2009 Investment Climate Statement - Greece

2009 Investment Climate Statement
Bureau of Economic, Energy and Business Affairs
February 2009

Openness to Foreign Investment

Greece, 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, and the ongoing liberalization of the energy and telecommunication markets offer investment opportunities. Greek businesses are among the leading investors in Southeast Europe, and Greece is actively positioning itself as a hub for Balkan trade. Recently, growth rate projections have declined significantly to .2 percent of GDP in 2009. Ultimately, the rate of growth in the short- to medium-term will be dependant upon the impact and recovery time from the global financial crisis and the resulting economic recession.

On the downside, Greece's economy continues to be hampered by extensive government regulation. Many international corporations state that bureaucracy remains the number one impediment to doing business in Greece. International organizations such as the OECD, Transparency International, the World Bank (in its Annual Doing Business and Governance Reports), and the World Economic Forum (in its Global Competitiveness Report) cite issues with corruption and government regulations that complicate investment and other commercial activities. As a result of both factors, Greece has had relatively modest levels of foreign investment as a percentage of the economy. It ranks 28 out of 30 OECD countries in level of FDI. Historically, growth has been financed by private sector borrowing, public sector spending and absorption of EU structural adjustment funds, which totaled roughly 24 billion dollars from 2000-2006. The EU has allocated a similar amount of funding, approximately 26.5 billion USD, for Greece for 2007-2013, and the Government of Greece (GoG) has budgeted 3.5 billion during the same period for infrastructural projects.

The GoG strongly encourages private foreign investment as a matter of policy. Investments are screened by the Ministry of Economy and Finance only when the investor wants to take advantage of government provided tax and investment incentives; foreign and domestic investors face the same screening criteria. Although Greece previously restricted foreign and domestic private investment in public utilities, it opened its telecommunications market and is in the process of slowly liberalizing its energy sector. Restrictions exist on land purchases in border regions and on certain islands due to national security considerations. Greece is the only EU country that does not have a land registry, which is a barrier to investment. U.S. and other non-EU investors in Greece’s banking, mining, broadcasting, maritime, and air transport sectors are required to obtain licenses and other approvals that are not required of Greek and EU investors. Foreign investors can buy shares on the Athens Stock Exchange on the same basis as local investors.

Major investment laws are:

-Legislative Decree 2687 of 1953 which, in conjunction with Article 112 of the Constitution, gives approved foreign "productive investments" (basically manufacturing and tourism enterprises) property rights, preferential tax treatment and work permits for foreign managerial and technical staff. The Decree also provides a constitutional guarantee against unilateral changes in the terms of a foreign investor's agreement with the Greek Government, but the guarantee does not cover changes in the tax regime.

-Law 3299/2004, the investment incentives bill, as amended by Law 3522/2006, provides grants to cover up to 60 percent of qualifying investments (generally those made in less-developed regions of Greece). Through a combination of incentives and corporate tax breaks, this law attempts to boost entrepreneurship, foster technological change, and achieve regional convergence throughout Greece. Law 3522/2006 introduces grants to newly founded small enterprises (Greek and foreign) to assist them with operational expenses for up to five years and attempts to simplify and expedite procedures for the evaluation of investment projects.

-Law 3389/2005 on Public Private Partnerships (PPP). This law is designed to facilitate public-private partnerships in the service and construction sectors by creating a market-friendly regulatory environment.

-Law 89/67 as amended in November 2005 by Law 3427/2005 provides special tax treatment for offshore operations of foreign companies established in Greece.

-Law 468/76 governs oil exploration and development in Greece. Law 2289/95, amending this legislation, allows private (both foreign and domestic) participation in oil exploration and development.

-Law 2773/99 opened up 34 percent of the Greek energy market in compliance with EU Directive 96/92 concerning the regulation of the internal electricity market. Law 3175/2003 harmonizes Greek legislation with the requirements of the EU’s Directive 2003/54/EC on common rules for the internal market in electricity. Law 3426/05 completed Greece’s harmonization with EU Directive 2003/54/EC and provided for the gradual deregulation of the electricity market.

