Athens News Agency: News in English (AM), 98-12-08

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

NEWS IN ENGLISH

Athens, Greece, 08/12/1998 (ANA)

MAIN HEADLINES

• Simitis-Schroeder talks focus on `Agenda 2000` financing
• Central bank to cut intervention rates this week, minister says
• Stocks jump as market players discount lower interest rates
• Panafon to join bourse's FTSE/ASE-20 index
• National Bank of Greece chief sees EMU entry close at hand
• NAPC lays-off entire workforce
• EU foreign ministers' council agree on text for Vienna summit
• Russia's Zyuganov due in Athens
• Thessaly-area farmers gear for mobilisations
• Weather
• Foreign exchange

NEWS IN DETAIL

Prime Minister Costas Simitis met in Bonn yesterday with German Chancellor Gerhard Schroeder, with both men agreeing there was a difference in opinion between the two states over the issue of EU financing for 'Agenda 2000'.

However, in statements to the press following Mr. Simitis' meeting with the new German chancellor, both men said that they would deal with the problem "in a spirit of mutual understanding, with all eyes trained on the future and with the goal of succeed ing in reforms to the EU".

Greece and Germany differ on the issue of funding for the EU's 'Agenda 2000' programme of budget and spending policy reforms.

Athens is opposed to a proposal for a freeze of funds for 2000-2006 and spending cutbacks for economic and social cohesion to allow poorer countries to catch up with wealthier EU partners.

Mr. Simitis said that Greece, given its position on the "last step on the EU ladder", insisted on the policy underpinning the social and economic cohesion funds.

Mr. Schroeder said he understood the existence of diverging interests, and admitting that the German EU presidency's work on 'Agenda 2000' was "particularly difficult".

Germany takes over the rotating presidency of the European Union on Jan. 1, 1999 and will preside over talks on budgeting, expected to conclude in March.

Regarding Turkey's status vis-a-vis accession to the European Union, Mr. Schroeder said it took the Copenhagen summit criteria on Turkey's bid to join the EU "seriously". The Copenhagen summit said Ankara needed to work on human rights and democratic ref orms and relations with its neighbours before it could be considered for accession. The decision has strained relations between Ankara and the 15-member EU.

"We want to exercise the policy which the EU has been applying towards Turkey for years. We are not of the opinion that the EU is a religious community, namely, a community based on religion, but we are of the opinion that the EU is a community of values, a community starting from the common conception of these values.

"Human rights is an issue which plays, according to our views, a leading role. Europeans decided in Copenhagen what is included in these values, such as torture not to take place and human rights to be safeguarded in their wider sense. When these precon ditions are fulfilled, then the door to Europe must also be open for Turkey. Therefore, it is up to Turkey whether it will fulfill these preconditions or not," Mr. Schroeder said.

The German chancellor said that in light of the European Union summit this Friday, Germany would not seek an upgrading of Turkey's status to equal candidate member.

"There is no such issue," Mr. Schroeder said.

"On the question of the Vienna summit, allow me to say that both of us (Mr. Schroeder and Mr. Simitis) agree that no decisions concerning enlargements will be taken there, or with regard to the circle of candidate countries. In this sense, the principles which we consider correct are harmonised with the principles applied by the EU in general," he added.

On Athens' standing claim for a repayment of a wartime loan forcibly extracted from the Greek central bank, Athens received no joy: Mr.Schroeder told the Greek prime minister that the new government would continue the policy on this issue forged by its predecessors and that it was not about to "open a chapter" on paying compensation to victims of the Nazi occupiers in Greece or the repayment of the loan.

"We see no possibility of reopening this issue. Given the contractual relations (the relations between the two countries which are determined by treaties and agreements), as well as friendly relations which have developed between our countries, we consi der this issue closed. We discussed this and I took into consideration that my Greek colleague raised this issue," Mr. Schroeder said.

The German chancellor said he had accepted an invitation from Mr. Simitis to visit Greece extended to then-chancellor Helmut Kohl during Simitis's visit to Bonn in 1997.

He said he expected to visit Greece on the completion of the German EU presidency in June 1999.

His visit will be the first visit to Greece by a German chancellor since Helmut Schmidt 23 years ago when Constantine Karamanlis was premier of Greece.

