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TITLE:  GREECE ECONOMIC POLICY AND TRADE PRACTICES
DATE:  FEBRUARY 1994
AUTHOR:  U.S. DEPARTMENT OF STATE

                              GREECE

                     Key Economic Indicators
          (Billions of drachmas unless otherwise noted)


                                  1991      1992      1993  /1
Income, Production,
 and Employment

Real GDP (1970 prices) /2             504.2     508.8     513.7
Real GDP Growth (pct.)              3.4       0.9       1.0
GDP (at current prices) /2         11,058.7  12,595.8  14,359.2
By Sector:
  Agriculture                       1,838.7   1,880.8   n/a
  Energy and Water                    292.0     338.5   n/a
  Mining                              157.0     162.2   n/a
  Manufacturing                     1,736.4   1,940.8   n/a
  Construction                        785.1     849.2   n/a
  Rents                               771.7     946.1   n/a
  Financial Services                  349.7     457.3   n/a
  Other Services                    3,035.1   3,621.0   n/a
  Government, Health
   and Education                    2,092.9   2,399.9   n/a
Net Exports of
 Goods and Services                -1,347.9  -1,459.8  -1,674.4
Real Per Capita GDP
(constant 1991 thousand
  drachma prices)                   1,084.0   1,085.0   1,087.0
Labor Force (000's)                 3,933.3   4,083.0   4,083.0
Unemployment Rate (percent)         8.5       9.0       9.5

Money and Prices
  (Annual Percentage Growth)

Money Supply (M2) (end period)      1,742.9   1,989.5   n/a
Base Interest Rate  /3             28.0      29.0      26.0
Personal Saving Rate               18.0      18-19     17.0
Retail Inflation                   19.5      15.8      14.5
Wholesale Inflation                16.7      11.3      11.0
Consumer price index               19.5      15.8      14.5
Exchange rate (DRS/$)
  Official                        182.3     190.7     230.0
  Parallel                          n/a       n/a       n/a

Balance of Payments and Trade
(millions of dollars)

Total Exports (FOB) /4              6,797.1   6.008.8   5,400.0
 Exports to U.S. /5                   495.0     382.6     148.7
Total Imports (CIF) /4             19,104.6  19,902.0  18.000.0
 Imports from U.S. /5                 923.5     848.9     340.3
Aid from U.S.                       n/a       n/a       n/a
Aid from Other Countries            n/a       n/a       n/a
External Public Debt               23,914.0  23,069.0  24,100.0
Debt Service Payments (paid)        5,786.1   8,038.2   7,800.0
Gold and Foreign Exchange
  Reserves                          6,096.0   5,588.0  6,500.0
Trade Balance /4                  -12,307.5 -13,893.0 -12,600.0
 Balance with U.S. /5                -428.5    -466.0    -191.6


Notes:

1/  1993 Figures are all estimates based on available monthly
data in October 1993.
2/ GDP at factor cost.
3/ Figures are actual average annual interest rates, not
changes in them.
4/ Merchandise Trade, Bank of Greece Data, Transaction basic.
5/ Customs Data (National Statistical Service of Greece).  1993
Figures cover January-May period.



1.  General Policy Framework

    Greece has been a member of the European Community (now the
European Union) since 1981 and enjoys a relatively open,
free-market economy.  The public sector constitutes 50 to 60
percent of gross domestic product (GDP), a substantial portion
of the total official economy.  It has a population of 10.3
million and a work force of about four million.  In 1992, the
official per capita GDP was $7,573.  Estimates put the
unrecorded economy at 30 percent of GDP.  Services, including
government services, are responsible for 59 percent of economic
output.  Agriculture constitutes 15 percent of GDP. 
Manufacturing and mining account for the remainder.  The
moderate level of development of Greece's basic infrastructure
-- road, rail, telecommunications -- reflects its middle-income
status.  Greece exports primarily light manufactures and
agricultural products, and imports more sophisticated
manufactured goods.  Tourism receipts, emigrant remittances,
shipping, and, increasingly, transfers from the EU form the
core of invisibles earnings.  Net EU inflows are running at $4
to $5 billion a year, five to seven percent of GDP.

