Athens News Agency: News in English (AM), 98-08-28

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From: The Athens News Agency at <http://www.ana.gr>

NEWS IN ENGLISH

Athens, Greece, 28/08/1998 (ANA)

MAIN HEADLINES

• Simitis-Clerides reaffirm common front, no postponement of S-300s
• Papantoniou says drachma not under direct attack
• Tsohatzopoulos dismisses latest Demirel claims
• Heightened Greek-Turkish trade, Ankara notes
• Greek stocks plunge 7.7 pct on financial turmoil abroad
• Greek drachma, bonds slump in fallout from international crisis
• Weather
• Foreign exchange

NEWS IN DETAIL

Prime Minister Costas Simitis used harsh language yesterday referring to the international community in relation to the Cyprus issue, saying "some had forgotten how the problem had arisen". He also reiterated Athens' commitment to defend the island repub lic in the event of a threat.

Mr. Simitis was speaking to reporters after a two-hour meeting with visiting Cyprus President Glafcos Clerides. The meeting was also attended by the the foreign and defence ministers of both countries.

A three-page joint communique issued after the end of the meeting stressed that the Cyprus problem was and remains one of invasion and subsequent illegal occupation. In addition, both Mr. Simitis and Mr. Clerides categorically stated that ther e had been no decision to postpone deployment of Russian-made S-300 anti-aircraft missiles on the divided island.

"The essence of the Cyprus problem has nothing to do with one kind of weapon or the other. It is a problem of invasion and illegal occupation," Mr. Simitis said.

On his part, Mr. Clerides said he was "completely satisfied" with the talks and welcomed in particular Mr. Simitis' statement that "any threat (against Cyprus) will be confronted jointly."

He added that the basic pursuit "is through peaceful means to find a just, viable and workable solution to the Cyprus problem," noting that "we are ready to resume the dialogue on the substance of the Cyprus problem".

The joint communique underlined that Greece and Cyprus fully backed efforts by the UN Secretary General to find a solution within the framework of Security Council resolutions and the summit agreements reached by the Greek and Turkish Cypriot sides in 1977 and 1979.

Both governments called on the international community to continue its efforts towards a resumption of inter-communal dialogue on Cyprus and the commencement of a dialogue on reducing arms and the divided island's demilitarisation. They also reiterated in the strongest terms that the defence and integrity of Cyprus was a fundamental right of the island republic's government and "Greece's duty". "The Greek government makes it clear to all that the (Greek and Cypriot) joint defence do ctrine is not restricted to defence planning. It constitutes a commitment on the part of Greece, the core of which is the Greek government's decision to defend Cyprus militarily in the event of a threat," the communique read.

Regarding Nicosia's plans to deploy the S-300 missiles, the communique stressed that neither government wanted friction or tension and that their only concern was "to strengthen Cyprus' defences in the face of Ankara's constantly increasing provocativen ess and extensive modernisation of Turkish weaponry in the occupied part of Cyprus".

The two sides also pointed out that the S-300 anti-aircraft missiles are purely defensive.

The communique also noted that Nicosia had put forward specific proposals for a gradual disarmament on the island with the ultimate aim of complete demilitarisation, "the adoption of which would prevent the creation of tension and help restore confidenc e".

Both Greece and Cyprus said they would not have any objection, "in principle", to a "guaranteed" military no-flight zone over the island, provided this was within the UN framework and was part of a procedure which would lead to gradual disarmament.

They also expressed disappointment once again at the continuing intransigence of the Turkish side, stressed in particular by Mr. Simitis in statements to reporters.

"It is just not possible for a UN member-state (Turkey) to object and refuse to accept a solution based on the rules of international legality in order for peace to be consolidated in the region," he said.

In terms of Cyprus' EU prospects, Mr. Simitis believed that negotiations should start during the current rotating EU Austrian presidency on issues which have been completed. The Greek PM said Cyprus' accession to the EU would constitute the key for a so lution to the Cyprus problem.

President Clerides left yesterday afternoon for Zurich on his way to Durban, South Africa, to attend the Non-Aligned summit.

Papantoniou says drachma not under direct attack

The Greek economy is not at the heart of the current upheaval in international markets, but is indirectly affected by the structural problems of the Russian and Asian economies, said National Economy Minister Yiannos Papantoniou during a press conference yesterday.

The minister stressed that the reason behind the flurry of sales of Greek state bonds by major foreign investors was their desire to liquidate gains to cover losses in Russia and the Far East.

He also noted that there was no direct "attack" against the national currency.

According to the data provided by Mr. Papantoniou, there was an outflow of 240 million German marks yesterday, after Wednesday's outflow of US$1.5 billion.