-Law 2364/95 as amended by Laws 2528/97, 2992/02, 3175/03 and 3428/05 governs investment in the natural gas market in Greece.

-Law 2246/94 and supporting amendments have opened Greece’s telecommunications market to foreign investment.

When Greece joined the European Monetary Union (EMU) Eurozone on January 1, 2001, it committed to serious structural reforms to meet EMU convergence criteria. To this end, the Greek Government has opened the telecommunications market, and the energy market has undergone some deregulation. Since 2001, about 34 percent of eligible consumers of middle and high-tension voltage have had the choice to obtain their electricity from producers other than the parastatal monopoly, the Public Power Corporation (PPC). The first private electricity generation plant (a 150MW power plant by the Terna-GEK contracting company) began operation in July 2005, and a second one (a 400MW power plant by Hellenic Petroleum) in January 2006. A third private power plant was integrated into the system in 2008 (a 330 MW power plant by Aluminum de Greece in Central Greece). The electricity market in Greece was to be completely deregulated by mid-2007. The process, however, has been slow, and the goal not yet realized. Only three private producers are operating at this time due to problems in arranging financing and obtaining state licenses.

The New Democracy government was re-elected in September 2007. It pledged fiscal and other structural reforms to enhance the competitiveness of the Greek economy. The administration has gradually adopted policies and programs designed to achieve fiscal consolidation and tax reforms, reduce red tape in business transactions and expedite market deregulation. After the successful privatization of the Hellenic Telecommunications Organization and the Port of Piraeus Terminal, the government is working toward privatization of several state-owned enterprises, including selling the national air carrier Olympic Airlines (an international tender is scheduled to be completed by April 2009), further privatizing the Postal Savings Bank, the Agricultural Bank and the Bank of Attika and allowing private ownership in more ports and port service facilities. These privatizations continue to spark significant resistance from the public; however, the government thus far is standing firm. The global economic environment, however, may impact the private sector’s ability to raise financial resources to buy these firms. Foreign and domestic investor participation in privatization programs is generally not subject to restrictions. However, the Greek government announced in December 2007 that it will cap private investment in companies of "strategic importance" at 20 percent unless special approval is granted by an interministerial privatization committee. The government defines strategic importance to include corporations which own, exploit, or manage national infrastructure networks (public telecommunications, public power, etc.). The Greek government explained this move as an effort to block potential takeovers of public utilities and to protect the “public interest.” The European Commission contested the Greek law on investment in strategic firms and sent Greece in November 2008 a final warning to change the law or face European Court action. Thus far, it is not clear how the government plans on responding.

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, adequate and effective compensation. Due process and transparency are mandatory, and investors and lenders receive compensation in accordance with international norms. There have been no expropriation actions involving the real property of foreign investments in recent history.

Dispute Settlement

No investment disputes have come to the Embassy’s attention for many years, the last couple of cases dating back to the mid-90s. Greece accepts binding international arbitration of investment disputes between foreign investors and the Greek State, and foreign firms have found satisfaction through this arbitration. International arbitration and European Court of Justice judgments supersede local court decisions. Greece has an independent judiciary, but the court system is a time-consuming means for enforcing property and contractual rights. Foreign companies report that Greek courts do not always provide unbiased and effective recourse. The judicial system provides for civil court arbitration proceedings for investment and trade disputes. Although an investment agreement could be made subject to foreign legal jurisdiction, this is not common, particularly if one of the contracting parties is the Greek State. Foreign court judgments are accepted and enforced, albeit slowly, by the local courts. Although the Greek government has been energetically prosecuting corrupt judges and attorneys in the last few years, problems with corruption still exist.

Commercial and bankruptcy laws in Greece are in accordance with international norms. Under Greek bankruptcy law, private creditors receive compensation after claims from the state and insurance funds have been satisfied. Monetary judgments are usually made in Euros unless explicitly stipulated otherwise. Greece has a reliable system of recording security interests in property.

Greece is a member 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.