    Current government economic policies have the objective of
meeting the targets of the Maastricht Treaty for EU Economic
and Monetary Union (EMU) and the provisions of the 1992 Single
Market.  The new government that took office on October 13,
1993 has pledged that it will continue efforts to lower
inflation to a single digit and to reduce the public sector
deficit, which is estimated at about 15.5 percent of GDP in
1993.  It also intends to sell minority share holdings of
certain state enterprises and organizations.  The ambitious
privatization program initiated by the previous government has
been scaled back substantially.  The new government will
concentrate its efforts on the continuation of fiscal restraint
with an incomes policy aimed at protecting the real income of
workers and maintaining growth.

    Greece's huge government deficit stems from past debts and
a bloated public sector which has many more civil servants than
an economy the size of Greece's can support.  Greece's 
social security program has also been a major drain on public
spending.  Finally, the state owns a number of loss-generating
companies.  The government passed in September 1992 a new bill
on social security intended to equalize expenditures with
receipts.  Deficits are financed primarily through treasury
bills.  Presently banks must put 15 percent of their deposits
into Treasury Bills; this requirement will be phased out by
January 1, 1994.

    New tax laws were passed on June 18, 1992 which introduced
substantial fiscal reforms to enable Greece to implement EU
taxation directives.  Changes included a lower tax rate for
middle and higher income brackets, a uniform and generally
lower tax rate for businesses, and legislation to broaden the
tax base and fight tax evasion.  Indirect tax measures in
August 1992 significantly increased tax revenue and put
government finances on a much stronger footing.  A new
investment incentives law, introduced in July 1990, redefines
the types of "productive investment" that qualify for
incentives.  The law puts greater emphasis on tax breaks and
reduces grants and loan-interest subsidies.

    Monetary policy is implemented by the Bank of Greece.  The
Bank uses the discount and other interest rates in its
transactions with commercial banks as tools to control the
money supply.  Reserve requirements are being gradually
reduced.  The Bank's policy includes a more active intervention
in the secondary money market and a phasing out of the direct
financing of the State.  Treasury bills are issued by the
Ministry of Finance but they are expected to  fall within the
monetary program prepared by the Bank of Greece.


2.  Exchange Rate Policy

    Greece has followed a relatively "strong drachma" policy
during 1993 as a means of holding down inflation.  Although the
Bank of Greece manages a gradual depreciation of the drachma,
the rate of depreciation has been close to the differential
between Greek inflation and the rates of Greece's principal
trading partners.  The Greek drachma does not yet belong to the
EU's Exchange Rate Mechanism.

    Foreign exchange controls have been progressively relaxed
since 1985.  Medium- and long-term capital movements for EU and
non-EU countries have been fully liberalized.  Operations in
securities by Greek residents in non-EU countries remain
restricted.  Controls still remain on short-term capital
operations (with a maturity of less than a year) with all
countries.  The controls are scheduled to be lifted on June 30,
1994.


3.  Structural Policies

    Greece's structural policies are largely dictated by the
need to comply with the provisions of the EU 1992 Single Market
and the Maastricht Treaty on Economic and Monetary Union.

    Pricing Policies:  The only remaining price controls are on
pharmaceuticals and some rents.  However, about one quarter of
the goods and services included in the consumer price index are
produced by state-controlled companies, and the government
retains considerable indirect control.  Government-set prices
and subsidies, e.g., public transport prices, distort the
economy, but they are not barriers to U.S. exports.

    Tax policies:  New tax legislation passed in June 1992:

--  Lowered the corporate tax rate to 35 percent, from a range
of 35 to 46 percent.  Corporate income taxes are levied on
profits before the distribution of dividends.  The new tax law
abolished the dividend tax.

--  Lowered the top personal income tax rate to 40 percent from
50 percent.

--  Set two principal value added tax (VAT) rates.  The lower
rate of eight percent is applicable to basic commodities
(mainly food products) and certain services; the higher rate of
18 percent is applicable to items not included in the lower
rate.  A former 36 percent rate for luxury goods was abolished
to conform to EU requirements.  (A four percent VAT applies to
periodicals and books.)

    Tax laws do not discriminate against foreign or U.S.
products.


4.  External Debt Management Policies

    Greece's public sector debt was recorded at 116 percent of
GDP in 1992.  However, when central government debt guarantees
and military debt are included, total state indebtedness is
probably closer to 125 percent of GDP, of which nearly one
third is owed to foreigners (about $30 billion at the end of
1992).  In spite of this large foreign exposure, however,
Greece's credit rating is, and is expected to remain, sound. 
Foreign debt does not affect Greece's ability to import U.S.
products.

