Greece

Originally published: Mar-31-2010

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Official Name: Helenic Republic

Internet Domain: .gr
International Dialing Code: +30
Time Zone: UTC + 02:00

Table of Contents

Location and Size

Greece is located in Southern Europe, bordering the Aegean, Ionian and Mediterranean Seas between Albania and Turkey. It is approximately the size of the US state of Alabama -- area: 131,957 sq. km. (51,146 sq. mi.)

Government

Parliamentary republic with three branches:

• Executive: President Karolos Papoulias, head of state; Prime Minister George Papandreou, head of government.
• Legislative: 300-seat unicameral Parliament
• Judicial: Supreme Court

Legal System

Greece’s legal system is based on codified Roman law. The judiciary is divided into civil, criminal, and administrative courts. Greece has accepted compulsory International Court of Justice (ICJ) jurisdiction. (What does this mean?)

People

• Population: 10,737,428 (July 2009 est.)
• Population growth rate: 0.127% (2009 est.)
• Languages: Greek 99% (official), other 1% (includes English and French)
• Literacy: 96% (2001 census)
• Ethnic Make-up: Greek 93%, other (foreign citizens) 7% (2001 census - percents represent citizenship, since Greece does not collect data on ethnicity)
• Religions: Greek Orthodox 98%, Muslim 1.3%, other 0.7%

Economy

Greece became the 10th member of the European Union in 1981 and adopted the euro in 2002. The economy depends heavily on tourism and other service industries, which account for more than 73% of GDP.

Greece has a capitalist economy with the public sector accounting for about 40% of GDP and with per capita GDP about two-thirds that of the leading euro-zone economies. Tourism provides 15% of GDP. Immigrants make up nearly one-fifth of the work force, mainly in agricultural and unskilled jobs. Greece is a major beneficiary of EU aid, equal to about 3.3% of annual GDP.

Between 1997-2007 Greece averaged 4% GDP growth, almost twice the EU average. As with other European countries, the financial crisis and resulting slowdown of the real economy have taken their toll on Greece’s rate of economic growth which fell -3.4% in 2009.

Key economic problems in Greece include a growing government deficit and increasing public debt. The EU recently placed Greece under its Excessive Deficit Procedure and has asked Greece to bring its deficit back to the 3% EU ceiling in 2010.

Almost 9% of the world’s merchant fleet is Greek-owned, making the Greek fleet the largest in the world.

• Currency: Euro (EUR)
• Leading Markets (2008): Italy 11.5%, Germany 10.5%, Bulgaria 7.1%, Cyprus 6.2%, US 5%, UK 4.7%, Romania 4.4%
• Leading Exports-commodities: food and beverages, manufactured goods, petroleum products, chemicals, textiles
• Leading Suppliers (2008): Germany 12.1%, Italy 11.7%, Russia 7.4%, China 5.6%, France 5.1%, Netherlands 4.7%
• Leading Imports-commodities: machinery, transport equipment, fuels, chemicals
• Top Industries: tourism, food and tobacco processing, textiles, chemicals, metal products, mining, petroleum
• Top Agricultural Products: wheat, corn, barley, sugar beets, olives, tomatoes, wine, tobacco, potatoes; beef, dairy products

News on Greece’s Economic Climate
(from www.gtnews.com)

The fallout from the Greek financial meltdown has thrown up two intriguing headlines. First, the European Commission (EC) has said that it might look at setting up a regional version of the International Monetary Fund (IMF) to provide support to perceived frailty in the eurozone - something that Greece's financial woes have rather publically exposed. The German Chancellor, Angela Merkel, hinted that she'd be in favor of such a body, referring to it as "a good and interesting idea." However, the political instruments required to establish anything like a European Monetary Fund don't current exist, and so a new European treaty would be required to bring this into being.

Key among the latest problems Greece is facing, according to the Greek Prime Minister, George Papandreou, is the role that international speculators are playing in driving down the Greek economy. Papandreou has appealed for help from the US in this regard, asking them to impose stricter regulations on hedge funds and currency traders. "Unprincipled speculators are making billions every day by betting on a Greek default," said Papandreou.

US Secretary of State, Clinton, for one, appears to agree, saying that there is a need for regulators to attend to the "unregulated financial market that globally moves money at the speed of sound, if not light, and leaves in its wake all kinds of consequences that governments have to contend with." Whether this comes in the form of self-regulation, or by sanctions imposed from the regulator, remains to be seen.