Central bank to cut intervention rates this week, minister says

National Economy and Finance Minister Yiannos Papantoniou said yesterday that the central bank would nudge down its money market intervention rates this week, accelerating the decline in the second half of 1999.

The government endorsed the Bank of Greece's conservative policy of a gradual drop in rates to keep pace with the rate of decline of underlying inflation, Mr. Papantoniou said.

Rates would continue to fall, but the decline would be more abrupt in the second half of 1999.

The rate cut later this week was the result of consultations between the central bank and the government, said Mr. Papantoniou, addressing the opening of a conference on the economy held by the Hellenic-American Chamber.

The Bank of Greece's weekly intervention generally takes place on a Wednesday.

He expressed optimism that the economy would meet targets for entry into European economic and monetary union (EMU), saying that the goal was realistic of lowering inflation to 4.0 percent by the end of the year, and then to 2.0 percent by the end of 1999.

In addition, the government's attainment of its targets had boosted the economy's credibility abroad.

International investment houses were taking the country's EMU entry for granted and recommending to their clients to purchase domestic state securities.

"It is already time to start thinking about the post-EMU entry period," Mr. Papantoniou said.

The state's net revenue from privatisation in 1998 was 700 billion drachmas, or two percentage points of GDP.

The first cycle of structural change in the economy had been successfully completed as 13 of 22 moves promised by the government after the drachma's devaluation in mid-March had been effected, Mr. Papantoniou said.

The government's reforms aimed to improve infrastructure, create a more flexible labour market, modernise the capital market and reform the public sector.

Mr. Papantoniou also said that the government's privatisation programme was proceeding as planned, except for Ionian Bank and Hellenic Duty Free Shops, both of which would be sold early in 1999.

Conceding that the new German government had toughened its position on EU cohesion fund monies to Greece in the European Union's Agenda 2000 negotiations, he pointed out that the fellow EU member had much to gain from award of the financing.

The minister cited as an example a new international airport for Athens being built by Hochtief of Germany, saying that much of EU funding for the airport was being channeled back to Germany.

Greece and other southern EU member states would wage a tough battle to avert a reduction of monies in the EU's Third Community Support Framework (CSF) being drafted from the Second CSF.

"Our policy is steady, we are cool-headed, and we shall use all available weapons if necessary," Mr. Papantoniou said, adding that Greece would not hesitate to use its right of veto to block EU enlargement.

The matter was critical for Greece as its economy would not be able to achieve true convergence after EMU entry without those funds, he said.

For Third CSF funds, private capital would be sought for most major projects. Eighty percent of Second CSF projects would be completed by end- 1999.

Finally, Mr. Papantoniou assured that the resignation of the managing director of listed Hellenic Telecommunications Organisation did not signal any change in policy, and his successor would retain the same policy of international expansion and modernisation.

He also said that a strategic investor in ailing national carrier Olympic Airways would be found by March 1999.

Stocks jump as market players discount lower interest rates

Equities surged on the Athens Stock Exchange yesterday discounting a drop in the central bank's money market intervention rate this week, which in turn would signal cuts across the board by commercial banks.

The general index ended 4.12 percent higher at 2,570.73 points, sprinting through resistance at 2,500 points.

Trade was heavy with turnover at 83.9 billion drachmas and 14,782,000 shares changing hands.

Demand was strong for banking stocks, which gained 6.44 percent.

The day's close was the highest since August 26, and the market has gained 73.7 percent since the beginning of the year.

The FTSE/ASE-20 blue chip index gained 4.93 percent to finish at 1,606.73 points.

The parallel market for smaller cap stocks closed 2.03 percent higher.

Sector indices recorded gains across the board.

Of 263 shares traded advances led declines at 212 to 33 with 18 unchanged.

Panafon to join bourse's FTSE/ASE-20 index

Panafon, the mobile phone operator that made its trading debut yesterday, is to enter the FTSE/ASE-20 index for blue chips and heavily traded stocks, the Athens Stock exchange said.

The share, which gained 26 percent in heavy trade, will join with a 15 percent free float on January 7, ASE said in a statement.

The decision was based on the fact that Panafon's equity has a wide share distribution and its market capitalisation represents more than 1.5 percent of the index's capitalisation, the statement said.

The stock to leave the index in order to make way for Panafon will be announced on January 5, it said. The loser will be the share with the lowest market value on the index.

