Archive for September 2006

Stalin’s Secret War: Soviet Counterintelligence Against the Nazis, 1941-45

September 29, 2006

It is only recently that Western historians have been able to render more or less full accounts of the Eastern Front, the decisive front in World War II. Only after Soviet historiography and archives opened up to some degree did it become possible to go beyond self-serving German and Soviet accounts of the war that were as notable for their distortions and omissions as they were for their information. But they were not alone in these offenses against Clio. Western historiography too showed an unwarranted tendency to play down the epic drama of this front which, in Churchill’s words, “Tore the guts out of the German Army.” This omission in our historiography led to a neglect of the lessons to be learned as well as an unmerited depreciation of the front’s strategic significance.

Robert Stephan’s book is one of the many that have come out in the last decade or so to fully rectify this omission. While we have had an enormous outpouring of literature on the intelligence war in the West, we have had very little on the dimensions of this aspect of the war in the East. And if one wants to see what information warfare really looks like, with deception operations materially contributing to operational success on the battlefield, or if one wants to understand the strategic importance of intelligence, the Eastern Front is the place to look. As Stephan points out, this front was host to the most brutal war in history. Apart from an unparalleled brutality of combat operations, most of the Holocaust happened here, taking place in what the French historian and ex-communist Boris Souvarine rightly called a counterintelligence state. And this unremitting investment in intelligence and counterintelligence paid off for the Soviet Union during the war, notwithstanding Stalin’s catastrophic disregard for intelligence in the period 1939-41.
Stephan’s work, deeply researched from sources on both sides and punctuated by his own experience as a CIA employee, recounts the Soviets’ attention to the importance of intelligence and counterintelligence, their growing ability to use these tools effectively in the conduct of combat and deception operations, and the penalties that the Germans incurred because of their blithe disregard for both forms of secret operations. Not surprisingly, the German invasion of Russia was in itself an act of staggering disregard for intelligence, and this hubris was only compounded by the incompetence, schisms, and insouciance of German spymasters. It is also safe to say that in a real sense the Nazi high command did not know what it was doing in Russia or against whom it was fighting until it was far too late. Moreover, the importance of this dimension of the war is brought home to the reader in the recounting of individual operations and in the author’s equally masterful depiction of the general climate and modus operandi of Soviet counterintelligence actions.

For once the encomiums on the back of a book are correct. This will be an indispensable account of this dimension of the war on the Eastern Front, and a valuable primer for all those who wish to understand how to conduct intelligence and counterintelligence operations. Needless to say this topic is of immense relevance to American forces and intelligence agencies today, and Stephan’s story is not just bygone history. In any account of the Eastern Front of World War II and of intelligence operations, this book deserves a very honorable mention.

Reviewed by Dr. Stephen Blank, Professor of National Security Studies, Strategic Studies Institute, US Army War College.

COPYRIGHT 2005 U.S. Army War College
COPYRIGHT 2005 Gale Group



September 29, 2006

Andrew Liaropoulos
(Analyst- Callaghan Centre for the Study of Conflict,
University of Wales, Swansea, UK)

Ioannis Konstantopoulos
(Ph.D Cand-Department of International
and European Studies, Panteion University, Greece)

Copyright: Research Institute for European
and American Studies (RIEAS)-

General Reading
· Bamford, James, Body of Secrets. How America’s NSA and the Britain’s GCHQ Eavesdrop on the World (London: Arrow Books 2002).
· Bennett, Richard, Espionage. Spies & Secrets (London: Virgin Books 2002).
· Betts, Richard and Thomas Mahnken (eds), Paradoxes of Strategic Intelligence (London: Frank Cass, 2003).
· Betts, Richard, ‘Intelligence Warning: Old Problems, New Agendas’ Parameters (Spring 1998), pp.26-35.
· Davies, Philip, MI6 and the Machinery of Spying (London: Frank Cass, 2004).
· Ferris, John, Intelligence and Strategy. Selected Essays (London: Routlegde, 2005).
· Herman, Michael, Intelligence. Power in Peace and War (Cambridge: Cambridge University Press, 1996).
· Heuer, Richards J. Jr, ‘Limits of Intelligence Analysis’, Orbis, 49, 1 (2004), pp.75-94.
· Hughes, Wilson John, Military Intelligence Blunders (London: Robinson, 1999).
· Johnson, Loch, ‘Bricks and Mortar for a theory of Intelligence’, Comparative Strategy, 22, (2003), pp.1-28.
· Johnson, Loch, ‘Preface to a theory of Strategic Intelligence’, International Journal of Intelligence and Counterintelligence, 16, 1 (2003), pp.638-663.
· Kahn, David, The Code Breakers. The Comprehensive History of Secret Communication from Ancient Times to the Internet (New York: Scribner, 1996).
· Laqueur, Walter, The Uses and Limits of Intelligence (New Brunswick and London: Transaction Publishers, 1995).
· Levite, Ariel, Intelligence and Strategic Surprise (New York: Columbia University Press, 1987).
· Marrin, Stephen, ‘Preventing Intelligence Failures by learning from the Past’, International Journal of Intelligence and Counterintelligence, 17, 4 (2004), pp.655-672.
· Richelson, Jeffrey, A Century of Spies. Intelligence in the 20th Century (Oxford: Oxford University Press, 1995).
· Scott, Len and Peter Jackson, ‘The study of Intelligence in theory and practice’, Intelligence and National Security, 19, 2 (2004), pp.139-169.
· Shukman, Harold (ed.), Agents for a Change (London: St’ Ermins Press, 2000).
· Shulsky, Abram and Gary Schmitt, Silent Warfare. Understanding the World of Intelligence (Washington DC: Brassey’s Inc, 2002).
· Volkman, Ernest, Espionage. The Greatest Spy Operations of the 20th Century (New York: John Wiley & Sons, Inc, 1995).

Intelligence and the Cold War
· Aldrich, Richard, The Hidden Hand. Britain, America and Cold War Secret Intelligence (London: John Murray, 2001).
· Andrew, Christopher and Oleg Gordievsky, KGB. The Inside Story of its Foreign Operations from Lenin to Gorbachev (London: Hodder & Stoughton 1990).
· Andrew, Christopher, For the President’s Eyes Only. Secret Intelligence and the American Presidency from Washington to Bush (London: Harper Collins Publishers, 1996).
· Bukharin, Oleg, ‘US Atomic Energy Intelligence against the Soviet target, 1945-70’, Intelligence and National Security, 19, 4 (2004), pp.655-679.
· Gordon, Thomas, Gideon’s Spies. The Secret History of the Mossad (London: Pan Books, 2000).
· Jeffreys-Jones, Rhodri, The CIA and American Democracy (New Haven and London: Yale University Press, 2003).
· Parrish, Michael, ‘Soviet Espionage and the Cold War’, Diplomatic History, 25, 1 (2001), pp.105-120.
· Raviv, Dan and Yossi Melman, Every Spy a Prince. The Complete History of Israel’s Intelligence Community (Boston: Houghton Mifflin Company, 1990).
· Smith, Michael, The Spying Game. The Secret History of British Espionage (London: Politico’s Publishing, 2003).
· Willard, Matthias C., America’s Strategic Blunders. Intelligence Analysis and National Security Policy, 1936-1991 (Pennsylvania State University Press, 2001).

