Interview of Prime Minister Kostas Karamanlis
to the “Caspian Energy Journal”,
within the context of the 10th Anniversary
of the Caspian Integration Business Club
- How does the instability of oil markets affect the economics of Greece;
It is quite clear that the unusually high oil prices of 2007 and most of 2008 contributed greatly to the subsequent oil price collapse, in the last quarter of 2008, which in turn precipitated the slow-down of the global economy. Lower oil prices may have pushed back record-high interest rates and thus attenuated the danger of increasing inflation, but low oil demand is a testament to slower and even negative economic growth. Predictable and relatively stable oil prices are a precondition for steady growth in the world economy. Developments in the oil market have an impact on all the economies of the EU, including ours, since this commodity plays an important role in the energy mix of Greece, covering almost 2/3 of our final energy demand. Greece, as a member of the EU, the Eurozone, the International Energy Agency and the International Energy Forum, actively supports the need for price stability and the security of oil supply and demand. Moreover, there is consensus that the lack of transparent and reliable oil statistics is an aggravating factor for the volatility of the oil market. Accordingly, Greece participates in and supports the Joint Oil Data Initiative (JODI), which aims to improve the availability and reliability of oil data began among producers and consumers. Increasing transparency and strengthening producer-consumer dialogue is important and can lead to concrete actions.
- How would you assess the process of liberalization of the Eurasian energy market;
The Eurasian energy corridor is a vast geographic and geopolitical area that is composed of several states with different levels of economic transparency and openness, where there are different legal frameworks offering different levels for the protection of investments in the energy sector. I believe that, as the region becomes more closely inter-related to the European energy system, with the functioning of the Southern Gas Corridor, which is pivotal to the policy of diversification of sources and routes and which will connect Southeast and Central Europe with Azerbaijan, the region will slowly, but steadily, come closer to the EU’s legal paradigm. At the end of the day, such a development will only facilitate the increase of FDI flows in the area. Azerbaijan is among the leaders of energy liberalization in the region given the fact that it has successfully opened up its upstream and downstream energy resources to international energy companies since the early 1990s.
- How does Greece participate in ongoing energy projects in Azerbaijan;
The aspirations of Greece are currently focused on becoming a major partner for the import and transit of Azeri gas to Europe via our active participation in the EU’s Southern Gas Corridor Strategy. We have also been importing a relatively small amount of Azeri crude. I would like to note that Greece is in the process of negotiating the supply of up to 1 Billion Cubic Meters of natural gas from Azerbaijan. The Azeri Energy Minister, Mr. Natiq Aliyev, has publicly acknowledged his country’s support for the completion of this supply contract provided that there is also a transit agreement with Turkey. Our gas company DEPA is in talks with its Turkish counterpart Botas; we sincerely hope that we would be able to address any pending details of this agreement within the foreseeable future. The 1 BCM/y agreement would constitute the first direct agreement, by which natural gas from Azerbaijan would flow to a Member State of the European Union, and is therefore of immense political significance.
- How are the plans on imports of Caspian gas to Greece and follow-up transit to other European states going on;
Developing the Natural Gas Transportation Corridor from Azerbaijan to the European markets is of great significance to the European Union and its Member States and, as you know, the Interconnector Turkey- Greece- Italy is a priority project of the EU. We were honoured to have your President, Mr Ilham Aliyev, attend the inauguration ceremony of the Turkey-Greece section, in November 2007. Moreover, progress is being made for the Greece-Italy interconnection, which consists of a mainland section in Greece and an off-shore section crossing the Ionian sea to southern Italy. The Greek-Italian POSEIDON Company, which owns the off-shore section, was established last year and is based in Athens. According to our schedule, the relevant studies will be completed, so that construction of both the mainland and off-shore sections can begin within the first half of 2010 and, together with the off-shore section, are expected to become operational by 2013.
In order to move the project forward, it is important to finalize a Four-Party Agreement between Greece, Azerbaijan, Italy and Turkey, which, I note, should be a primarily political rather than a commercial text highlighting the willingness of all interested parties to contribute to the success of Europe’s policy of diversification of sources and routes. The ITGI is the most mature project designed to promote this policy. Its implementation will mark its success and the importance of Azerbaijan to increasing the energy security of the countries involved.
