15 April, 2008
Ladies and Gentlemen,
Thank you for being here today. This year, for the first time, the Foreign Ministry is presenting a report on last year’s economic diplomacy activities and our programme for 2008. This initiative serves two purposes: The first is to keep the business community informed so that we can optimise coordination of our activities with the business initiatives being undertaken by Greek companies active abroad. The second is to fine tune our actions to meet the specific needs and priorities of Greek enterprises; particularly those needs and priorities arising from where these companies are based, as in your case. And this is the main reason why we decided to hold this separate event here in Thessaloniki, for northern Greek enterprises. We want to re-establish an open line of communication with businesses active abroad, as being active abroad is obviously a dire necessity for growth in northern Greece.
Shaping relations of friendship, peace and cooperation – political relations, that is, with our immediate neighbourhood and all the countries of the world – is the central mission of every Foreign Ministry. It is a mission that of course has positive economic results, whether because it reduces defence spending, or because it creates a political environment conducive to economic cooperation.
As you will have gleaned from the news in recent days, the political mission of our Ministry is the focus of attention, as important foreign policy issues and major developments in the wider region are at a critical turning point. In spite of this, we are continuing with the purely economic part of our mission with the same intensity that has characterised our work throughout recent years. Our being here today is not the only proof of this. Our manifest dedication to economic diplomacy is clear from the fact that since the beginning of the year, several major business missions have already been carried out. One to Turkey, in tandem with the Prime Minister’s visit; one to Syria, and to Syria, on the initiative of the competent Deputy Foreign Minister, Mr. Doukas; and one within the framework of my visit to Algeria. The latter was, in fact, the first to this important north African country.
I would like to talk to you about the new philosophy with which the Ministry is now approaching economic diplomacy and the role that I believe it plays in the overall success of the externalization policy the government has been following since 2004.
In the current international economic environment, externalization is truly vital to the survival of the Greek economy. The time is gone when our growth was based on increasing demand in our domestic market – whether through high lending (state or private) or steadily increasing European funding. Household lending – particularly for the construction of new homes – is no longer increasing at the explosive rates of recent years, and is gradually approaching the European average for percentage of GDP. EU funding will remain significant in the coming years, thanks to effective negotiation on the part of the government for the fourth CSF and much greater absorption than in the past of co-funded projects. But as of next year, inflow from the Union will no longer increase as a percentage of GDP, and at some point it will inevitably start to fall.
Thus, today we have to seek new sources of growth, which necessarily have to originate abroad: exports, foreign investment and internationalization of our enterprises. And we have to do this within the context of constantly growing international competition and at a time when the global economy, after a long growth cycle, is very likely entering a slow-down.
Realising the importance of externalization, the government put particular emphasis on it as soon as it took office in 2004. And the government is well aware that there are two basic tools for achieving the goal of externalization: competitiveness and economic diplomacy.
Economic diplomacy lays the groundwork. But it is not enough in and of itself. Because subsequent competitiveness determines the real growth potential of externalization. And the key to competitiveness is progress on the structural reforms that are at the heart of the government’s economic policy.
The structural reforms – progress on the implementation of which is at a critical turning point today – are the key area where the long-term course of our economy will be decided. This is a major challenge that has been undertaken by the government; a challenge that we are all resolved to meet. Because it is a challenge that concerns not only the success of the government and realisation of the expectations of the party that supports the government; it concerns first and foremost the course of the country and ensuring the prosperity of the Greek people.
If we lived in an ideal world for economists – and I’m not at all sure that would be the best possible world for everyone else – competitiveness would be enough to determine our performance with regard to externalization. But our world is complex. There are nearly 200 separate states with different tariffs, taxes, regulations, bureaucracies and, of course, different levels of political risk.
So there are many other factors that bear upon the success of externalization. In many markets – particularly outside the EU, and above all in the services sector – economic diplomacy plays an important role in attracting foreign investment and internationalizing Greek enterprises.
Economic diplomacy is important in many areas:
1. In creating the right political climate and corresponding institutional framework for facilitating economic transactions, in an era when globalization necessitates the ability to penetrate the markets of foreign states in every part of the globe.
2. In providing the necessary information. I’m not referring here to general economic information that one can find via an Internet search engine. I am referring to reliable, detailed and objective information on specific enterprises and markets, which presupposes a good knowledge of the local market – knowledge that individual businesses cannot have of all the markets in the world.
3. In facilitating networking among our enterprises – particularly businesses that are active in the services sector, where personal relationships and contact between individuals play a vital role in achieving successful results.