Intelligence in the post Cold-War Era
· Berkowitz, Bruce and Alan Goodman, Best Truth. Intelligence in the Information Age (New Haven and London: Yale University Press, 2000).
· Berkowitz, Bruce, ‘Better ways to fix US Intelligence’, Orbis, (Fall 2001), pp.609-619.
· Berkowitz, Bruce, ‘The DI and IT. Failing to keep up with the Information Revolution’, CIA Studies in Intelligence, 47, 1, (2003).
· Berkowitz, Peter (ed.), The Future of American Intelligence (Stanford, CA: Hoover Institution Press, 2005).
· Betts, Richard, ‘Fixing Intelligence’, Foreign Affairs, (January/February 2002).
· Caroll, Thomas Patrick, ‘The Case against Intelligence Openness’ International Journal of Intelligence and Counterintelligence, 14, 4 (2001), pp.559-574.
· Castagna, Michael, ‘Virtual Intelligence: Reengineering Doctrine for the Information Age’ International Journal of Intelligence and Counterintelligence, 10, 2 (1997), pp.180-95.
· Cullather, Nick, ‘Bombing at the speed of thought: Intelligence in the coming age of Cyberwar’, Intelligence and National Security, 18, 4 (2003), pp.141-154.
· Dupont, Alan, ‘Intelligence for the Twenty-First Century’, Intelligence and National Security, 18, 4 (2003), pp.15-39.
· Ferris, John, ‘Netcentric Warfare, C4ISR and Information Operations: Towards a Revolution in Military Intelligence’, Intelligence and National Security, 19, 2 (2004), pp.199-225.
· Gormley, Dennis, ‘The Limits of Intelligence: Iraq’s Lessons’, Survival, 46, 3 (2004), pp.7-28.
· Hart, Douglas and Steven Simon, ‘Thinking straight and talking straight: Problems of Intelligence Analysis’, Survival, 48, 1 (2006), pp.35-60.
· Hastedt, Glenn, ‘Public Intelligence: Leaks as Policy Instruments – The Case of the Iraq War’, Intelligence and National Security, 20, 3 (2005), pp.419-439.
· Hedley, Hollister John, ‘Learning from Intelligence Failures’, International Journal of Intelligence and Counterintelligence, 18, 3 (2005), pp.435-450.
· Herman, Michael, Intelligence Services in the Information Age (London: Frank Cass, 2001).
· Hulnick, Arthur, ‘US Intelligence Reform: Problems and Prospects’, International Journal of Intelligence & Counterintelligence, 19, 2 (2006), pp.302-315.
· Johnson, Loch, Secret Agencies U.S Intelligence in a Hostile World (New Haven and London: Yale University Press, 1996).
· Muller-Willie, Bjorn, ‘EU Intelligence Cooperation. A Critical Analysis’, Contemporary Security Policy, 23, 2 (August 2002), pp.61-86.
· Muller-Willie, Bjorn, For our eyes only? Shaping an Intelligence Community within the EU, Occasional Paper no. 50 (Paris: The European Institute for Security Studies, January 2004).
· Posner, Richard, Remaking Domestic Intelligence (Hoover Institution Press, 2005).
· Scott, Len and Peter Jackson (eds), Understanding Intelligence in the Twenty-first Century (London: Routledge, 2004).
· Shpiro, Shlomo, ‘The Media strategies of Intelligence Services’, International Journal of Intelligence and Counterintelligence, 14, 4 (2001), pp.485-502.
· Staar, Richard F, and C. A. Tacosa, ‘Russian’s Security Service’, Mediterranean Quarterly 15, 1 (Winter 2004), pp.39-57.
· Steele, Robert, ‘Information Peacekeeping and the future of Intelligence’, International Journal of Intelligence and Counterintelligence, 17, 2 (2004), pp.265-285.
· Steele, Robert, ‘Intelligence Affairs: Evolution, Revolution or Reactionary Collapse?’, International Journal of Intelligence and Counterintelligence, 19, 1 (2006), pp.187-189.
· Steele, Robert, New craft of Intelligence: Achieving asymmetrical advantage in the face of non-traditional threats (Carlisle PA: Strategic Studies Institute, US Army War College, February 2002).
· Taylor, Stan and David Goldman, ‘Intelligence Reform: Will more agencies, money and personnel help?’, Intelligence & National Security, 19, 3 (2004), pp.416-435.
· Teitelbaum, Lorne, The Impact of the Information Revolution on Policymaker’s Use of Intelligence Analysis (Santa Monica CA: RAND, 2005).
· Tenet, George, ‘The CIA and the security challenges of the new century’ International Journal of Intelligence and Counterintelligence, 13, 2 (2000), pp.133-143.
· Treverton, Gregory, Reshaping National Intelligence in an Age of Information (Cambridge: Cambridge University Press, 2001).
· Turner, Michael, ‘A distinctive US Intelligence identity’, International Journal of Intelligence and Counterintelligence, 17, 1 (2004), pp.42-61.
· Weller, Geoffrey, ‘The internal Modernization of Western Intelligence Service’ International Journal of Intelligence and Counterintelligence, 14, 3 (2001), pp.299-322.
· Wettering, Frederick, ‘The Internet and the Spy Business’, International Journal of Intelligence and Counterintelligence, 14, 3 (2001), pp.342-365.

Open Source Intelligence
· Friedman, Richard, ‘Open Source Intelligence’, Parameters, 28, 2 (1998), pp.159-165.
· Gibson, Stevyn, ‘Open Source Intelligence. An Intelligence Lifeline’, RUSI Journal (February 2004), pp.16-22.
· Hulnick, Arthur, ‘The Downside of Open Source Intelligence’ International Journal of Intelligence and Counterintelligence, 15, 4 (2002), pp.565-579.
· Mercado, Stephen, ‘Re-examining the Distinction Between Open Information and Secrets’, CIA Studies in Intelligence, 49, 2 (2005).
· Mercado, Stephen, ‘Sailing the Sea of OSINT in the Information Age’, CIA Studies in Intelligence, 48, 3 (2004).
· Rathmell, Andrew and Valeri, Lorenzo, ‘Implementing Open Source Intelligence’, Jane’s Intelligence Review, 9 (November 1997), pp.523-527.
· Steele, Robert, ‘Open Source Intelligence: What Is It? Why Is It Important to the Military?’, American Intelligence Journal 17, 1 & 2, (1996), pp.35-41.
· Steele, Robert, On Intelligence. Spies and Secrecy in an Open World (Fairfax Virginia: AFCEA International Press, 2000).