    Servicing of external debt in 1992 (interest and
amortization) was equal to 133.8 percent of exports and 10.3
percent of GDP.  With no new net borrowing, Greece's external
debt service will be around $7.8 billion in 1993.  About
two-thirds of the external debt is denominated in currencies
other than the dollar.

    Greece has regularly serviced its debts and has generally
good relations with commercial banks and international
financial institutions.  It has not had an adjustment program
with the IMF or the World Bank.  In 1985, and again in 1991,
Greece borrowed from the EU.


5.  Significant Barriers to U.S. Exports

    Most barriers to U.S. exports are imposed by the EU.  Many
trade barriers to U.S. products have disappeared over the past
three years, but several Greek-specific barriers exist in
services in such areas as law, accounting, aviation, tourism,
and motion pictures:

--  Greece maintains nationality restrictions on a number of
professional and business services, including legal advice. 
These restrictions have been recently lifted for EU citizens.

--  Barriers also exist in accounting for non-EU citizens. 
U.S. accounting firms in Greece circumvent this barrier by
employing EU-country nationals as auditors (as of June 1992, 
citizens of EU countries have been allowed to perform auditing
in Greece).

--  Foreign air carriers may not sell ground services for
aircraft to other airlines.  This will soon change at least for
EU airlines.  The Greek flag carrier, Olympic, has a partial
monopoly to provide ground services to other airlines.

--  Greek residents are limited on the amount of foreign
exchange they may spend on personal travel to 2,000 ECUs per
trip ($2,300).

--  Greek film production is subsidized by a 12 percent
admissions tax on all motion pictures.  The government sets a
maximum price (currently $20,000) for the purchase of a film.

Investment barriers:

--  Both local content and export performance are elements
which are seriously taken into consideration by Greek
authorities in evaluating applications for tax and investment
incentives.  However, they are not legally mandatory
prerequisites for approving investments.

--  Greek tax authorities also continue in some cases to
withhold refunds on royalties, despite the U.S.-Greek bilateral
tax treaty and despite streamlined procedures put into place
January 1, 1990.  In some cases, Greek tax authorities have
ruled that a U.S. company has a permanent establishment in
Greece, thereby making the question of royalty refunds moot. 
The tax authorities then apply the withheld royalties against
tax liabilities arising from being declared a Greek
establishment.  Such action can only be overcome by waging a
protracted (up to six to eight years) court battle to prove
non-residency.  Consequently, some U.S. firms write off the 25
percent withholding on royalties as noncollectible and take the
deduction against their U.S. taxes.  In some recent cases,
refunds have been made.

--  U.S. and other non-EU investors receive less advantageous
treatment than domestic or other EU investors in (1) the
mineral sector, where restrictions continue to apply to non-EU
investors; (2) banking, where only 40 percent of the shares of
Greek state banks is open to non-EU residents; and, (3) land
purchases in border regions.

    Greek laws and regulations concerning government
procurement nominally guarantee nondiscriminatory treatment for
foreign suppliers.  Officially, Greece adheres to EU
procurement policies, and Greece has also recently joined the
GATT Government Procurement Code.  Greek willingness to join
the GATT Government Procurement Code is a positive step and
reflects the improvement in the procurement situation.  As a
result of the new Greek attitude, U.S. companies are finding it
easier to participate in tenders and a number of them are
winning sizable contracts.

    Some problems, however, still exist.  Included are
occasional sole sourcing (explained as extensions of previous
contracts), loosely written specifications which are subject to
varying interpretations, and allegiance of tender evaluators to
technologies offered by longtime, traditional suppliers.  The
real impact of Greece's buy national policy is felt in the
government's offset policy (mostly for purchases of defense
items) where local content, joint ventures, and other
technology transfers are stressed.


6.  Export Subsidies Policies

    The Greek government does not use any form of subsidies to
support exports.  Some agricultural products receive subsidies
from the EU.  Greece, as an EU member, is also a member of the
GATT Subsidies Code.


7.  Protection of U.S. Intellectual Property

    Greece is a member of the Paris Convention for the
Protection of Industrial Property, the European Patent
Organization, the World Intellectual Property Organization, and
the Berne Copyright Convention.  As a member of the EU, the
government intends to harmonize fully its laws with EU
standards.  Current Greek law extends equal protection for
patents and trademarks to foreign and Greek nationals.

