Ladies and Gentlemen,

To understand the economic potential of Southeastern Europe and the obstacles we still have to overcome, one could start by looking at the map. The geographical map of our part of Europe with its mountains and valleys, its seas and coastline, its islands and peninsulas, explains a lot about our different historic paths, our different but connecting cultures, the old scars and the old scores that time and time again came to haunt us during the 20th century. The political map is also a patchwork of different situations. In the center there is Greece, an old full member of the community, remote and detached up till now from its partners, which, in a few months will be geographically connected to the rest of the European Union by two new members, Bulgaria and Romania. An event, that creates a new economic and political environment in the region. But towards the west, in the western Balkans and in the east, where Turkey and Cyprus stand, a number of political problems still reside.
How can these be resolved? How can the great economic potential of this region be achieved?
The answer that we all adopted in the beginning of the 21st century, is the path towards European integration. We decided to promote together in our region the paradigm of the European Union, one of the greatest success stories of the past sixty years.
Inspired and motivated by this paradigm, all the countries in the region, in the past few years, promoted reforms, strengthened their economic ties and achieved high rates of growth.
However public opinion both in the member countries and in South-eastern Europe, is starting to show considerable signs of «fatigue». Enlargement fatigue in the EU member countries, and reform fatigue, in some of the countries aspiring to join the Union.
In order to overcome this fatigue and keep the momentum going we need closer economic cooperation, more reforms and a long term commitment on building the institutions that are in the heart of the European integration process.
You will allow me briefly to tackle more the issue of institution building, because I believe that from a purely economic perspective «institutions matter» and not enough emphasis was placed in the recent past on their crucial role for the success of economic reforms and the encouragement of foreign investment.
Institutions are in essence the rules of the game that steer both individual and government economic behavior. They consist of the laws enacted and the organizations responsible for their enforcement, but their effectiveness is determined also by the social capital accumulated in any given society. The level of trust within a society and the obligations, expectations and mutually developed norms, evolving through time.
European institutions are not built automatically in a country, just because some laws enacting/transferring the acquis communautaire, are voted by the parliament. The process is more complex and it involves drastic changes of attitudes and behavior, in the political system, the bureaucracy and the individual economic agents. This takes time, patience and long-term commitment. But the economic results can be immense.
Building successful institutions based on the EU paradigm, means credibility of property rights, drastic reduction of the rent seeking behavior of individual politicians or bureaucrats and predictable treatment of investors in all their economic activities.
This effort is still undertaken in Greece. An successful member of the Union, that has joined it 25 years ago and has participated from the inside in the great changes that Europe went through during that period. So it is obvious that it has to continue for a long time in all the countries of the region.
This long term effort will create the virtue’s cycle that we need in order to achieve our great potential. Because the real (not just nominal) convergence of our institutions, and the advancement of the economic ties within the region will diminish the entrance cost of foreign investors, create new business opportunities and improve the political environment. It will reaffirm the great strategic and economic advantages that exist for the Union, if the enlargement continues in Southeastern Europe. With time we can all aspire towards an economically united Southeastern Europe, within the framework of the European Union. In such an environment we can find balanced, just and mutually acceptable solutions to the remaining political problems. We can turn our region, from a troubled corner of the late 20th century Europe, to one of the most vibrant economic regions in the world. We have the geography and the manpower to achieve that. We just have to stick to the course.

Ladies and Gentlemen,
Greece has served the vision I described you with commitment and persistence.
Our policies to this end are based on three pillars:
• supporting the aspiration of our neighbours to become full members of the European Union;
• actively encouraging bilateral economic relations in the form of trade and investment; and
• promoting the creation of a single economic space in South eastern Europe.

Greece’s support for the aspirations of our neighbours to become full members of the European Union, is of great strategic significance to us. We remain firmly committed to this policy, even as wider Europe public opinion and part of the European political elite are showing strong signs of «enlargement fatigue».
This includes our northern neighbours and Turkey. Greece took the brave decision to encourage and support Turkish candidacy and it stands by it. We believe that if Turkey proceeds with the reforms necessary for European integration, both our countries, and the broader region, will enjoy very substantial political, economic, and security benefits. However, the changes needed, in policies and in mindset, are considerable and daunting, as they have been for every single country that joined the EU. And it is important for Turkey to move towards that direction with much more forcefulness and determination. Because if the momentum of Europe’s supportive decision is lost, it will indeed be very difficult to renew.
On the bilateral side we have invested approximately 14 billion Euros in the wider region, including Turkey, creating 200.000 new jobs. In the banking sector only more than 1000 branches of Greek Banks now operate in the region. Overall nearly three thousand Greek enterprises and businesses have taken advantage of this new environment and are now actively conducting operations in these markets. This process of heavy Greek investment started in the early nineties and has never stopped, even while the region was in turmoil.
We never regretted our decision. Today as the Greek economy becomes even more extroverted, in order to sustain our high development rate, now averaging 4% annually, we offer to potential investors, not only political stability, rule of law, and a modern infrastructure, but also direct access to a newly dynamic economic region.
Finally, Greek immigration policy has been critical to this success story. Over the past fifteen years, Greece has accepted and successfully integrated a wave of immigrants, mostly from neighbouring countries, that exceeds 10% of the country’s entire population. This policy provided Greece with needed labour and the countries of origin with sizable remittances and workers who returned to their homelands experienced in the functioning of a modern market economy.
This brings me to the third pillar of our policy: the promotion of a single economic space in South-eastern Europe. While full membership in the European Union remains the final goal, we must recognize the practical obstacles that lie ahead, especially in the western Balkans.
So a complementary effort is needed. The creation of a single economic space will facilitate the accession process and at the same time provide immediate economic development with long-term benefits.
Thus we support, together with our EU partners, the creation of a free trade area encompassing all our northern Balkan neighbours. We are also supporting the work on major trans-European transport freeways, railroads, and other networks that, once completed, will interconnect regional markets and create new arteries to nourish economic development. Though the main catalysts are European Union and international organization funds, Greece provides considerable national funding as development aid to facilitate this effort, mainly in the pan-european corridor X.

Greece is also facilitating the creation a common energy market in the region and we are also promoting the creation of new energy networks, like:
• the natural gas pipeline starting from Baku, going through Turkey and Greece to Italy, with construction already under way;
• the agreement to interconnect electricity networks of Greece, Turkey and Bulgaria; and
• the Bourgas-Alexandroupolis pipeline will provide yet another secure corridor for Eurasian oil to reach Western markets.
Finally we are also using our sizable development aid to promote economic unification and strengthen incentives for investing in the Balkans with smaller projects such as the broadband interconnection of regional education and research institutions.
Ladies and Gentlemen,
Southeast Europe has entered a new era leading to European Integration. Greece fully supports the institutional and economic reforms that will enable all countries in the region to achieve sustainable economic growth, political stability and prosperity. So that we can together realize the vision of an economically united Southeast Europe, belonging to the European Union.

Source: Press Office of the Embassy of Greece

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