Performance Requirements/Incentives

Greece is in compliance with WTO TRIMS requirements. Investment incentives are available on an equal basis for both foreign and domestic investors in productive enterprises. More generous incentives are given to investments in less-developed regions. The Investment Incentives Law (Law3299/2004) provides new and already-established companies incentives worth up to 55 percent of the overall investment made in these regions. In December 2006, the law was amended by Law 3522/2006, which increases the incentive to cover up to 60 percent of an investment in less-developed areas. This amendment also introduces grants to newly founded small enterprises to assist them with operational expenses for up to five years. The amended law is also intended to simplify and expedite procedures for the evaluation of investment projects. The incentives provided are combinations of grants, interest subsidies, subsidies for the creation of new jobs as well as for leasing equipment, and tax exemptions.

Additional tax incentives are extended to foreign investors if they establish export-oriented or import substitution businesses (Law 2687/53).

There are no performance requirements for establishing, maintaining, or expanding an investment. Performance requirements come into play, however, when an investor wants to take advantage of tax and/or investment incentives. In evaluating applications for incentives, the Greek authorities consider local content, import substitution, export orientation, creation of new jobs, energy conservation, environmental protection and technology transfers. Companies that fail to meet the specified performance requirements may be forced to give up the incentives initially granted. All information transmitted to the government for the approval process is, by law, to be treated confidentially. Offset agreements, co-production, and technology transfers are commonplace in Greece’s procurement of defense items.

U.S. and other foreign firms may participate in government-financed and/or subsidized research and development programs. Foreign investors do not face discriminatory or other de jure inhibiting requirements. However, many potential and actual foreign investors assert that the complexity of Greek regulations, the need to deal with many layers of bureaucracy, and the involvement of multiple government agencies discourage investment.

Foreigners from EU countries may freely work in Greece. Foreigners from non-EU countries may work in Greece after receiving residence and work permits. There are no discriminatory or preferential export/import policies affecting foreign investors, as EU regulations govern import and export policy, and increasingly, many other aspects of investment in Greece.

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.

Private enterprises enjoy the same treatment as public enterprises with respect to access to markets and other business operations, such as licenses and supplies. Liberalization of the banking system and increased compliance with EU norms has made credit also equally accessible to private and public enterprises.

Protection of Property Rights

Greek laws extend protection of property rights to both foreign and Greek nationals, and the legal system protects and facilitates acquisition and disposition of all property rights. Regarding real property, the continued lack of a land registry, and more importantly, the multiple layers of authority concerning land use and zoning permits is one of the most significant disincentives to Greenfield investments. On IPR, Greece is a member of 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. As a member of the EU, Greece has harmonized its legislation with EU rules and regulations. The WTO-TRIPS agreement has been incorporated into Greek legislation since February 28, 1995 (Law 2290/1995). The Greek government has also signed and ratified the WIPO Internet treaties, which were incorporated into Greek legislation in 2003 (Laws 3183 and 3184/2003)

Greece's legal framework for copyright protection is contained in Law 2121 of 1993 on copyrights and Law 2328 of 1995 on media. Implementation and enforcement of these provisions, however, is not rigorous, and intellectual property problems continue in Greece. Greece was a special mention country on the Special 301 Watch List from 1994 until 2003, during which time Greece worked to resolve specific areas of violation, particularly those related to the broadcasting of copyrighted materials on the national airwaves. Violations, particularly in copyrighted audio-visual products, software and apparel and footwear continue to raise industry concerns. Despite the existence of adequate IPR legislation, Greece lags in implementation of enforcement of these laws. 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 once again in 2008.

Audiovisual, music, and software industries bear the brunt of IPR violations in Greece. This is likely to rise with increased internet penetration. 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. In the last two years, local IPR industry representatives have reported an increase in the quality and degree of support they are receiving from relevant Government IPR and enforcement offices. Although violations continue, the Government is more willing to work with local IPR industry representatives on longer-term solutions, including judicial training seminars and public outreach (anti-piracy ad campaigns). In addition, a formal interagency coordinating committee on IPR issues established in 2008 is developing a national action plan to combat IPR infringement and coordinating efforts among ministries to improve enforcement of IPR rights.

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, U.S. companies believe the importation and sale of counterfeit products may be increasing. Although in the past, U.S. companies reported a lack of support in combating this problem, recently, they report they are receiving more.