4. In promoting our country with the aim of attracting investment capital.
5. In providing practical support for Greek enterprises that are active in foreign markets when they come up against bureaucratic problems, unfair competition or ill treatment from the local authorities. This support is given at the appropriate official or political level and in the manner proper to the given circumstances.
Our intensification of economic diplomacy – in particular, our focus on fast-developing countries outside the EU and the Balkans, such as China, the Arab world, Russia, etc., as well as on energy diplomacy – is certainly an initiative and accomplishment of our government.
During our time in office, the Foreign Ministry gradually started taking on a role that is broader than its traditional mission. We have started seeing it as a ministry that is not only political, but also productive; a ministry whose mission includes the crucial role of promoting economic diplomacy, as is the case with foreign ministries in many other countries.
This is a development that requires a profound change of approach from Ministry personnel. This change will not come about from one day to the next, but it is significant that it has already started to happen, and we are supporting it through institutional reforms, funding and practical policy measures.
On the institutional level, with the changes adopted in the new Foreign Ministry statutes, the heads of our diplomatic missions are even more active in this sector, along with the Economic and Trade Affairs personnel. A the same time, economic diplomacy will now be one of the main fields of activity for those just starting their diplomatic careers, starting with the Diplomatic Academy graduates who are successful in the Academy entrance exams taking place at the Foreign Ministry as we speak.
In terms of funding, starting in 2007 we secured – for the first time – an allocation of funding in the budget for new economic diplomacy actions. This enabled us to initiate the pilot cooperation projects with private sector agencies that I referred to earlier. But for there to be co-funding of the actions we initiated, we had to put in our share of funding from our budget. At the same time, we are pursuing additional funding for economic diplomacy actions and infrastructure programmes that we are submitting to the fourth CSF. Finally, we now consider ‘aid for trade’ to be a priority for our development policy. Our development aid will increase significantly in the coming years, as we meet our European obligations.
These additional revenues will enable us to make much better use of the Economic and Trade Affairs bureaux that are operating within the framework of our economic missions abroad. In 87 countries, we have 58 Economic and Trade Affairs bureaux and 148 embassies, consulates general, consulates and liaison offices. This is an extensive network that until now was not funded for development programmes and initiatives in the economic sector. That is, the state had made the major investment of establishing the network, but not the small investment required to utilise it as a mechanism for promotion and networking – beyond the information and problem-solving mechanism.
As of 2007, this has begun to change. This has enabled us to develop a number of actions and practical policy measures:. organisational measures, such as reinforcing local staff and bureau infrastructure; implementation of a system for evaluating services provided by the Economic and Trade Affairs bureaux. Furthermore, the creation of a new web portal for economic and trade affairs will be the focal point for providing relevant services electronically. At the same time, new actions are being developed for promotion and networking in collaboration with individual, sector-oriented agencies in the private sector. We have already signed relevant memoranda and we have begun collaboration with the Federation of Greek Mariculture (FGM), the EDOAO, the Aluminium Association of Greece and the Hellenic Association of Consulting Firms. In the coming days, we will sign relevant memoranda in the fur sector and with the Technical Chamber of Greece.
This whole effort is based on a comprehensive strategic plan that also has a geographical side. On an international level, the Greek economy is of a respectable size, due to the high level of per capita income compared with the global average. But in terms of population, our market is small, while our market is one of services, which account for 70% of our economy. Therefore, we have to capitalize on every advantage we have. And one of our major advantages is our country’s good international image in many parts of the world where our competitors are not as politically welcome. On the level of exporting goods, this advantage is relatively limited, as exports of products depend mainly on price, quality and marketing. However, in the case of exporting services, attracting investments, and investments made abroad by Greek companies that are being internationalized, the conversion of good political relations into good economic relations is a feasible goal. This is mainly the case in the very many and important countries outside the West, where the state and the political process continue to play a very important role in business decisions.
We are moving in this direction geographically, opening up markets outside the Balkans: in the Middle East, in northern Africa, in Russia, in the countries of the Caucasus and in Central Asia. We are using a combination of repeated political visits, business missions, activation of our embassies and strengthening our Economic and Trade Affairs bureaux – opening new ones where necessary. It is important that we all realise that in these countries the prospects are vast, but returns are not immediate. The cost of penetrating these difficult markets is significant, and economic diplomacy needs time to create the critical mass in relations and contacts that will allow our economic relations with these countries to really take off. But we have to be persistent and work together in a systematic and organized manner.