- How would you evaluate the current economic cooperation between Greece and Azerbaijan; Have Azerbaijan and Greece used the full potential to proceed with the development of the bilateral relations; What mutually beneficial ways of cooperation are viewed as primary ones;
I am confident that there is a considerable potential for strengthening our commercial cooperation. Greece can offer Azerbaijan several investment opportunities in its own energy industry and infrastructure, particularly in the downstream and midstream oil & gas sectors. I also believe that we can move beyond the energy sector and I am determined to do all in my power to widen and deepen our current level of economic interaction in areas of mutual benefit, such as telecommunications, banking, tourism, education, agriculture, and of course shipping, an area of particular importance given the expected rise in inter-Caspian trade over the next few years. I am very pleased to have had the opportunity to discuss our cooperation with President Ilham Aliyev, during his official visit to Greece last month, and I look forward to working towards the enhancement of our relations.
- Mr Prime Minister, how did the global financial crisis affect the economics of the EU and Greece? What consequences for the national economy would you suggest?
Ç äéåèíÞò ÷ñçìáôïðéóôùôéêÞ êñßóç, ðïõ îåêßíçóå ôïí Áýãïõóôï ôïõ 2007 áðü ôéò ÇíùìÝíåò Ðïëéôåßåò, ìåôáäüèçêå ãñÞãïñá, ëüãù ôçò áëëçëåîÜñôçóçò ôùí ïéêïíïìéþí, óôçí ÅõñùðáúêÞ ¸íùóç êáé ôïí õðüëïéðï êThe global financial crisis, which began in late 2007 in the USA, quickly spread, due to the economic interconnectedness between all countries, to the European Union and the rest of the world. Ç ðñþôç öÜóç ôçò, ìÝ÷ñé ôï êáëïêáßñé ôïõ 2008, óõíÝðåóå ìå ôç ìåãÜëç áýîçóç ôùí äéåèíþí ôéìþí ôïõ ðåôñåëáßïõ êáé Üëëùí ðñþôùí õëþí êáé ðñïêÜëåóå ôçí åðéâñÜäõíóç ôçò ïéêïíïìßáò ôçò Å.Å., ç ïðïßá Ýãéíå ðåñéóóüôåñï Ýíôïíç ìåôÜ ôç äåýôåñç öÜóç ôçò ÷ñçìáôïðéóôùôéêÞò êñßóçò, ðïõ óçìáôïäüôçóå ç êáôÜññåõóç ôçò Lehman Brothers ôïí ðåñáóìÝíï Its first phase, lasting until the summer of 2008, coincided with a large spike in the international prices of oil and other raw material leading to the deceleration of the EU’s economy, a deceleration exacerbated by the second phase of the crisis, signalled by the collapse of Lehman Brothers last September. Compared to the other countries in the EU, the Greek economy proved more resistant to the crisis in terms of growth, thanks to the negligible exposal of Greek banks to the so-called ‘toxic bonds’ and the reforms that have been carried out in the last years, and bolstered its dynamism. In 2008, the growth rate in Greece was 3% in comparison with 0.9% in the EU. While in 2009 growth is expected to subside substantially in Greece, a positive growth rate will be sustained, whereas the prediction for the EU is a negative -1.8% growth rate. The crisis has also negatively affected the Greek economy’s public sector figures. In order to deal with these consequences, the government is implementing a scheme, which involves strengthening real economy and boosting employment, gradually reducing treasury deficit and providing support to the financially weaker citizens.
- What position does Greece enjoy in the EU? What economic projects underlie the relations between Greece and the other EU states?
Ç ÅëëÜäá åßíáé ìÝëïò ôçò Å.Å. áðü ôï 1981 êáé áðü ôï 2002 åßíáé ìÝëïò ôçò Åõñùæþíçò, óôçí ïðïßá óÞìåñá ìåôÝ÷ïõí 16 áðü ôéò 27 ÷þñåò ôçò Å.Å. êáé Ý÷ïõí ôï åõñþ ùò êïéíü ôïõò íüìéóìGreece has been a member of the EU since 1981 and a member of the Eurozone since 2002, to which 16 of the EU’s 27 countries participate today, having the Euro as their common currency. Greece’s economic relations with the other countries of the EU are particularly important. Our country plays a key role in the development of the SE European region. Large scale investments in infrastructure projects are being carried out in Greece, co-financed by resources from the European Funds. For the period 2007-2013, we have already secured resources amounting to 24 billion Euros from the EU; add national funds to that and you have a figure of approximately 40 billion Euros that will be used to realize programmes aimed at strengthening the Greek economy’s competitiveness. In the context of EC programmes, there are also joint investments in infrastructures involving Greece with its neighbouring countries in the EU.