From: gd8f@kelvin.seas.Virginia.EDU (Gregory  Dandulakis)
Subject: Greece and the EC
Originator: gd8f@kelvin.seas.Virginia.EDU
Organization: University of Virginia
Date: Tue, 5 Jan 1993 23:23:04 GMT


Since we had several arguments about Greece and the EC, and since
it seems that my position is diametrically different from that of
Spyros, I decided to bring some information which strongly indicates
that the following assertions are justified:


1. The western mass media are severely distorting the position of
   Greece within the EC. This double standard tonque is not extented
   to their serious information sources for investors, in which case
   a much fairer picture is given.

2. The EC countries saw great gains into Greece's market right after
   our entrence. The severe consequences is not only a communist
   party imagination but a mere fact. The net Greece's loss from this
   greately expanded trade defficit is not yet presented to us in numbers.

3. EC companies have bought the Greek companies for peanuts and they
   placed their position in the Greek market eagerly. This net asset
   for EC is not mentioned to us into numbers.

4. Greece is rightfully the only Balkan country member of the EC for
   the time being, and that her prospect is even better in the future.
   This is the only objective explanation for Greece's acceptance into
   the EC; EC gained from Greece; No sympathy or emotions played any
   role. 


Let's see arguments for each assertion separately:


ASSERTION No 1:
---------------

"Mass media distort intentionally. But information for investors is strict."


PROOF:
------

===============================================================================

       "GREECE IN THE 1990S, Taking Its Place In Europe"
        ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

by Robert McDonald, The  Economist  Intelligence Unit Economic Pro-
spects Series, BI LTD, Special Report No 2099, London-New York, 1991.

##############################################################################


ASSERTION No 2:
--------------

"EC saw immediate gains in trade, right after Greece's entry."


PROOF:
------

==============================================================================

CHAPTER 3	CONSUMPTION LED GROWTH
		======================

A VULNERABLE ECONOMY

THE ECONOMY, BEING INWARD LOOKING--
If one may be allowed a pun in a serious study of this nature, the Greek 
economy is wasting from consumption. High levels of consumer demand con-
sistently outstrip domestic  supply capacity causing inflation and suck-
ing in imports. Prior to entry into the EC in 1981, domestic investments 
tended to focus on medium sized industries in sectors seeking to satisfy 
basic demands  such as  food, beverages, textiles, cement, furniture and 
white  goods. There  was little  attention  to  manufacturing for export 
which continued to be dominated by agricultural products. Goods produced 
for the  home market were  competitive with  imports in price but not in 
quality and retained their dominant position only because of tariff pro-
tection. Entry into the Community ended this protected status.

--WAS VULNERABLE TO THE IMPACT OF EC ENTRY
EC entry  coincided with the advent of the socialists, whose redistribu-
tive incomes  policies fuelled  private  demand. As a result the chronic 
trade imbalance  deteriorated further. Transfers from the Community bud-
get have been a mixed  blessing. They have cushioned the current account 
deficit but they have fed demand and thus contributed to the trade defi-
cit.

Greek entrepreneurs are aware of the need to restructure and to moderni-
se  in order  to improve productivity both on domestic and external mar-
kets. Otherwise, they fear being  marginalised or overwhelmed within the 
single European market which will follow 1992.

SUPPLY OF EXPORTABLE GOODS IS LIMITED

INTERMEDIATE PRODUCTS IMPORTED

COMMUNITY ENTRY HAS GIVEN GREECE NEW MARKETS--
The balance  of payments  suffered  adversely  from entry into the EC in 
1981 despite a long period of  preparation and extended transitional ar-
rangements...

--BUT THERE HAVE BEEN PROBLEMS
... According to IMF statistics, Greek  agricultural imports from the EC 
nearly doubled in value from 41.1 per cent of total agricultural imports 
in 1980 to 78.4 per cent in 1984 while exports rose by only half that a-
mount from 40.9 to 60.3 per cent.

##############################################################################


ASSERTION No 3:
---------------

"Greek market access and companies are valuable to the EC and bought from
 EC companies for peanuts."