    While intellectual property appears to be adequately
protected in the field of patents and trademarks, the same is
not true for copyrights.  Piracy of copyrighted products is
currently widespread in Greece.  Industry estimates are that 65
percent of video cassette rental transactions involve pirated
product.  Over 80 licensed and unlicensed television stations
frequently broadcast American movies and television programs
without authorization or payment of royalties.

    Greece took a major step toward addressing this problem by
enacting a new copyright law in February 1993.  This law offers
a high standard of protection for all copyrighted works.  Its
greatly increased penalties should serve as a deterrent, if
properly enforced.  Greece now has a powerful tool that the
government can use to substantially reduce copyright
violations.  The U.S. and Greece have agreed to an ambitious
enforcement of the new law.  The new law relies heavily upon a
new intellectual property office (OPI) to supervise
implementation.  This new office has not yet been established. 
How effective the law is will depend directly upon how well OPI
functions.  Due to the piracy situation, Greece was placed on
the USTR's "Watch List" under the "Special 301" provision of
the 1988 Trade Act.


8.  Worker Rights

    a.   Right of Association

    All Greek workers except the military and police may form
or join unions of their choosing.  The right of association is
set out in the constitution and in specific legislation passed
in 1978 and amended in 1982.  Unions are highly politicized,
with competing unions linked to political parties, but they are
not controlled by the parties or the government in their day to
day operations.  There are no constraints on serving as a union
official, and Greek unions are not restricted with regard to
making international contacts or joining international trade
union organizations.  Greek labor law prohibits laying off of
more than two percent of total personnel employed by a firm per
month.  This rigidity restricts the flexibility of firms and
the mobility of Greek labor.

    b.   The Right to Organize and Bargain Collectively

    The right to organize and bargain collectively was embodied
in legislation passed in 1955 and amended in February 1990 to
provide for mediation and reconciliation services as steps
prior to compulsory arbitration.  Antiunion discrimination is
prohibited, and complaints of discrimination against union
members or organizers may be referred to the labor inspectorate
or to the courts.  However, litigation is lengthy and
expensive, and penalties to employers are seldom severe.  There
are no restrictions on collective bargaining for private
workers.  Social security benefits are legislated by parliament
and are not won through bargaining.  Although civil servants
have no formal system of collective bargaining, they negotiate
their demands with the Ministry to the Prime Minister.

    c.   Prohibition of Forced or Compulsory Labor

    Forced or compulsory labor is strictly prohibited by the
Greek constitution and is not practiced.

    d.   Minimum Age of Employment of Children

    The minimum age for work in industry is 15 with higher
limits for certain activities.

    e.   Acceptable Conditions of Work

    Minimum standards of occupational health and safety are
provided for by legislation.  Although the Greek General
Confederation of Labor (GSEE) has characterized health and
safety legislation as satisfactory, it has also charged that
enforcement of the legislation is inadequate, citing statistics
indicating a relatively high number of job-related accidents in
Greece.  Inadequate inspection, outdated industrial plants and
equipment, and poor safety training of employees contribute to
the accident rate.

    f.   Rights in Sectors with U.S. Investment

    Although labor management relations and overall working
conditions within foreign business enterprises may be among the
more progressive in Greece, worker rights do not vary according
to the nationality of the company or the sector of the economy.



         Extent of U.S. Investment in Selected Industries

              U.S. Direct Investment Position Abroad
                on an Historical Cost Basis - 1992
                    (millions of U.S. dollars)

Category                                    Amount

Petroleum                                                 D
Total Manufacturing                                     129
    Food & Kindred Products                     D
    Chemicals and Allied Products              63
    Metals, Primary & Fabricated                0
    Machinery, except Electrical                0
    Electric & Electronic Equipment             D
    Transportation Equipment                    0
    Other Manufacturing                        28
Wholesale Trade                                          65
Banking                                                   D
Finance and Insurance                                     D
Services                                                  D
Other Industries                                          0

TOTAL ALL INDUSTRIES                                    429


(D)-Suppressed to avoid disclosing data of individual companies

Source:  U.S. Department of Commerce, Bureau of Economic
Analysis.

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