Intellectual property appears to be adequately protected in the field of patents. Patents are available for all areas of technology. Compulsory licensing is not used. The law protects patents and trade secrets for a period of twenty years. There is a potential problem concerning the protection of test data relating to non-patented products. Violations of trade secrets and semiconductor chip layout design are not problems in Greece.

Transparency of the 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. On occasion, foreign companies report that they encounter cases where there are multiple laws governing the same issue, resulting in confusion over which law is applicable.

In order to simplify and expedite the investment process, a quasi-state investment promotion agency, the Hellenic Center for Investment (ELKE), was established in 1996. ELKE, reorganized and renamed Invest in Greece Agency in March 2008, is designed as a one-stop shop for investors in cutting through red tape and acquiring the numerous permits needed to proceed with investments. For investors seeking government incentives under Law 3299/2004, the Agency is responsible for helping investors with projects valued at over 8.8 million euros ($11.9 million), or over 3 million euros ($4 million) in cases in which there is at least 50 percent foreign participation. It also advises the government on streamlining investment and promoting Greece as a favorable investment destination, and improving the investment climate in Greece. The new investment incentives law 3522/2006 that replaced 3299/2004 as of 1/1/07 is also intended to simplify and expedite the evaluation of projects.

Greek labor laws limit working hours, limit overtime, restrict part-time employment, and are restrictive regarding the dismissal of personnel. A new labor law (3385/2005) passed in July 2005 gives greater flexibility to employers to ask employees to work without overtime premium pay during peak times, in return for compensatory time off during non-peak times. Under current regulations, both private and public companies are prohibited from firing or laying-off more than two percent of their total workforce per month without government authorization.

Greece’s tax regime lacks stability, predictability, and transparency. The government often makes small adjustments to tax levels and has not hesitated to impose retroactive taxation. Although foreign investors object to the frequent changes in tax policies, foreign firms are not subject to discriminatory taxation. The New Democracy government launched reforms in December 2004 to lower tax rates on corporations’ profits (from 35 percent to 25 percent by 2007) and on partnerships and personal companies (from 25 to 20 percent). New legislation (3691/2008) reorganized the government’s efforts and strengthened its ability to combat money laundering and financial crimes.

Generally, in sectors open to private investment, foreign investment is not prohibited or restricted in any way. Proposed laws and regulations are usually published in draft form for public comment before being debated in Parliament. The International Financial Reporting Standards (IFRS) for listed companies was introduced in fiscal year 2005, in accordance with EU directives. These rules improved the transparency and accountability of publicly traded companies.

Efficient Capital Markets and Portfolio Investment

Greece has a reasonably efficient capital market that offers the private sector a wide variety of credit instruments. Credit is allocated by public and private banks on market terms prevailing in the Eurozone and credits are equally accessible by private Greek and foreign investors. Three American banks operate in Greece (Citibank, American Express and Bank of America), serving both the local and international business communities.

An independent regulatory body, the Hellenic Capital Market Commission, supervises brokerage firms, investment firms, mutual fund management companies, portfolio investment companies, real estate investment trusts, financial intermediation firms, clearing houses and their administrators (e.g., the Athens stock market), and investor indemnity and transaction security schemes (e.g., the Common Guarantee Fund and the Supplementary Fund) and encourages and facilitates portfolio investments. Owner-registered bonds, bearer bonds and shares are traded on the Athens Stock Exchange, which has held "developed country" status since 2001, according to key western investment firms. It is mandatory for the shares of banking, insurance and public utility companies to be registered. Greek corporations listed on the Athens Stock Exchange that are also state contractors are required to have all their shares registered.

Private Greek and foreign banks hold about 70 percent of the banking system's assets. Following an ambitious privatization program, only two banks remain under state control: Agricultural Bank of Greece and Postal Savings Bank (there is limited state participation through government controlled social security funds in another two banks: National Bank of Greece and Bank of Attica). According to the Bank of Greece, Greece’s central bank, private banks in Greece have healthy loan-deposit ratios (over 90 percent). State banks operate on free market criteria and limit their exposure to public enterprises of questionable financial health. Total combined assets of the five largest banks are estimated at 270 billion dollars.