Economic Indicators

Note: there are no import/export stats as the sources I consulted showed radically different values.
(e) estimate (f) forecast

Comparative Economic Indicators - 2009

* PPP – Purchasing Power Parity

Credit and Collections

Payment Practices in Greece

Bills of exchange are widely used by Greek companies in domestic and international transactions and, along with promissory notes, are not subject to stamp duty (since 2002). In the event of payment default, a protest certifying the dishonored bill must be drawn up by a public notary within two working days of the due date.

Checks are still widely used in international transactions. In the domestic business environment, however, checks are customarily used less as an instrument of payment than as a credit instrument. Post-dated checks endorsed by several creditors therefore represent common and widespread practice. Issuers of dishonored (bounced) checks may be liable to prosecution provided a complaint is lodged.

Promissory letters are another means of payment widely used by Greek companies in international transactions. Issued to the creditor by the customer's bank, these are a written acknowledgement of an obligation to pay the creditor at a contractually fixed date. Although promissory letters are a sufficiently effective instrument, in that they constitute a clear acknowledgement of debt on the part of the buyer, they are not deemed a bill of exchange, and so fall outside the scope of the "exchange law".

SWIFT bank transfers, well established in Greek banking circles, are used to settle a growing proportion of transactions, and offer a quick and secure method of payment.

Debt Collection

The recovery process begins with the creditor sending the debtor a final demand for payment by recorded delivery mail. The final demand should include any contractually agreed interest penalties or interest penalties accruing at the legal rate of interest. Under a presidential decree, interest is due from the day following the date of payment stipulated in the invoice or commercial agreement. Payment is to be calculated at a rate equal to the European Central Bank's refinancing rate, unless the parties agree otherwise, plus seven percentage points.

Creditors may seek an injunction from the court to pay via a lawyer under a fast-track procedure. This takes about one month from the date of the petition. To qualify for an injunction, the creditor must possess a written document substantiating the claim underlying his lawsuit. This can be an accepted and protested bill, an unpaid promissory letter or promissory note, an acknowledgement of debt established by private deed, an original invoice summarizing the goods sold and bearing the buyer's signature certifying receipt of delivery, or the original delivery slip signed by the buyer.

The ruling issued by the judge allows immediate execution, subject to the defendant's right to lodge an objection within 15 days. To obtain suspension of execution, the debtor must petition the court separately.

A "justice of the peace" hears claims up to EUR 12,000. A court of first instance, presided by a single judge, hears claims not exceeding EUR 80,000. A panel of three judges hears larger claims.

Where creditors do not have written and clear acknowledgement of non-payment from the debtor, or where the claim is disputed, the only alternative is to obtain a summons under ordinary proceedings. Such litigation can take a year or more to finalize.

Dispute Resolution

Greece accepts binding international arbitration of investment disputes between foreign investors and the Greek State. Foreign firms have found satisfaction through this arbitration. International arbitration and judgments by the European Court of Justice supersede local court decisions.

Greece has an independent judiciary. The judicial system provides for civil court arbitration proceedings for investment and trade disputes. However, the court system is a time-consuming means for enforcing property and contractual rights, and foreign companies report that Greek courts do not always provide unbiased and effective recourse.

Greece is a signatory 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.

Foreign court judgments are accepted and enforced, however slowly, by the local courts.

Risk Assessment

In late 2009, eroding Greek finances prompted major credit rating agencies to downgrade Greece's international debt rating. This has led to increased financial instability.

Coface Country Rating: A3 -- Changes in generally good but somewhat volatile political and economic environment can affect corporate payment behavior. A basically secure business environment can nonetheless give rise to occasional difficulties for companies. Corporate default probability is quite acceptable on average.

Coface Business Climate Rating: B2 -- The business environment is good. When available, corporate financial information is reliable. Debt collection is reasonably efficient. Institutions generally perform efficiently. Intercompany transactions usually run smoothly in the relatively stable environment rated A2.

Ducroire Delcredere Political Risk Rating: 1 – lowest risk (1-7)
Ducroire Delcredere Commercial Risk Rating: C – highest risk (A, B, C)

Business Climate

Greece, as 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. Greece is actively positioning itself as a hub for Balkan trade.

The Greek economy has been gradually transforming in ways that improve flexibility and openness, but progress has been slow. Privatization has reduced the state’s dominant role in the economy, and the overall entrepreneurial environment has been enhanced by implementation of a more competitive corporate tax rate and more efficient regulation.

Foreign Trade Zones: 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 in without payment of customs duties or other taxes and remain free of all duties and taxes if subsequently transshipped or re-exported. 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. 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 paid every six months.