Economic Espionage
· Bellochi, Luke, ‘Assessing the effectiveness of the Economic Espionage Act of 1996’ International Journal of Intelligence and Counterintelligence 14, 3 (2001), pp.366-387.
· Evans, J.C., ‘U.S. Business Competitiveness and the Intelligence Community’, International Journal of Intelligence and Counterintelligence, 7, 3 (1995).
· Fialka, John, ‘Stealing the Spark: Why Economic Espionage Works in America’, The Washington Quarterly, 19, 4 (Autumn 1996).
· Fialka, John, War by Other Means: Economic Espionage in America (W.W. Norton & Company, Inc., 1997).
· Fink, Steven, Sticky Fingers: Managing the Global Risk of Economic Espionage (Dearborn Trade Publishing, 2002).
· Galvan, Robert, ‘The Role of American Intelligence in The Global Economy: Business and Industrial Spying I’, International Journal of Intelligence and Counterintelligence, 8, 3 (1995).
· Hastedt, Glenn, ‘Seeking Economic Security through Intelligence’, International Journal of Intelligence and Counterintelligence, 11, 4 (Winter 1998-1999).
· Hitz, Frederick, ‘The Future of American Espionage’ International Journal of Intelligence and Counterintelligence, 13, 1 (2000), pp.1-20.
· Loundy, David, Computer Crime, Information Warfare, and Economic Espionage (Carolina Academic Press, 2003).
· Nasheri, Hedieh, Economic Espionage and Industrial Spying (Cambridge University Press, 2005).
· Porteous, Samuel, ‘Economic Espionage: Issues arising from Increased Government Involvement with the Private Sector’, Intelligence and National Security, 9, 4 (1994).
· Porteous, Samuel, ‘Economic/Commercial Interests and the World’s Intelligence Services: A Canadian Perspective’, International Journal of Intelligence and Counterintelligence, 8, 3 (1995).
· Porteous, Samuel, ‘Looking Out for Economic Interests: An Increased Role for Intelligence’, The Washington Quarterly, 19, 4 (Autumn 1996).
· Potter, Evan (ed.), Economic Intelligence & National Security (Carleton University Press, 1998).
· Rustmann, F.W. Jr, CIA, INC.: Espionage and the Craft of Business Intelligence (Brassey’s, Inc., 2002).
· Schweizer, Peter, ‘The Growth of Economic Espionage: America Is Target Number One’, Foreign Affairs, 75, 1 (Jan. / Feb. 1996).
· Schweizer, Peter, Friendly Spies: How America’s Allies Are Using Economic Espionage To Steal Our Secrets, (New York: Atlantic Monthly Press, 1993).
· Trim, Peter, ‘The Company-Intelligence interface and National Security’ International Journal of Intelligence and Counterintelligence, 13, 2 (2000), pp.204-214.
· Valero, Larry, ‘The Role of American Intelligence in The Global Economy: Business and Industrial Spying II’, International Journal of Intelligence and Counterintelligence, 8, 3 (1995).
· Warner, W.T., ‘International Technology Transfer and Economic Espionage’, International Journal of Intelligence and Counterintelligence, 7, 2 (1994).
· Whitney, E. Merrill and Gaisford D. James, ‘Why Spy? An Inquiry into the Rationale for Economic Espionage’, International Economic Journal, 13, 2 (Summer 1999).

Intelligence & Terrorism
· Berkowitz, Bruce, ‘Intelligence and the War on Terrorism’, Orbis, (Spring 2002), pp.289-300.
· Falkenrath, Richard, ‘The 9/11 Commission Report. A Review Essay’, International Security, 29, 3 (2004/05), pp.170-190.
· Goodman, Melvin, ‘9/11: The Failure of Strategic Intelligence’, Intelligence and National Security, 18, 4 (2003), pp.59-71.
· Herman, Michael, ‘11th September: Legitimizing Intelligence?’, International Relations, 16, 2 (2002), pp.227-241.
· Herman, Michael, ‘Counter-Terrorism, Information Technology and Intelligence Change’, Intelligence and National Security, 18, 4 (2003), pp.40-58.
· Nomikos, John, ‘A European Union Intelligence Service for confronting Terrorism’, International Journal of Intelligence and Counterintelligence, 18, 2 (2005), pp.191-203.
· Rudner, Martin, ‘Hunters and Gatherers: The Intelligence Coalition against Islamic Terrorism’, International Journal of Intelligence and Counterintelligence, 17, 2 (2004), pp.193-230.
· Rudner, Martin, ‘Using Financial Intelligence against the Funding of Terrorism’, International Journal of Intelligence and Counterintelligence, 19, 1 (2006), pp.32-58.
· Treverton, Gregory, ‘Terrorism, Intelligence and Law Enforcement: Learning the right lessons’, Intelligence and National Security, 18, 4 (Winter 2003), pp.121-140.

Intelligence Related Websites

Brunel Center for Intelligence and Security Studies (BCISS)
Department of Homeland Security
Defense Intelligence Agency
Federation of American Scientists
Government Communications Headquarters
United States Intelligence Community

MI 5
National Security Agency

Central Intelligence Agency

CSI – Center for the Study of Intelligence
Open Source Solution


September 29, 2006

Jason Vest
(National Security Correspondent for Government Executive)
Copyright: Foreign Policy Journal on line

Note: A Critical Analysis of the International Journal of Intelligence and Counterintelligence, Vol. 18, No. 2. Summer 2005.

People have long been fascinated with the shadowy milieu of espionage, what former British intelligence officer and novelist John Le Carre christened the “secret world.” Although its name may not suggest a compelling page turner, the “International Journal of Intelligence and Counterintelligence” is as gripping for the serious student of intelligence as the spy novels tourists buy in airport bookstores.

If the journal has a strong grasp of the challenges facing the intelligence community, it is probably because many of the authors are drawn from its ranks. Headed by Richard R. Valcourt of the American Military University, the editorial board and roster of contributors boast active and retired intelligence professionals, ivory tower academics, and a handful of spooks turned scholars.

The Summer 2005 issue shows the editors take the “international” in the journal’s name seriously, with features on the arms embargo against Bosnian Muslims, the role of religion in global intelligence, and former British Prime Minister Winston Churchill’s use of spies.

But the issue’s most compelling pieces examines the need for a global postmortem on intelligence analysis, reminding us that the United States is not the only country that needs to sharpen its skills.