Despite the Greek banks’ limited exposure to risky financial products at the center of the current global financial crisis, credit markets in Greece have been affected by the ensuing freeze in the capital markets. Following the examples elsewhere in Europe and the U.S., the Greek government announced in October 2008 that it would support the Greek credit system to restore flows in credit markets with a combination of state guarantees, state participation in the share capital and liquidity increase in the total amount of 28 billion euros (about $38 billion). Parliament passed the bank aid plan in December, and the majority of Greek banks have indicated they will make use of the 28-billion euros rescue plan in the first two months of 2009. According to bank sources, the use of the package will restore confidence in the market and will ease frozen credit markets. In addition, the government followed new EU guidelines and has increased coverage of its deposit insurance scheme from 20,000 euros per person per account to 100,000 euros per person per account.

There are a limited number of cross-shareholding arrangements in the Greek market. To date, the objective of such arrangements has not been to restrict foreign investment. The same applies to hostile takeovers (a practice which has been recently introduced in the Greek market).

Political Violence

Greece is a parliamentary democracy currently governed by a pro-EU, center-right government. Several domestic terrorist groups have been active in Greece since the restoration of democracy in 1974, including the 17 November (17N) and the ELA organizations and more recently, Revolutionary Struggle. U.S. and western government and commercial interests, as well as prominent Greek businessmen, journalists and politicians have at times been targeted by these groups. In 2002, the Greek police arrested 19 suspected members of 17N and four suspected members of ELA. Most of these individuals were convicted and sentenced to lengthy jail terms or life sentences. A group appeals trial for fifteen 17N convicts and two previously acquitted individuals opened in December 2005. In mid-May 2007, the appeals court upheld the stiff prison sentences of the leading 17N convicts. Several less significant 17N figures have either been acquitted, had their prosecutions time-barred under Greek law, were released for medical reasons, or were released after their sentences were reduce to time served In January 2008, the last incarcerated member of ELA was released on bail due to claims of ill health. He served approximately five years of a 25 year sentence.

Revolutionary Struggle (RS), an anti-establishment radical leftist group, claimed responsibility for a bomb explosion in May 2006, near the residence of the former Minister of Public Order, but police have made no arrests in the case. Police officials have not closed their investigation into the 2004 killing of a Greek Special Guard at his post outside the residence of the British Defense Attaché. RS claimed responsibility for an RPG attack on the U.S. Embassy on January 12, 2007, that caused no injuries. RS has been linked to a number of subsequent attacks, including a January 5, 2009 machine gun patrol in Athens. Attacks by self-styled anarchists have increased in the last few years. Anarchists attacked what they call "imperialist-capitalist targets" with tools such as firebombs and Molotov cocktails. Since these attacks typically occurred in the middle of the night, only a few people have been seriously injured and there have been no deaths. Several U.S. businesses have been targeted. In December 2008, large-scale rioting broke out following the death of a young student in an encounter with the police. Anarchists and students attacked and destroyed police stations and businesses

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


Bribery is considered a criminal act and the law provides severe penalties for infractions, although diligent implementation and enforcement of the law remains an issue. The problem is most acute in the area of government procurement, as political influence and other considerations are widely believed to play a significant role in the evaluation of bids. As a signatory of the OECD Convention on Combating Bribery of Foreign Government Officials and all relevant EU-mandated anti-corruption agreements, the Greek Government is committed to penalizing those who commit bribery in Greece or abroad. The OECD Convention has been in effect since 1999.

The Greek Government has tried to fight corruption in public administration and has established a number of inspection bodies to investigate cases of corruption. The main authority is the Public Administration’s Inspectors and Auditors Unit, established in 1997, at the Ministry of Interior. Independent inspection divisions exist at various Ministries and in the Greek Police and the Hellenic Coast Guard. Investigation procedures and preliminary inquiries on financial crimes come under the jurisdiction of a special unit in the Ministry of Economy and Finance, the Special Audits Service (Greek acronym: YPEE). The responsibility for the prosecution of bribery cases lies with the Ministry of Justice. In cases where politicians are involved, the Greek Parliament decides whether parliamentary immunity should be lifted to allow a special court action to follow. The Greek Chapter of Transparency International closely follows developments to press for investigation and prosecution of corruption cases. Greece was in the 57th position on the Transparency International Corruption Perception Index in 2008 (Greece ranked 23rd among the 27 country-members of the EU).