National Bank of Greece chief sees EMU entry close at hand

Greece is on the verge of attaining economic targets that will allow entry into European economic and monetary union by January 1, 2001, National Bank of Greece governor Theodoros Karatzas said yesterday.

"We are a stone's throw away from meeting EMU entry criteria," Mr. Karatzas told a conference on the economy held by the Hellenic-American Chamber.

Mr. Karatzas also pointed out that the stock market had made a healthy contribution to the economy.

The Athens Stock Exchange's capitalisation at the end of October stood at more than 58 billion dollars despite a global financial crisis that battered markets, up from 34.7 billion dollars at the end of 1997.

The Athens bourse had also posted a higher rate of growth than other markets in Europe and worldwide, Mr. Karatzas said.

He said both increases in quality and quantity were needed for the capital market, which would aid the economy to mature further.

NAPC lays-off entire workforce

North Aegean Petroleum Co. (NAPC) yesterday forwarded termination notices to its entire workforce, sparking vehement protests among the 400 employees at the Prinos off-shore oilfield in the northern Aegean.

The notices were sent despite Labour Minister Miltiadis Papaioannou's pledge two days earlier that the government was willing to contribute 700 million drachmas to help fund voluntary retirement for around 70 workers.

Citing financial woes and low production, NAPC said it would close its installations, located off the northern Aegean island of Thassos and southeast of the town of Kavala, if workers persisted in rejecting the plan to lower operating costs by 30 per cent.

EU foreign ministers' council agree on text for Vienna summit

The council of European Union foreign ministers reached an agreement in Brussels late last night on conclusions that the "15" will forward to the EU Vienna summit, scheduled for this weekend. Alternate Foreign Minister George Papandreou, who represented Athens, said that the final draft is satisfactory for Greece, as it differentiated between Turkey and other EU candidate-countries of central and eastern Europe and Cyprus. The last amendment agreed upon in the text was that a separate paragraph was used for the 11 candidate-countries and another for Cyprus.

The final communique mentions that the FMs' council underlines that Ankara should make special efforts to establish a democratic society in accordance with the Copenhagen summit criteria and other EU council conclusions.

Russia's Zyuganov due in Athens

The president of the Russian Communist Party's central committee, Gennady Zyuganov, will visit Athens tomorrow and Thursday at the invitation of the Communist Party of Greece (KKE).

Mr. Zyuganov will meet with leading KKE officials, and other political figures during his visit. He will hold a news conference on Thursday.

Thessaly-area farmers gear for mobilisations

The government's policy on the issue of agriculture is one of working out problems through dialogue, acting government spokesman Nikos Athanassakis said yesterday, ahe-ad of a planned protest by farmers today. Thousands of farmers, mainly from central and northern Greece are expected to attend today's rally in Larissa to protest the government's agricultural policy and to press demands.

Mr. Athanassakis told reporters that Agriculture Minister George Anomeritis had not rejected any meeting with the farmers, saying reports to the contrary were "a misunderstanding".

"Mr. Anomeritis has begun wide-ranging talks with all agencies in the agricultural community, both established and otherwise. The door is open," he said.

The spokesman admitted there were issues in the sector that needed resolution and that the government was applying policy on a case-by-case basis, in line with the provisions applicable for the European Union and domestically.

"They don't need to take the most dissatisfying course (blocking national roads). We hope that these protests will not be disruptive to others," he said.

Large-scale protests by farmers last year - against new tax laws, in support of demands for cheaper fuel and higher prices for their products - caused unprecedented chaos in Greece, hampering road and rail transport between the north and south, preventing lorries from delivering vital supplies and on occasions forcing factories to shut down due to shortages of fuel and raw materials.

Hundreds of farmers and more than 70 tractors rallied in the central town of Farsala, near Larissa, in early November, to warn the government they were prepared to block roads again this year if their demands were not met.

The rally was organised by the Federation of Farming Associations, with the support of the Thessaly Coordinating Committee, the force behind extensive farmers' protests last year.

Farmers are now demanding a higher production ceiling for cotton crops and government intervention in Brussels to prevent what they claim will be a 30 per cent reduction in cereal crop prices this year if the European Union does not alter its regulations.

WEATHER

FOREIGN EXCHANGE

(L.G.)

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