Indeed, two pieces focus on the particular challenges that Europe faces. After the Madrid commuter train bombings in March 2004, intelligence agencies from Britain, France, Germany, Italy, and Spain coordinated their responses, following leads that pointed them across Europe and North Africa.

In his article, Glen M. Segell, director of the Institute of Security Policy in London, credits the effectiveness of this cooperation with ultimately connecting the central suspect to Islamic militants. Of course, many of these intelligence services cooperated with each other even before the Madrid bombings, which leaves open the question why they were unable to thwart the attack in the first place. Here, Segell provides a useful critique of how various agencies’ failures to integrate different approaches to intelligence analysis left Madrid – and any other potential targets, such as London – vulnerable to attack.

JOHN M. NOMIKOS of the Athens-based Research Institute for European and American Studies (RIEAS)-  has developed a solution for such deficiencies: a single, integrated European Spy Agency. In his essay, John Nomikos makes the case for a new European Union (EU) Agency modeled on what the CIA was originally supposed to be – an organization focused not on covert operations, but analysis. John Nomikos imagines an independent EU intelligence outfit that would initially focus on providing the European Commission and European Council with strategic insights based on open sources and information voluntarily contributed by member intelligence services. To be sure, spy chiefs are usually leery of sharing or leaving their organizations open to penetration. But casting such a service as primarily analytic and focused on terrorism, as John Nomikos does, is hard to disagree with on practical grounds.

For intelligence professionals and laypeople alike, the Mossad, Israel’s intelligence service, is vested with near-mythical qualities of effectiveness and precision, particularly in on-the-ground operations. It is that reputation that makes reading Ephraim Kahana’s look at the faults and foibles of Israel’s famed intelligence service so interesting. Besides providing a historical inventory of Israeli operations gone awry, Kahana, a professor at the College of Western Galilee, examines scores of analytical failures by the Mossad.

These are not small errors. By his estimation, the “number of significant and costly failures” by Israel’s intelligence service, rooted in both underestimation and overestimation of threats, has cost the country both on the battlefield and at the negotiating table.

In the wake of recent intelligence failures, including July’s bombings in London, many critics have charged that Western intelligence services have lost their nerve, that they are no longer willing to risk dealing with the dirty underworld of espionage. Whether it is a fair point or not, these essays demonstrate that running agents and collecting intelligence from unsavory characters is never sufficient.

The underlying message is clear: Although field agents many argue that procuring information is paramount, intelligence is useless if you can not break it down into meaningful parts, if the tools of analysis are weaker than the tools of collection. Which is another way of saying that, to succeed, spies need more than a cloak and dagger.

Romania Seeks to Boost Tourism Numbers

September 29, 2006

By Razvan Amariei for Southeast European Times in Bucharest

In 2004, 6.6 million foreign citizens entered Romania. The number increased by about 13 per cent compared to 2003, but only about a quarter of the visitors were tourists. Some experts believe potential tourists are still being kept away by the cost of travel in Romania, which is high in relation to the quality of services.

Hotel rates rose about 10 per cent this year. According to Lucia Morariu, the president of the Tourism Agencies National Association, the increase was due to inflation. Others, however, have charged that the new owners of Romania’s formerly state-owned hotels simply don’t know how to manage them, and customers are paying higher prices as a result.

Other problems facing would-be travellers include poor road infrastructure and a lack of tourist amenities in some areas. At the same time, seaside and mountain resorts present another type of problem — open-air bars and discotheques that play loud music deep into the night, interfering with the sleep of nearby hotel guests. Hoping to make the seaside more tourist-friendly, the environment ministry decided to order the removal of such establishments from the beachfronts, but then re-authorised some construction after officials realised that tourists need at least some beach-bars. Now state officials are at odds with their municipal counterparts, such as Constanta Mayor Radu Mazare, who is refusing to allow the new buildings to be constructed.

Romania also suffers from an image problem abroad, with many still viewing it as the country of Ceausescu, street children and stray dogs. The government hopes to change such perceptions, but has been hampered by a lack of marketing expertise. “We haven’t found people in Romania who had done such work, so we’ll have to call in some consultants from abroad,” Saptamina Financiara’ quoted Valeriu Turcan, head of the Governmental Strategies Agencies, as saying.

Despite the obstacles, authorities as well as tourism companies are optimistic, projecting that the number of foreign visitors will keep growing. German tourism giant TUI plans to sign an agreement with Bucharest officials to open an agency in Mamaia, a Romanian seaside resort. The company hopes to draw tourists to the Black Sea coast, the Danube Delta, the Carpathian resorts and the historical regions of Maramures, Bucovina and Transylvania.

Marius Crivtonencu, chief of the National Tourism Authority, hopes the Romanian resorts will attract 10 per cent more visitors this year, compared to 2004. The season has shifted from 15 May to 15 September to 1 May to 1 September, and the results have been noticeable. During a period when hotels formerly were closed, they are now packed with visitors — especially elderly tourists, who have come for the famous anti-aging Gerovital treatment. Foreigners, in fact, remain the tourist industry’s best hope for increased profits.

Investment opportunities in Serbia

September 29, 2006


European investors have ranked Serbia among the top 25 investment opportunities globally (1).

Serbia’s advantages include:

Strategic positioning for markets in Europe, Asia, and the Middle East
Duty Free access to the South East Europe Free Trade Zone of 60 million consumers
Only country outside the CIS with a free trade agreement with the Russian Federation
Not yet an EU member; greater flexibility and investment advantages

Lowest corporate profits tax rate in Europe

Skilled labor at a reasonable cost

Highest percentage of English language speakers in SE and Central Europe
Stable economy:

Sound monetary policy and fast implementation of key macro economic laws
Simplified foreign trade and foreign investment regulations
Facilitation of company operational and start up procedures, including residency regime for foreign nationals, business registration, and customs
(1) A.T. Kearney, 2003 Global FDI Confidence Index
 Investment Opportunities
Agribusiness in Serbia

Energy sector in Serbia

Automotive and Component Production in Serbia

IT Industry in Serbia

Electronic Industry in Serbia

Textile industry

Wood and Furniture Industry

Pharmaceutical Industry

What is the size of the sector?

– Accounted for 20.65% of total GDP and 40.91% of the manufacturing industry output in 2001
– Total revenues amounted to €3 billion in 2001
– Contributed to Serbian exports with 16% in the same year
– Employed around 155,000 people in 2002 – more than 10% of the workforce in Serbia
– Encompassed 3,269 companies in 2002
– Monthly net wage averaged €161 in 2003

How could you benefit from investing?

Natural Conditions
With more than 5 million hectares of first-class soil, favorable mild continental climate and restricted use of chemical fertilisers Serbia represents one of the Europe’s most attractive locations for production of high-quality healthy food.