International and domestic NGOs as well as U.S. firms believe that anticorruption efforts need to increase. Mutual accusations of corruption between political parties are frequent and in the current government’s tenure, there have been a number of corruption cases. The Employment Minister was forced to resign from the cabinet in April 2007 when it was revealed that one of his key staff members at the Employment Ministry was under a prosecutor's investigation for suspicious stock exchange transactions. Likewise, his successor, resigned in December 2007, in response to allegations of corruption. The Greek Merchant Marine Minister and the State Minister/Government spokesman also resigned in 2008 amid mounting criticism over property transactions, including a large land swap between the state and a wealthy monastery where the wife of the Merchant Marine Minister acted as agent.

Corruption in the judiciary has been confronted more drastically than in the political world. Since mid-2004, the Greek judiciary is under continuing corruption investigation resulting in dismissals, suspension from duty, disciplinary action, even imprisonment in about 100 cases of corruption. Greece is also investigating whether German engineering group Siemens bribed companies and officials to win deals including the security contract for the 2004 Olympics. A prosecutor has filed charges and an investigating judge has launched an inquiry.

Bilateral Investment Agreements

Greece has bilateral investment protection agreements with Albania, Algeria, Argentina, Armenia, Azerbaijan, Bosnia, Bulgaria, Chile, China, Croatia, Cuba, Cyprus, Czech Republic, Egypt, Estonia, Georgia, Germany, Hungary, India, Iran, Jordan, Kazakhstan, Korea, Latvia, Lebanon, Lithuania, Mexico, Moldova, Morocco, Poland, Romania, Russia, Serbia, Slovenia, South Africa, South Korea, Syria, Tunisia, Turkey, Ukraine, Uzbekistan, and Zaire. Investments by EU member states are governed and protected by EU regulations.

Greece and the United States signed the 1954 Treaty of Friendship, Commerce and Navigation, which covers a few investment protection issues, such as acquisition and protection of property and impairment of legally acquired rights or interests. Also, Greece and the United States signed the 1950 Treaty for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.

OPIC and other Investment Insurance Programs

Full Overseas Private Investment Corporation (OPIC) insurance coverage for U.S. investment in Greece is currently available only on an exceptional basis. OPIC and the Greek Export Credit Insurance Organization signed an agreement in April 1994 to exchange information relating to private investment, particularly in the Balkans. Other insurance programs that also offer coverage for investments in Greece include the German investment guarantee program HERMES, the French agency COFACE, the Swedish Export Credits Guarantee Board (EKN), the British Export Credits Guarantee Facility (ECGF), and the Austrian Kontrollbank (OKB). Greece became a member of the Multilateral Investment Guarantee Agency (MIGA) in 1989.

For the purposes of OPIC Currency Inconvertibility insurance, currency inconvertibility is no longer an issue as Greece has been part of the Eurozone since January 1, 2001.


There is an adequate supply of skilled, semi-skilled, and unskilled labor in Greece, although some highly technical skills may be lacking. The total number of immigrants is estimated as high as one million, nearly one-fifth of the work force, and approximately thirty percent of them are undocumented or hold residence permits that have expired. Illegal immigrants predominate in the unskilled labor sector in many urban areas. Greece has started a process to regularize the status of some immigrants, necessary to integrate them into society. Approximately half of the estimated 1.2 million aliens in the country are from neighboring Albania.

Overall, the 2008 unemployment rate in Greece was around eight percent. Labor-management relations in the private sector are generally good. Strikes, labor stoppages, and related job actions occur mostly in the public sector, where job security is guaranteed by legislation.

