ECONOMY

Olympic dividends not certain yet for Athens

Once the Olympic flame dies next August, Greece will face what could be an even greater challenge than hosting the Games: turning the billions spent on preparations into a profitable long-term investment. The impact that the massive spending ahead of the Athens 2004 Games has already had on the Greek economy is indisputable. The government estimates that about 40 billion euros of European Union funds, complemented by public and private investment, have been adding up to half a percent to the country’s gross domestic product since 1998, and the effect for 2004 is seen at 0.9 to 1.3 percent. This has helped Greece to sail through the global economic slowdown and grow at around a 4 percent clip, while many of its eurozone peers have been flirting with recession. But once the work on Olympic sites is done and athletes and spectators go home, the benefits will look less certain. The Greek government, facing general elections by May – three months before the Games – has promised to keep investments going after 2004. The government center for planning and economic research estimates that about 65,000 permanent jobs will be created thanks to the Games, mainly in the telecommunications, services and tourism sectors. Greek construction firms are also seen expanding, helped by expertise gained while completing Olympic projects. But economists worry that unless those billions already spent and those yet to be invested are flanked by sweeping economic reforms, their impact will fizzle out once EU funds start drying up after 2006. Even in the vital tourism sector that accounts for some 10 percent of Greece’s economic output and employment, the Olympic payoff is not taken for granted. «In 2004 we have to give our best; it’s the year to sow the seeds, not to make the harvest,» said Giorgos Drakopoulos, managing director at Greek tourism industry group SETE. He said his group was launching an internal campaign to drive this message home and discourage «get rich in one year» tactics that could tarnish the whole industry’s reputation for years to come. Athens 2004 organizers hope to emulate the success of 2000 Games hosts Sydney and Barcelona in 1992. Both cities have boosted tourism and added to economic growth long after their events. But Greece still lacks an international tourism promotion campaign linked to the Games, something Sydney and Barcelona had in place early in the runup to their events, Drakopoulos said. The head of the country’s National Tourism board, Yiannis Patelis, predicted earlier this year that tourism numbers might even fall next year. «People tend to stay away from where the Games are,» he told reporters. Drakopoulos said a small rise next year was achievable, but the real goal was to ensure steady growth afterward. SETE is targeting a rise in foreign tourist arrivals from 14 million in 2002 to 19 million in 2010, with the caveat that the Games are considered a success. «If the Games are a success we’ve got 10 years of good business ahead; if they go bad, it’s like starting all over,» he said. Greece is the smallest country since Finland in 1952 to host the summer Games and the stakes are high. But whether it has done enough to earn fat annual Olympic dividends is still hotly debated. Better roads The Federation of Greek Industries (SEV), a leading business lobby, has warned that without deregulation, a more flexible labor market and tax cuts, Greece risks a post-Games slump and a spike in unemployment. The fear is shared by some ordinary Athenians. «The day after (the Games) will be a black day for the Greek economy,» said Marios Stavropoulos, who runs a barber’s shop in central Athens. The government has been brushing off such fears, saying funding, currently focused on Games preparation, will not dry up but will be redirected toward other regions. «The post-2004 era will be even better,» Prime Minister Costas Simitis said earlier this year. Simitis’s Socialist government argues that improved roads and transport networks, upgraded telecommunications and better expertise will secure long-term growth by boosting productivity. Economists say, however, that better infrastructure, the main legacy of the Games, is needed but is not sufficient to keep the economy growing, attract foreign investment and create jobs. «Despite high growth rates the economy has been unable to create jobs, and unless we see initiatives to liberalize the labor market we’ll see unemployment rising after 2006,» said Platon Monokroussos, chief economist at EFG Eurobank. «In order to attract foreign direct investment a lot of other things have to be done, such as simplifying the tax system and cutting red tape,» he added.