Human Capital
Thorough education and technological skillness notwithstanding, workforce remains extremely low-cost compared to other transition economies, making the intellectual capital a number one competitive advantage.

Market Leverage
A combination of growing local demand for food and beverages, accounting for almost 50% of household budget, duty-free export to Russia and access to the Southeast Europe free trade zone enhances the rentability of investment in agribusiness.

Recognized Image
Not only do traditional export drivers, like raspberries, beef and pork, but also excellent fruit juices, beers and dairy products bolster the favorable reputation of Serbian agribusiness on the global market.

Quality Standards
Leading agribusiness companies boast HACCP and ISO quality accreditations thereby substantiating full commitment to achieving highest performance.

Who leads the way?

Greek ice-cream manufacturer Delta was among the first to locate production facilities in Serbia with €40 milIion investment back in 1998. In 2003 agribusiness alone attracted foreign investment worth almost €1 billion. Early last year Croatian Agrokor won the tender for the frozen foods producer Frikom paying €11 million to acquire the majority stake. This acquisition was followed by two strategic partnership agreements; Europe’s leading beer producers Interbrew and Carlsberg commited themselves to invest in Apatinska Pivara and Pivara Celarevo €326 million and €53 million respectively. Finally, Philip Morris and British American Tobacco privatized tobacco producers from Nis and Vranje in €562 million and €87 million worth deals.
Automotive and Component Production

What is the size of the sector?

In the late 80’s production of automobiles excedeed 200,000 units a year
Exports totaled $41 million in 2001
Employs around 38,000 workers in 2002 (2.66% of total workforce)
Comprised of 155 companies, out of which more than 70% are privately owned
Average monthly net wage amounted to €112 in 2003
How could you benefit from investing?

Respectable Tradition
Prior to imposing economic sanctions, local automotive companies had been involved in more than 200 joint ventures with leading international producers either as their components’ suppliers, or licensed car assemblers.

Cost Efficiency
Significantly lower labor and utility costs in comparison to major FDI recipients in Central and Eastern Europe safeguard excellent prospects of reaching targeted profitability.

Intellectual Capital
Over the years of cooperation with Western companies, domestic staff has received specific know-how and adapted itself to advanced technology and rigorous quality standards.

Market Potential
Duty-free export to Russia and access to the Southeast Europe free trade zone are coupled with the urgent necessity of domestic motor pool modernization, taking into account the extremely high age of vehicles averaging more than 12 years.

Quality and Infrastructure
The vast majority of companies have ISO 9001/9002 accreditations and preserved production facilities which could be utilized for serving growing demand.


The largest automotive company in Serbia Zastava from Kragujevac commenced production of FIAT based models of cars and trucks in 1955. During the 70’s and 80’s valve producer MIV had long-term arrangements with clients worldwide, Peugeot and Chrysler being the most prominent ones. Another components’ producer FAD was a supplier to Mercedes and Ford for a long time, while IDA produced braking and engine parts for GM and Opel brands, courtesy of joint venture with General Motors.

IT Industry in Serbia

What is the size of the sector?

Annual growth rate of 18.3% and a projected five-year CAGR (Compounded Annual Growth Rate) of 16.8%.
The value of the Serbian IT market in 2003 was estimated at USD 340 million.
1,408 IT companies. The ownership structure: 95% are domestic companies, 3% are with mixed ownership and 2% are foreign companies.
9.409 employed in 2003.
Net salary costs vary from 350 EUR to 850 EUR per month for qualified and experienced personnel. The overall salary cost of a programmer/systems expert is in the range 700-1,400 EUR per month.
Key Products and Offerings

Highly-skilled engineers who are competent in a broad range of methodologies, technologies and tools supporting efficient development of high quality software and systems integration. They have expertise in developing front-end, back-end and middle-ware components, but also are very proficient at listening to client requirements and creating tailored software and systems.

Serbian software developers assume either partial or full responsibility for a client’s daily information technology needs. In many cases, they manage and improve the client’s entire information technology process which includes applications, data centers, and networks. Serbian software development experience and expertise are applicable to a variety of business areas and solutions. Subcontract work undertaken is wide ranging and includes creative web design development work for European companies, subcontracting of employees to foreign firms for specific web enabled tasks and the development of technical hardware and software solutions for major international companies such as Philips Semiconductors, Carl Zeiss, Raytheon and NCR. These software and design firms are the core of what could become a much larger specialization in the future.

The industry focus to date has been on the development of customized products for specific industry applications for the local market with the larger companies offering a wider systems integration and full technical service approach. Today, modern hardware (LCD monitors, memory modules, toners cartridges for printers, etc) are made in Serbia.
How could you benefit from investing?

Human Capital
– In this sector, given the high education levels and young age profile, Serbia has a distinct English language proficiency advantage compared to other Eastern European countries.
– As a young industry, the IT sector does not suffer from the labor inflexibility of many traditional industries. Companies have confirmed no labor disruptions. The average age of staff is in the early thirties.
– Highly skilled workforce, with 70% having completed a university level of education.

Academic Framework
– Because of the openness of the region prior to the 1990s, the education standards in the technical departments of universities in Serbia benefited from greater exposure to Western developments than other countries in Eastern Europe.
– Students from a high-school specialized in Mathematics, Physics and Informatics have won an impressive number of prizes at the World Science Olympiads.
– Over 878 of all graduates in the area of electrical engineering, organizational sciences, and mathematics institutes in 2003 are specialized in computer sciences.

Legal Framework
Serbia has done a lot to align businesses in the IT sector closer with the standards of the EU. In order to aid the quick development of the Information Society, several important laws have been adopted:
• Electronic Signature Law
• Patent Law
• Trademark Law
• Copyright and Related Rights Law
• Legal Protection of Design Law
• Protection of Integrated Circuits Topographies Law
• Protection of personal data
• Protection of consumers
• Access to information
• Amended Criminal Code
The strategy of IS development is set to be finished by the end of 2005.

Business Incentives
• The lowest corporate profit tax in Europe – 10%.
• 10 year tax holiday for investments over CSD 600 million (app. € 7.4 million) and employment of more than 100 new workers.
• Tax credit for up to 10% of investment amount for investing in fixed assets.
• Tax relief equating to gross salary plus employer contributions for every newly employed worker during a period of 2 years.
• Accelerated depreciation of environmental, educational and computer equipment.
• Import of equipment and other assets as well as construction materials representing a foreign entity’s investment is exempt from customs duties.
• Import of raw materials, semi-finished and component parts carried out for the purpose of realization of a long-term production contract in cooperation with a foreign producer is exempt from customs and other import duties.
• The liberalization of property laws made it possible for foreigners to own real estate.

Who leads the way?