PROOF:
------

==============================================================================

--BUT EC SINGLE MARKET HAS PROVIDED A SPUR
The prospects of integrated European  market in 1992 has helped spur the 
return to investment. There has also been an upturn in investment as no-
                                                                  ^^^^^
rthern European and non-EC companies have moved into the country seeking 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
to establish a market  position. Foreign investment capital enjoyed con-
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
stitutional  protection against  nationalisation  and expropriation but, 
prior  to 1986, regulations  strictly  limited the patriation of capital 
and profits. The  controls  began  to be eliminated  that year and since 
then there has been a wave of  mergers and acquisitions as foreign firms 
have bought up existing marketing and distribution  networks established 
by domestic companies. The prices involved in the transactions have been 
modest because of the high debt levels involved. But many entrepreneurs, 
                                                 ^^^^^^^^^^^^^^^^^^^^^^
it  would seem, have preferred to sell what remains of their capital, e-
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
ven at a discount, rather than to risk losing it entirely.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

##############################################################################


ASSERTION No 4:

"Greece was accepted to the EC because it complied the minimum *economic*
 requirements, and not because of sympathy (democracy, humanitarian etc, etc)."


PROOF:
------

==============================================================================

CHAPTER 8	DOMESTIC ASSUMPTIONS IN THE CENTRAL FORECAST
		============================================

THE POLITICAL ENVIRONMENT

GREECE IS THE EC'S POOREST NATION--
Greece is the slowest ship in the EC convoy  with GDP  per head half the 
Community average. Inflation, in double figures since the first oil pri-
ce shock of 1973, is fuelled by weak supply capacity, strong wage demand 
and large public sector deficits. Aggregate public  debt exceeds GDP and 
the country's international credit  rating is the lowest of the 12. Poor 
performance in the supply of consumer  goods coupled with a lack of ver-
tical  integration in industry, which means  that  many  sectors require 
high levels of foreign intermediate components, causes high levels of i-
mports. Manufacturing output is concentrated in sectors that face strong 
competition from  newly industrialised  countries  which curtails export 
potential. There is, thus, a chronic trade deficit.

--BUT IT HAS COME A LONG WAY
Set against this, the country has  been  transformed over the past three 
decades  from a rural Balkan backwater  into an urban European nation in 
the mode, if not the economic circumstances, of its EC partners. The no-
tion of a peasant underclass has  been eliminated. There  are still poor 
people but no one need any longer be  resigned to a life of deprivation. 
Material living standards have improved  markedly, though the quality of 
urban life has deteriorated through severe environmental degradation. A-
lthough Greece is, according to the above  figures, the poorest EC state 
in terms of average income, this  does not mean that Greece has the most 
poverty.


--AS BUSINESSES MOVE TO SECURE COMPETITIVENESS--
Entrepreneurs recognise the need further to modernise their plant and e-
quipment in order to improve productivity, quality and economies of sca-
le if they are going to survive in the integrated market. Greece has re-
                                                          ^^^^^^^^^^^^^
ached the level of development where it can no longer count on a low wa-
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
ge regime to secure competitiveness but must look increasingly to higher 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
standards and product differentiation. Younger businessmen have realised 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^  !!!!!!! ^^^^^^^^^^^^^^^^^^^^^^^^^
this and are seeking rapidly  to improve their product lines. On the ba-
^^^^
sis of ad hoc contacts with business community, the Economist Intellige-
nce Unit feels that they  perceive the "climate" to be right for invest-
ment. In Greece  this nebulous concept is often more important than pra-
ctical considerations.

Prospects are particularly good for production of higher value added go-
ods such as processed foods, fashion  garments, household and office fu-
rnishings, intermediate components for  transport vehicles, and environ-
mental products. Growth in basic industries will be limited though there 
is substantial scope for expansion in processing of domestic minerals.

--AND SERVICE SECTORS BECOME MORE SOPHISTICATED
Services exhibit  strong potential. There  is particular  scope in money 
managements  (for insurance, broking, financial  counselling, credit ca-
rds, leasing and niche banking) and in high income tourism (for marinas, 
spas, sport  and  conference centres). Advertising  is poised for growth 
following  the  introduction of  private television though its potential 
has been hampered by  the tight economic situation. Retailing is also on 
the verge of  major expansion, particularly as  northern European chains 
have begun to move into larger centres.

##############################################################################

                                                                         Q.E.D.

Gr
Newsgroups: soc.culture.greek