patrols will be further stepped up as 1,000 newly graduated officers join the police ranks.

[15] EU farmers' income fell by 2.8 per cent in '97, 4.4 in Greece

Brussels, 20/03/1998 (ANA - G. Daratos)

Greek farmers' incomes dropped by 4.4 per cent, mainly due to a glut in olive oil production, sending its real price down by 28.1 per cent, while the price of wheat fell by 4.2 per cent, sugarbeet by 4.3 per cent and wine by 1 per cent. The negative development was also due to an increase in the prices of fertilizers.

Net value added to the cost of factors of production also continued to fall, this time by 7.2 per cent compared to 1996.

Employment in the agricultural sector fell by 3 and 2.9 per cent in 1996 and 1997, respectively. It was the second year in a row that farmers' real incomes fell, after a 4.1 drop in 1996. They are now O.5 per cent lower than the 1989-1991 average.

Finally, the real value of finished agricultural production fell by 3.4 per cent in 1997.

[16] PM to inaugurate one-day seminar on agriculture

Athens, 20/03/1998 (ANA)

The conference is organized by the PASOK Eurodeputies and the party's agricultural and cooperative section.

About 500 agricultural and government officials as well as specialized scientists will attend this conference.

The prime minister is expected to speak on the Greek agricultural sector's need for adjustment to the European standards.

[17] DEH loan worth $500 million

Athens, 20/03/1998 (ANA)

According to a statement yesterday, the loan will be used towards refinancing a 1991, 125-billion drachma loan in Japanese yen, expiring in May 1998.

The interest rate will be appreciably lower than the 8.1 per cent rate of the yen loan.

[18] Euphoric Greek stocks hit new all-time high

Athens, 20/03/1998 (ANA)

The euphoria was sparked by the drachma's entry into the European Union's exchange rate mechanism at the weekend and an accompanying 14 percent devaluation. The general index ended 6.09 percent higher at 1,861.73 points, exceeding its previous record of 1,794.14 points in October 8, 1997.

Trading was extremely heavy with turnover at 96.1 billion drachmas.

Analysts said that demand for shares was so intense that forecasts may be justified of the market sprinting through 2,000 points in the mid-term.

Sector indices all scored sharp gains. Banks rose 7.71 percent, Insurance was 3.11 percent higher, Investment soared 5.78 percent, Leasing ended 5.60 percent higher, Industrials shot up 6.79 percent, Construction rose 3.77 percent, Miscellaneous was 3.03 percent up and Holding increased 5.62 percent.

The parallel market index for small cap companies ended 3.69 percent higher. The FTSE/ASE blue chip index soared 6.26 percent to 1,084.15.

Broadly, advancers led decliners by 179 to 51 with another 24 issues unchanged.

Naoussa Mills, ETEBA, Klonatex, Alpha Credit Bank, Ionian Bank, National Bank, Commercial Bank and Intracom scored the biggest percentage gains at the day's 8.0 percent upper volatility limit.

Mochlos, Korasidis, Dane, Balkan Export and Demetriadis suffered the heaviest losses.

National Bank of Greece ended at 30,358 drachmas, Ergobank at 19,950, Alpha Credit Bank at 22,269, Delta Dairy at 3,490, Titan Cement at 19,450, Intracom at 17,496 and Hellenic Telecommunications Organization at 8,350.

[19] Money markets still high on ERM entry, rates drop

Athens, 20/03/1998 (ANA)

Bankers reported new capital inflows at the drachma's daily fixing totaling 110 million ECUs and 450 million DMarks.

Interbank rates fell by one percentage point. The Greek currency was 0.06 percent higher against the ECU. It strengthened 0.16 percent against the DMark, but was 0.64 percent off against the US dollar.

[20] Gov't welcomes market reaction to ERM entry

Athens, 20/03/1998 (ANA)

Mr. Reppas said that domestic and foreign markets were showing confidence in the economy and that the government's policies were bearing fruit.

[21] Farmakis says no new Gov't measures on social security funds

Athens, 20/03/1998 (ANA)

He was speaking yesterday at a conference hosted by the employees' federation of social policy organizations on the social security issue.

Mr. Farmakis said political measures already announced will be implemented, possibly at accelerated rates, adding that they are adequate to lead the country to the desired target.

Referring to the insurance issue, Mr. Farmakis confirmed that there is no question of increasing the pensioning age or contributions of insured persons, at least over the next two years.

Federation President Georgios Koutroumanis said the total amount of funds' liquid assets and real estate is valued at 3.25 trillion drachmas at present. However, he underlined the loss of some five trillion drachmas due to the inefficient use and investment of reserves as well as seven trillion due to non-implementation of tripartite funding over the past 20 years.

The president of the Civil Servants Supreme Administrative Council (ADEDY), Yiannis Koutsoukos, and Panteio University professor Savvas Rombolis conveyed the views of the unions, accepting deregulation of the system, but stressing the need for control and security measures.

[22] HEPO event on Greek-Algerian trade relations

Athens, 20/03/1998 (ANA)

Algerian Minister of International Relations Lahcene Moussaoui, as well as other high-ranking Algerian state and private sector executives will address the event.

Issues of bilateral interest expected to be discussed include construction, pharmaceuticals, energy, plastics, foodstuffs and marble.

End of English language section.

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