In addition to major multinationals such as Ericsson and Siemens, which are present in Serbia, a number of smaller European firms have established a presence in the country, both to expand their market reach and to develop products for the region.
FinSoft London and TeleTrader, originally from Vienna, both have more than 50 developers in Belgrade – that number swells to a hundred or more during peak production times.
Austrian S&T signed an agreement for the takeover of IT banking solutions provider SITO Inc. Information Systems Engineering and Design Company.
Blue Star is one of very few companies which has daily offerings of SDR memory modules in its portfolio. Together with Samsung, their strategic partner, Blue Star offers a wide range of TFT monitors, plasma and TFT TV sets. The company also produces VGA cards (ATI and Nvidia platforms), USB sticks (64MB-1024MB), memory cards (64MB-256MB), MP3 players and TV tuners.
Bozic i Sinovi has developed a partnership with a UK-based company, Gowigroup Ltd. and signed a long term annual contract worth L500,000.
Electronics Industry


– Low share in the GDP (1.1%) in 2001, but recorded the highest growth in 2002 (72.4%)
– Contributed to Serbian export with 2.5% in 2001
– Workforce encompassed 24,700 people, or 1.84% of the working population in 2002
– 1,320 companies registered in 2001, most of them (90%) privately owned
– Net monthly salary averaged €133 in 2003


Intellectual Base
High-class technical schools in Serbia, including the School of Electrical Engineering in Belgrade which is widely regarded as one of the best in the world, yield the annual average graduate output of around 2,700 and percentage of university and two-year college employees in the sector reaches 13%.

International Links
Over decades most large Serbian electronics producers fostered extensive partnerships with blue-chip telecommunications and electronics companies worldwide.

Low Overheads
Given that the average monthly net wage of Serbian workers stands at merely one third vis-?-vis their Hungary and Czech Republic counterparts, the average savings on an annual salary bill for a 300 person operation in the sector will exceed €1 million.

Market Perspective
By setting-up business in Serbia an electronics producer may capitalize on duty-free export agreement with Russia, Southeast Europe free trade zone and burgeoning local demand, with electronics imports which is sevenfold higher than exports.

Local Sourcing
Large free capacities – the result of economic sanctions in the 90’s, could be utilized for serving both local and global demand with a full range of electronics products, while the strong domestic R&D platform may provide active support in developing advanced technologies.


Major producer of consumer electronics and home appliances in the Balkans EI Holding Corporation Nis boasts long tradition of collaboration in the form of joint ventures and industrial contracts with world top companies like Alcatel (telephony), Siemens (HF transmission), Bull (computers), Philips (color picture tubes) and Sagem (teleprinters). VF Holding, leading producer of radio, TV and telecommunication equipment, was established in 1990 as a joint venture with Siemens which eventually became the sole owner in 2001. Another joint venture, between Alcatel (56%) and Pupin (44%) – Alcatel Pupin Yugoslavia currently employs around 40 people with an asset base of almost €10 million.
Textile Industry

– Estimated share in GDP amounted to 10% in 2002
– In the same year exports reached $196 million, 70% of which absorbed by the EU market
– Employed around 100,000 people or 13% of the industrial workforce in 2002
– Dominated by private companies – 77% out of total of 1,185 in 2000
– The lowest average net monthly salary within the Serbian economy – €54 in 2002


Workforce Quality
In spite of respectable professional experience and technical skillness, gained through 15 years of work within the sector, an average textile employee in Serbia still receives merely one half to one third of the salary paid in neighboring countries, which results in high international competitiveness.

Partnership Culture
Most large textile producers in Serbia developed deep-rooted cooperation in the form of cut-manufacture-trim operations with Western companies successfully meeting their rigorous quality standards.

Cost Competitiveness
In addition to low-cost labor force, foreign investors in Serbia could also benefit from moderate utility costs and favorable tax regime envisaging numerous incentives as well as the lowest corporate profit tax rate in Europe.

Market Accessibility
Investing in Serbian textile industry means not only the opportunity to serve rising local demand, currently accounting for 8% of household budget – higher than in most transition countries, but also to gain duty-free access to Russian and Southeast Europe markets.

Geographic Position
Owing to Serbia’s strategic position at the intersection of Pan European corridors no. 7 and no. 10, the proximity of the Adriatic Sea and a dense transportation network, it takes only few hours to reach all major export and import markets.


A great number of large socially owned textile companies are yet to be privatized and one of the first to find a strategic partner was a trading company Ateks purchased by Italian Fibest at a public auction for approximately €8 million. Within the private sector jeans producer Oktan Pro represents an emerging breed of flexible and customer-oriented Serbian companies, currently exporting most of its production under the world famous brand names, such as Mango and Zara. In the mid 2003 Azira Fashion, majority owned by Italian Gruppo Real, the world’s third largest lingerie producer, launches production at Backa Palanka-based company Marina planning to employ 200 workers by 2005.
Wood and Furniture Industry

– Stable growth of production in recent years reaching 3.63% of industrial output in 2002
– Generates positive net foreign trade effect with $89 million of exports in the same year
– Comprised of 2,758 companies – 90% privately owned
– With around 33,000 employees contributed to total workforce with 2.51% in 2002
– Net monthly salary averaged €80 in 2003


Market Potential
Relocating to Serbia enables furniture producers to serve rising domestic demand, fuelled by the steady growth of household income, and seize the opportunity to capitalize on free trade agreements with adjacent countries and the Russian Federation.

Low Overheads
A combination of low average wages, ranging between €55 in wood processing and €90 in furniture production, moderate electricity, telephone and water costs, along with the lowest corporate profit tax rate in Europe enhances the prospects of achieving higher profit margins than in other FDI recipient countries in the region.

Human Capital
Qualified and experienced workforce, with almost 10% of university graduates engaged in furniture production, requires minimum training to catch up with up-to-date technologies and operation procedures.

Resource Base
Serbia abounds in high-quality oak and beech forests which cover approximately Ľ of its territory and represent an ample raw base for both primary and furniture production.

Geographic Position
Its strategic position at the intersection of Pan European corridors no. 7 and no. 10, linking southern and central parts of the continent, makes Serbia easily and quickly accessible from all major import and export markets.


As a hint of its return to Serbian market after a decade’s hiatus, Swedish multinational furniture producer Ikea has recently signed an agreement with Vranje-based company Simpo providing for delivery of mattresses worth €3 million.

Energy sector in Serbia

In order to have uniform development policy in the field of energy and provide all necessary conditions for permanent and equalized development strategy government of the Republic of Serbia has enacted a new law.

According to expectations, reforms in energy shall provide pre-conditions for more efficient operation of all subjects dealing with energy business, and corresponding institutional changes should improve their business performance. This primarily refers to the economic effects and making adjustments in order to meet market competition.