Greece has ratified ILO Conventions protecting workers' rights. Specific legislation provides for the right of association and the rights to strike, organize, and bargain collectively. Greek labor laws prohibit forced or compulsory labor, set a minimum age (15) for the employment of children and determine acceptable work conditions and minimum occupational health and safety standards.

Foreign Trade Zones/Free Ports

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 into these zones without payment of customs duties or other taxes and remain free of all duties and taxes if subsequently transshipped or re-exported.
Similarly, 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 2504/1988 and 2562/1990. 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 promptly paid every six months.

Foreign Direct Investment Statistics

Statistics on foreign direct investment are not collected systematically, resulting in a wide variation in estimated data on investment levels. By all estimates, though, FDI levels in Greece are the lowest in the EU. Greek statistical data were previously based on records of investment approvals kept by the Ministry of National Economy or the Bank of Greece, but there has been less monitoring of investment since the lifting of foreign exchange restrictions, and the Ministry of Economy now keeps records of only the investments that seek government assistance. Bank of Greece records of capital inflows do not distinguish among Greenfield investments, acquisitions, foreign borrowing by Greek companies, and other capital transfers. The Greek Government has claimed for several years now that a new data system based on surveys is being set up.

According to the UN’s trade and development organization’s World Investment Report (which is based on Bank of Greece records, with all the limitations as mentioned above), FDI inflows into Greece in 2007 were 1.9 billion dollars (0.6 percent of GDP), significantly lower than the 5.4 billion dollars reported in 2006. Outflows for direct investment abroad were 5.3 billion dollars in 2007 (1.7 percent of GDP) and 4.2 billion dollars in 2006.

Although there is no official estimate of total foreign investment in Greece, the total stock of foreign investment is estimated at around $25 billion, or approximately eight percent of 2007 GDP. Until the Greek government provides more reliable data, this estimate should serve only as a guideline. Again highlighting the absence of reliable data, the U.S. Embassy estimates the total stock of U.S. investment to be about $5.5 billion, a little more than one-fifth of the total stock of foreign investment. U.S. firms employ about 11,000 people.

Greece’s investment abroad is mainly directed to the Balkans. According to the Greek Ministry of Foreign Affairs, Greek direct investment in the Balkans is estimated at 7.2 billion dollars, one third of which is invested in Serbia, one third in Romania, and the remaining one third in Bulgaria, Albania and the Republic of Macedonia.

Major U.S. investments in Greece:

(Based on 2006 total assets as reported by the companies. Source: 2008 ICAP - Greek Financial Directory)

(2006, U.S. $MILLIONS)
Carlyle Group (Neochimiki)1,012.5*
Coca Cola Hellas Bottling875.4 **
Philip Morris Group (Papastratos) (Kraft Hellas)738.5
Cinergy (Attiki Gas Supply)457.1
Searle (Vianex)229.8
Crown Cork and Seal221.8
(Crown Hellas Can Packaging Mfrs)
First Data (First Data Hellas)217.6
Johnson & Johnson193.5
Abbott Laboratories179.6
Procter & Gamble140.9
Bristol-Myers Squibb91.4
Colgate Palmolive57.0
Marriott (Asty)40.1
Dow Chemicals36.3
S.C. Johnson and Son35.1
Ideal Standard33.6
Mobil Oil27.0
Heinz (Copais)22.8

* Estimate – new investment 2008
** Amount represents 23.81 percent U.S. ownership of the Greek subsidiary’s total assets

Major non-U.S. foreign investments in Greece are:

(2006, U.S. $ MILLIONS)
Deutsche Telekom AG
4,320.0 *
Siemens Tele Industrie A.G.499.5
Thyssen Krupp
(Hellenic Shipyards)
China Ocean Shipping – COSCO
(Piraeus Port Container)
4,600.0 *
Dixons Overseas Limited (Kotsovolos)362.1
BC Partners
(Regency Entertainment)
British American Tobacco118.0
(Heracles General Cement)
(Nexans Hellas)
Air Liquide62.1
(Athenian Brewery)
(Elais Oleaginous Products)
(Unilever Hellas)
(Halyps Building Materials)
Fulgorcavi Halia
(Fulgor Greek Electric Cables)

* Estimate – new investment 2008