The new Greek cabinet convenes in Athens on Wednesday, September 19th 2007 to be sworn into office by President Karolos Papoulias

Stepping up the pace of change
Awarded a second term by Greek voters, the government has pledged to push ahead with further social and economic reforms as it seeks to boost growth, employment and prosperity

With his New Democracy party reelected in September for a second term, Prime Minister Costas Karamanlis has been given the opportunity to press ahead with the social and economic reforms needed to build a prosperous future. “The Greek people have chosen their course,” he says. “They have given us a clear mandate to continue with reforms, whilst at the same time calling for us to up the pace.”

Solid foundations were laid during the centre-right administration’s first term and the income gap between Greece and other EU economies is gradually narrowing. Greece now ranks among the EU member-states enjoying the highest rate of economic growth. Some 200,000 new jobs have been created and unemployment has fallen to its lowest for a decade. Inward investment is at its highest-ever level. Meanwhile, state finances have been put back on track and the budget deficit is within the EU threshold of 3 per cent of GDP.

Having used its first term to tackle problems that were threatening to destabilise the economy, New Democracy needs to dedicate its second term to building on the progress that has been made. Further reforms are already being introduced to improve the investment climate and ensure continued high rates of growth. At the same time Greece, like other EU states, faces long-term challenges in areas such as education, energy, environment, globalisation, health care, social security and technology. While it promises to seek to achieve maximum social consensus, the government will face major political tests over the fundamental reforms it plans to make in the pensions and education systems.

Greece’s integration into the Knowledge Society through investment in human and social capital is a priority if the economy is to become more competitive. The government is committed to widening access to ICT and encouraging innovation. More controversially, Mr Karamanlis has pledged to change the constitution to allow private universities to operate and to give universities greater autonomy.

Also high on the agenda is the development and diversification of Greece’s tourism sector, now pulling in a record 17 million visitors a year and with major resort schemes lining up for development. A youthful new minister has been charged with promoting quality and broadening the country’s appeal beyond mass tourism.

The new Acropolis Museum is due to open in 2008 and will add to Greece’s tourism appeal

In the energy sector, new pipeline projects are set to turn Greece into an important transit hub. A newly inaugurated Turkey-Greece link will eventually be extended to supply natural gas to Italy and the rest of western Europe. A deal has also been signed with Russia and Bulgaria for a Burgas-Alexandroupolis pipeline that will transport Russian oil to European markets, bypassing the Bosphorus Strait. Meanwhile, efforts are continuing to strengthen the electricity production and supply system in Greeece itself.
Greece continues to be one of the main beneficiaries of EU structural funds, designed to help member states whose per capita GNP is less than 90 per cent of the Community average. A total of more than 24 billion euros in EU funds is being made available for modernising the economy and raising the general standard of living through Greece’s National Strategic Reference Framework (NSRF) for 2007-2013. Approved in Brussels in November, the eight sectoral and five regional programmes will accelerate Greece’s convergence with the economies of the other EU states.

A key objective is to improve the competitiveness of the Greek regions, towards which 80 per cent of total NSRF funds of 36 billion euros will be directed. Much of the investment will be in key areas for growth and the creation of jobs, such as innovation, support for small and medium-sized enterprises, information technologies, trans-European networks and the environment.

“The Greek regions have been at the heart of our policy from the very outset,” says Mr Karamanlis. “We have prepared works, actions and policies, which are now being fully implemented. We are creating modern infrastructures, which are increasing the competitiveness of our economy, enhancing our country’s strategic position and improving the quality of life.”

An unprecedented programme of public works has been launched. Construction is due to start soon on major new highways and the rail network is being modernised. Meanwhile, work continues on extending ports, airports and the Athens Metro, completion of the Egnatia motorway and its vertical axes, the construction of dams and water supply systems, and other major projects.

“The aim is for our country to acquire the infrastructure it needs and for our economy to further improve its new growth model and competitiveness and become more outward-looking,” says Mr Karamanlis.


Project Director: Alexi Fernandez
Editorial Director: Tatyana Ovcharova
Editorial Assistant: Estefania Arrocet