Energy sector at glance

– Serbia has produced in 2003 a total of 30 108 GWh of electricity
– Most of the electricity is produced by the thermal power plants. In 2003 thermal plants account for 72.7% of the overall electricity production in Serbia. Hydro-plants produce the remaining 27.3% of the electricity.
– A new law was passed in July ensuring more competitive energy sector primarily aimed towards better overall satisfaction of end users.
– Energy Agency will act as an independent regulatory authority ensuring healthy development and implementation of national energy development strategy.
– Households account for 58.84% of electricity consumption in Serbia.

Possibilities for development

Serbia is experiencing slight changes in the energy consumption. It has become evident, as the consumption of electricity in winter is slightly lower, whereas in the summer consumption increases. This can be explained by more efficient heating and increased use of cooling equipment.

Serbia still has not maximally utilized the renewable energy sources even though more than a quarter of the energy comes from hydro-plants. In particular smaller communities could benefit from small-scale micro-hydro-plants or wind powered plants.

Over time, it can be expected that role of gas powered plants will increase. This is primarily because of availability of gas from Russia, with whom Serbia has a free trade agreement.


Based on commercial contracts 1 667 GWh of electric power was imported, what is by 46 per cent less than in the previous year. For the first time after 11 years, we signed a contract for commercial exports of 394 GWh.

The power generation in electric power plants of Serbia and hydro power plant Piva was 34 192 GWh. The power generation of power generating facilities of EPS was 33 436 GWh, and if the share of thermal power plants from Kosmet is excluded, (Kosovo A and Kosovo B ), the output was 30 108 GWh.
Thermal power plants and thermal power-heating plants of EPS generated 24 318 GWh and achieved the greatest share (72.7%) in the total achieved annual power generation of EPS.

The hydro power plants of EPS generated 9 118 GWh, which has been, due to extreme drought, the lowest annual power generation, and therefore the lowest share (only 27.3%) in the total power generation of EPS within the last ten years.

Although a record power generation was achieved, as it had been increasing for four years repeatedly, it was still insufficient to meet the consumers’ needs. Actually, the gross consumption was 34 340 GWh of electric power. The public companies for distribution received 31 951 GWh and 1 160 GWh was supplied to direct consumers. The share of households in the total consumption was 58.84%. The maximum monthly consumption was realized in January (3 741 GWh), and the lowest in June (2 196 GWh). A peak hourly load of 6 564 MW, was marked at 6 p.m. on 13 January.

Compared with the previous year, electricity consumption for heating of premises during the winter months was reduced, but, on the other hand, it was increased for cooling purposes during the summer period.

Key benefits

Exceptional cost efficiency – low labor and utility costs, combined with the lowest corporate tax rates in Central and Eastern Europe and increasing productivity to underpin profitability.

High intellectual capital – Technologically advanced, well educated and highly cost competitive labor force available.

Linguistic skills – The best command of the English language in Central and Eastern Europe by a very wide margin, according to a survey by Gallup International.

Strong tradition in energy business – companies from Serbia, in particular those private are predominantly export oriented and represent real partners when it comes to exporting. Adding this to numerous free trade agreements, Serbia becomes an attractive location for outsourcing and that demands performance on competitive market.
Pharmaceutical Industry

What is the size of the sector?
• The sector accounts for 3.24% of the total industry (2004)
• The value of sector’s annual production is €308 mill. (2004)
• Annual growth of the sector in 2004 was 15%
• Employs around 6,000 workers in 2004
• Comprised of 49 companies (production of pharmaceutical products)
• Average monthly net wage amounted to €326 in 2004
How could you benefit from investing?
Production capabilities
Generic drugs are taking on a much greater role in the industry. This trend has created a tremendous business opportunity for pharmaceutical companies who serve the “bottom of the pyramid”. Serbian pharmaceutical companies have strategically positioned themselves to take advantage of the mentioned trends. Many of the Serbian pharmaceutical companies have invested substantial capital into development and are capable of producing quality low-cost generic drugs. If short of in-house manufacturing capacities, want to outsource small-batch production, reduce manufacturing costs, or delay/avoid capital investments in manufacturing, one should consider manufacturing in Serbia.
Cost Efficiency
Significantly lower labor and utility costs in comparison to major FDI recipients in Central and Eastern Europe safeguard excellent prospects of reaching targeted profitability. The average monthly salary in the industry in 2004 was €326.
Intellectual Capital
Pharmaceutical industry is the one with the best qualification structure of all industries in Serbia. The number of collage and university graduates as percentage of total number of employees in the sector is around 30%. Moreover, medical universities produce close to a thousand of university graduates annually. This creates an excellent base for recruitment of educated workforce.
Market Potential
Decades of presence in the Russian market has built trust and loyalty towards Serbian drugs and pharmaceuticals. Serbia enjoys a FTA with the Russian Federation which applies to almost all drugs and medical devices. Furthermore, based on the free trade agreements signed with other Southeast European countries a producer is entitled to market its goods to a 60 mill people market customs free.
Commitment to Quality
Most of the manufacturers within the sector comply with ISO 9000 quality system. Some of them acquired ISO 14000 certificate, while the leaders of the industry comply with GMP, GLP and GCP.
Companies like Hemofarm and Galenika, which have invested substantial capital into development, are expanding the frontiers of pharmaceutical industry in the Region. Other companies like the Zdravlje Actavis (owned by Actavis company from Iceland) which is one of the leading manufacturers of generics in Serbia provide access to low-cost drugs.
Hemofarm is a company with decades of experience in drug production. Today, the Group comprises a parent company and 21 subsidiaries, 12 in SCG and the rest abroad. Galenika has been producing drugs for 60 years. It was established in 1945, and soon after became the fourth company in the world producing penicillin. In 1991 it has entered a JV with ICN, which ended in 1999. Currently, the company accounts for 30% of the domestic market.

Kuwait tanker operator to order four mega vessels

September 29, 2006

KUWAIT CITY —  The state-owned Kuwait Oil Tanker Co. (KOTC) will soon order four giant oil tankers expected to cost some $500 million, chairman Abdullah Al Rumi said Wednesday.

The new order was approved by the national oil conglomerate Kuwait Petroleum Corp. (KPC), and will be offered in a tender soon, Rumi told the official KUNA news agency.

Each has a capacity of 300,000 tons and will replace old tankers in the company’s fleet of 24 vessels.

KOTC signed three contracts in 2004 with South Korean companies to build seven new vessels at a cost of $540 million. Delivery is expected to start next year.

They include two very large crude carriers (VLCC), two liquefied petroleum gas tankers, and three petroleum products vessels.

Established in 1957 by a group of Kuwaiti private investors, KOTC was taken over by the government in 1979. Last year it transported some 24 million tons, half of it to the Far East, India, and Africa.