The Greek private sector has already proven that it can compete successfully in the international environment. The proof is right here before us. You, yourselves are the proof. You have been successfully expanding your activities in one of the most difficult regions in the world – the Balkans – . And you are continuing to expand and do business there, showing tenacity, flexibility and patience. You proved that you can succeed without depending fully on help from the Greek state; you can succeed based on your own abilities. Moreover, many of you do not request any help. You simply want things to be clearer; you just want fewer obstacles.
Since I am speaking before an audience of North-Greek businesspeople, I would like to share with you my view of this region and its people. All of you here today responded to an invitation regarding economic diplomacy; a tool that the Foreign Ministry has put at your service. In this way, you demolish the outdated stereotype of the isolated northerner, the inhabitant of a border region. This stereotype only exists in order to foster a rhetoric for reproducing syndromes, introversion, and stagnation.
The reality is very different.
You, the Greeks of Macedonia and Thrace, but also of the rest of northern Greece, you are the first citizens to live this new geopolitical reality in our region in their everyday life.
You were the first following a long period of closed borders to understand what mobility means. You again realized that this is not a static process. Neighbouring countries have each one started to find their own pace, not entirely smoothly of course. Here, more than the rest of Greece, it is understood what it means to have a common border with united Europe. But here it is clearer than anywhere else and what is most important: It is clear that being in the same neighbourhood means having to adapt as well, changing your own pace as well. Here, one can see how important it is to be able to communicate with your neighbour; To discuss with them the fact that their polluted rivers will one day empty into our sea. It is understood, dear friends, how important it is to work with them to find solutions. You share your neighbour’s need for a visa on their passport more often than everyone else. This is a regular source of anxiety for them and a reasonable source of doubt for you.
In other words: This reality which changes day by day, this world in which the citizens of nation states are called to share their priorities and each other’s needs going beyond their country’s borders; for us, all that is a grid of policies that we are called to draw up and implement, though for you it is an image you see outside your house everyday.
This is why I believe that today, you as businesspeople from northern Greece, you are the pioneers of this new era. You are the ones who are called to cross borders instead of simply controling them. Because you know that this is the only way in which you can succeed.
This is why I am certain that northern Greeks understand more than anyone the reason why the accession of the Western Balkans in the European Union is a strategic goal for our country. Greece has put forward ambitious proposals that tangibly prove the European perspective of the region’s peoples with a view to accelerating its pace towards the achievement of this goal, which is something demanded and promoted by our country.
I think it is equally clear to you what Prime Minister Karamanlis and I have repeated constantly and with resolve to our neighbour, the Former Yugoslav Republic of Macedonia: “We have come half way. Now its time for you to come the rest of the way and meet us in the middle.” It’s a matter of good neighbourly relations, but also something more: It is the prospect of a common future of security and prosperity for our two peoples and for our whole region. Wanting a common course on the path to a united Europe does not suffice. You need to realise the value of understanding others’ views, the principle of respecting a partners dignity, the process of conciliation – the need for compromise. These are all European values; they are the acquis of conduct with a united Europe. As long as your conduct is alien to these values, this alienation will keep you away from the European and Euro-Atlantic family. We are prepared to continue the negotiations with the framework of the UN at the soonest possible time and with the same persistence and dedication. Our goal is to achieve a solution as fast as possible; a solution based on an erga omnes, substantially compound name with a geographical qualifier; a solution that is comprehensive, viable and functional; a solution with winners or losers; a solution that all of us in this room realise the value of; a solution that I believe we want.
Today, addressing you, I feel that I am addressing the Greece that I believe in; the Greece that speaks for me. The Greece that is outward-oriented, confident – the Greece of coexistence and progress.
My instructions to the members of my team are clear: We must do our best in the service of this Greece – quietly, through hard work; with a plan and a vision. We have to be as effective as we have shown that the Ministry can be when it dedicates itself to an objective. And the objective of economic diplomacy – the potential for us to contribute to the success of the smaller or larger business plans of each of you – is an important objective.
Today, here in our immediate neighbourhood, we need to create favourable conditions for your business activities. And we also need to extend this endeavour across a much broader geographical area. I have profound faith in this policy. I want you to know that there is not a single place I have visited where I haven’t felt how welcome Greeks are, how open the horizons are for Greek businesspersons. We can be everywhere. We can succeed everywhere. And I want you to know that the Foreign Ministry assist you substantially in realising this effort. When we work together as Greeks with a goal and a plan, we have shown that we can move ahead by leaps and bounds. We have shown this at difficult times, when shortly before the Olympic Games no one believed that we could succeed. We proved it a few days ago when we convinced our friends and allies to come round to our way of thinking. I think that we can prove this again, meeting the great challenge of externalization. It is a dire necessity, a national necessity that we succeed.