Transparency of 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. Greece's economy continues to be hampered by extensive government regulation and many international corporations state that bureaucracy remains the number one impediment to doing business in Greece.

Intellectual Property: Implementation and enforcement of copyright protections are not rigorous. As a result, intellectual property problems continue in Greece despite its membership in 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.

Greece lags in the implementation of enforcement of intellectual property rights (IPR). 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 in 2008 and 2009.

Audiovisual, music, and software industries bear the brunt of IPR violations in Greece. This is likely to rise with increased penetration of the internet. Unlicensed sharing of a licensed copy among multiple computers is the largest problem for the software industry, while street vending of DVDs and CDs is a common practice.

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, US companies believe the importation and sale of counterfeit products may be increasing.

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.

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

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.

Corruption: Although the Greek government has been energetically prosecuting corrupt judges and attorneys in the last few years, problems with corruption still exist. Greece ranked 71st in the 2009 Transparency International Corruption Perception Index, down from the 57th position in 2008. The 2009 score reflects insufficient levels of anti-corruption enforcement, lengthy delays in the judicial process and systemic weaknesses which have resulted in a number of recent corporate corruption scandals.

Economic Freedom: Greece’s economic freedom score is 62.7, making its economy the 73rd freest in the 2010 Index of Economic Freedom. Its overall score has improved by 1.9 points from last year, reflecting better scores in five of the 10 economic freedoms. Greece is ranked 34th out of 43 countries in the European region, and its overall score is above the world average.

Political Unrest: Currently, the Greek Government is under intense pressure by the EU and international lenders to implement a medium-term austerity program that includes cutting government spending, reducing the size of the public sector, and reforming the labor and pension systems. Athens, however, faces long-term challenges to push through reforms unpopular with the country's powerful labor unions and the general public. Greek labor unions are prepared to strike over new austerity measures and continued widespread unrest could lead to rioting or violence.

Although terrorist attacks still remain below their peak levels in the 1980s, the potential for political violence still exists.

For more detailed information on these topics, visit the 2009 Investment Climate Statement – Greece , the U.S. Department of State.

Business Protocol

Relationships are the linchpin of business dealings in Greece as Greeks prefer to do business with those they know and trust. Nepotism is not viewed negatively.

Business Cards: Have business cards and other printed material in both English and Greek.

Business Attire: Business dress is similar to that in most of Europe. Men wear dark colored, conservative business suits. Women wear either business suits or tasteful dresses, preferably in dark or subtle colors.

Names and Titles: Greeks are more formal with names than some other countries. First names are used only among friends and close business contacts. The head of an office will typically be addressed using the title of Mr. and his last name. It is best to be more formal when first meeting. Even when first names are used, Greeks may add a title such as Mr. or Mrs. before a first name as a sign of respect.

Conversation: Some business people speak English; however, it is a good idea to hire an interpreter. The Greek style of conversation is loud and often emotional. It has been said that Greeks live their lives with an exclamation point!

Gifts: Bringing small gifts with a company logo is appropriate and appreciated– although not required in the first meeting.

Meetings: Greeks prefer face-to-face meetings rather than doing business by telephone or in writing. Appointments are necessary. During the first meeting your Greek business colleagues will want to get to know something about you as a person. The second meeting is used to develop trust and mutual respect. By the third meeting, business may begin.

Negotiations: Forming a personal relationship is critical to developing a successful business relationship. Companies are hierarchical. Greeks respect age and position. Business is conducted slowly. Decision making is held at the top of the company. Imposing a deadline on reaching a decision may end the negotiations.

It is recommended that a local partner, or lawyer, be found to assist in any negotiations. This is important not only for the legal issues, but also as the Greeks place great value in knowing with whom they are working.

Acceptable Public Conduct: Never say or do anything that can be construed as challenging the honor or integrity of a business colleague. Under no circumstances should you publicly question someone's statements.

Articles of Interest on Greece

Eurogroup discusses financial assistance for Greece, should it be needed, Europa EU News, March 15, 2010

Prime Minister Papandreou’s statements following his meeting with U.S. President Obama, Embassy of Greece, March 9, 2010

Greece on the skids by Nikos Hidiroglou, February 2010 issue of Chronicles

Free Resources for information on doing business in Greece

Doing Business in Greece, Invest in Greece Agency

Embassy of Greece, Washington, DC

Invest in Greece Agency – Doing Business

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Greece. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Economic Indicators: Variety of sources including the CIA World Factbook, Coface Country Rating, Economist Country Briefings, Federation of International Trade Associations (FITA) Country Profiles.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

Historical Exchange Rates: OANDA.com The Currency Site.