September 29, 2006  

Greece, even though it joined European Union since 1981 and has been accepted in all major transnational organizations; it hasn’t been as equally adept in competing in the world economic arena and its internal market was in most respects a kind of protected agora for some major businesses. This is changing over the past year in a speedy way that will most certainly have regional ramifications, since the international capital is going to use Greece as a base in order to establish offshoots in South Eastern European states and the Black Sea ones.


 Starting from the banking sector one major French bank-Credit Agricole( is set to buy in the coming days the Greek Commercial Bank( for a reputed price of 3,5 billion Euro. It is interesting to note that this is the biggest takeover of a Greek bank in the country’s recent history and places the French capital in advantageous placement in the Balkans since the Greek bank is already positioned in Romania and Bulgaria and has a large costumer base.
Moreover the National Bank of Greece(www.nbg) has recently acquired 46% of the  Turkish Finasbank( for almost 2.2 billion Euro and with plans of gaining stakeholder control(Over 51%) within 2007. It is the biggest ever Greek investment in Turkey despite perennial relations between the two states and clearly indicates the goals that the Greek bank has in relation with regional expansion. Furthermore NBG wants to acquire the Romanian deposit bank CEC( that has around 7,500 employees and 1400 outlets across Romania. Simultaneously moves are being made towards the Serbian Vojvodjanska( which is on for sale by the Serbian authorities within the next few months. Finally NBG would be more that welcome to examine the Egyptian Alexandria bank( thus achieving the status of a true regional bank conglomerate. It is obvious that the heads in NBG are considering themselves capable of asserting a peripheral role within the European banking world and at the same time being able to withstand the increased competition.

 Another Greek financial institution Marfin bank( recently sold its 31,5% to Dubai Investment Group( a large Arabian financial conglomerate that is eying on the underdeveloped Balkan markets throughout its cooperation with Marfin. Other developments in the banking sector include the plans of Eurobank( of expanding to Poland with the opening of 300 outlets in the next years and the buyout of 10%of Bank of Cyprus( by the bank of Piraeus ( Pundits expect within the next three years only three to four independent banks to remain in Greece while the rest are going to become affiliated to either foreign or domestic enterprises.


 In other fields now such as the electronic sector the Greek company Intracom( sold last month its telecommunition sector to the Russian colossus Systema(, a company that was founded in 1993 and it is already the largest in the electronic and telecommunications sector in the CIS.
In the food industry a new group has been formed called VIVARTIA and it is the combination of Chipita(, Goodys( and Delta Holdings( along with another dozen food related companies. The new enlarged enterprise will the largest in the Balkans with an annual turnover of over 1 billion Euro and will employ some 18,000 employees. In a European scale it will be among the top 40 in its field. Simultaneously industrial giants such as the French Danone ( and the Swiss Nestle ( are building up their operations in Greece and another one, the Dutch Friesland ( inaugurated a new yogurt production facility in the city of Patras in southern Greece. This concentration of large companies will have ultimately as a side effect the elimination of the middle sized ones that cannot compete in the marketing or operational methods of their largest antagonists.

 In the sector of commerce globalization has made its entrance in Greece with the welcoming image of high profile European chain stores and their impossible to resist offers. Already last year the British Dixon electronic chain store( has bought the Greek Kotsovolos stores( with immediate plans of investing in Bulgaria and Romania under the new management. Continuing the German multinational Media Markt( has made its presence felt especially to the Greek owned electronic chain stores by eliminating competition with its offers and its new marketing techniques. Finally the French Leroy Merlin( has set foot in the Greek DIY market as well as the French bookstore chain FNAC(
  Another German supermarket chain called Plus Supermarkets is set to make an entrance in early 2007 and has already drafted plans for a total investment of 600 Euro in the Greek market, which is steadily becoming foreign oriented in the past few years as far as ownership is concerned. Supermarkets like the French Carrefour( the German Lidl( have acquired large market segments and expand hastily into the Greek periphery like small provisional towns.  The Athenian now commercial world has seen the birth of two mega shopping malls the first one called The Mall( and in Thessaloniki the Mediterranean Cosmos( . The former was constructed by the Greek property company Lamda development( which is controlled by the richest Greek –Spyros Latsis-. Already 50% of The Mall has being sold to the British bank HSBC( for around 450 million Euro whilst the Mediterranean Cosmos is being managed by the British as well Lampert Smith Hampton properties.


The Greek shipping sector is still growing strong nowadays and there are some notable developments in the internal Greek market. The Chinese company COSCO( has already acquired container logistic outlets in the port of Piraeus and it already views the port as its main destination for container cargo in the Eastern Mediterranean Sea. The port authority of Piraeus ( has plans of collaborating with the Chinese as well as with the Israeli navigation company ZIM( in expanding the existing container facilities in order to be able to serve the Southern Eastern European region. Moreover during spring 2007 Carnival cruises ( the American cruising company is set to make Piraeus its embarkation port for cruises ranging across the East Med. Easy Cruise ( the latest company of the famous Greek Stelios Hadjioannou is negotiating its entrance for Aegean cruises that are going to target young people and middle class people that were not into the cruising fashion but it is assumed that they are going to be lured by the low prices the Easy Cruise concept is going to introduce.

Developments have occurred in this sector as well and already the Greek telephone and internet provider Forthnet( has been acquired by the Icelandic fund Novator  Equities ( which is an energetic fund as far as acquisitions are concerned in Eastern Europe mainly.  Moreover the Greek mobile telephony provider TIM( was bought by the American funds APAX Partners( and Texas Pacific Group( for around 1.6 billion Euros and the markets are anxious to whom this funds are going to resell this company within the next few months. The same American funds have bought Q Telecom a mobile and land telephony provider for 325 million Euro but they do not intend to merge TIM and Q Telecom, instead the most probableoutcome would be to resell those two companies in different buyers.

Within the coming months the government plans on the fate of OTE ( the state telecom company where the government has a 38% stake; are going to be unveiled and maga companies such as French Telecom( and the Spanish Telephonica( are already on the move. Also the Athens International Airport ( in which the state has a 55% stake is set for privatization through the stock market within early 2007. Finally the Agricultural Bank of Greece( which is mainly controlled by state entities and has a market capitalization of almost 4 billion Euro is on the verge of being fully privatized. Moreover during the past decade large capital accumulation has occurred in the Greek shipping sector that is going sooner or latter to use the weight of its international assets in the upcoming upturn of the Greek economy from the state to the private sector. As far as the regional implications are concerned, the profitable Balkan companies are soon going to become targets of the foreign capital mainly throughout the Greek subsidiaries and quite possibly for the first time since the 19th century the Geopolitical Balkan sphere is going to homogenize geoeconomically as well. Time will tell though.
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