This was a definite improvement, he noted, but all would depend upon the developments in the international markets in the near future. Regarding the stock market the minister said that yesterday's decline was a natural outcome of the internatio nal upheaval, while noting that interest rates remained under control.

Mr. Panantoniou stressed that the government and the Bank of Greece followed developments closely, taking all appropriate measures. Such moves included yesterday's repurchase of Greek state bonds worth 100 billion drachmas by the finance minist ry and today's pla-nned absorption of liquidity throu-gh swaps by the Bank of Greece.

Furthermore, the government will continue its monetary policy, which aims at preserving the current 4.5 per cent appreciation of the drachma in relation to the 357 parity to the Ecu, which was set when the Greek currency entered the Exchange Rate Mechan ism in March. Finally, the minister stressed that the government would continue its austere fiscal policy and would focus on the speeding up of privatisations, which might be delayed in case the international crisis is prolonged.

Tsohatzopoulos dismisses latest Demirel claims

National Defence Minister Akis Tsohatzopoulos yesterday dismissed statements made on Wednesday by Turkish President Suleyman Demirel, who openly disputed Greek sovereignty of 132 islets in the Aegean.

Mr. Tsohatzopoulos called the Turkish president's comments "repetitions without substance".

He was speaking to reporters after a half-hour meeting with several visiting US Congressmen and the chairman of Congress' Greek-American Friendship Committee, US Rep. Michael Bilirakis.

The Greek minister added that there was "nothing to negotiate" in the Aegean, while international law and international conditions "clearly set out the status quo in the Aegean".

Mr. Demirel said in an interview with the Turkish daily "Hurriyet", published Wednesday, that "there are 132 rocky outcroppings or islets in the AegeanIwhich belong to us".

On his part, government spokesman Dimitris Reppas replied on the same day by describing Turkish foreign policy and the Demirel statement as "fossils from the past".

Heightened Greek-Turkish trade, Ankara notes

The Turkish external trade bureau announced yesterday that the volume of Turkey's external trade with Greece in 1997 increased by 39.8 per cent.

According to figures, Turkish exports to Greece increased from US$ 236.4 million to $298 million, an increase of 26.1 per cent, while imports from Greece increased by 51.2 per cent, from $285 million in 1996 to $430.7 million.

The share of industrial exports to Greece increased from 67.5 per cent to 74.9 per cent, while the export share of agricultural and mineral products decreased from 17.1 per cent to 15.3 per cent, and from 15.4 to 9.9 per cent, respectively.

The trade balance shows surplus in favour of Greece of $132.6 million.

Greek stocks plunge 7.7 pct on financial turmoil abroad

Greek equities nosedived yesterday badly hit by a major crisis in international markets to end drastically lower in active trade near the daily eight percent lower volatility limit.

The general index ended 7.70 percent, or 190.42 points down at 2,281.33 points, its lowest level since mid-April. Turnover totalled 76.2 billion drachmas. Traders said a wave of blue-chip selling in banks and industrials, mainly by American funds, h it the Greek market, pushing the many of share prices to the daily 8.0 percent limit down.

Dealers said a lack of buying interest inflated losses in the market, with numerous sell orders remaining unexecuted.

Sector indices all suffered heavy losses. Banks plunged 7.97 percent, Insurance fell 3.94 percent, Investment dropped 7.82 percent, Leasing ended 8.0 percent off, Industrials fell 7.58 percent, Construction dropped 7.68 percent, Miscellaneous ended 8.0 percent down and Holding declined 6.84 percent.

The parallel market index for small cap companies dived 7.17 percent. The FTSE/ASE 20 index plumeted 7.99 percent to 1,373.68 points.

Broadly, decliners led advancers by 237 to 14 with another 3 issues unchanged.

Greek drachma, bonds slump in fallout from international crisis

Greek markets remained under pressure yesterday with the drachma sliding further against most foreign currencies and bond prices losing substantial ground.

Traders said, however, that capital outflows were significantly curtailed to total 250 million US dollars, and the drachma's decline had slowed.

The drachma fell by 0.77 percent against the dollar. The Greek currency was 0.60 percent off versus the DMark and 0.76 percent lower against the Ecu.

Bond prices were badly hit again as foreign institutional investors continued liquidating their long-term positions in the Greek bond market in a bid to cut their losses in Russian bonds and other emerging markets.

Interbank rates rose further with the Athibor rate increasing to 21.5 percent. The finance ministry auctioned the repurchase of fixed-rate bonds, a move aimed at defending the country's bond market from external pressure.

The auction included seven-, 10- and 15-year bonds totalling 100 billion drachmas.

Settlement dates are August 28 for bonds with duration of seven and 15 years, and September 1 for 10-year bonds.

WEATHER

FOREIGN EXCHANGE

(L.G.)

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