Why did Thessaloniki not live up to expectations, common in the early 1990s, that it would become the regional hub for the Balkans? Why has Athens’s relative importance actually increased, both domestically and in the Balkans? And what was the role of market reforms and the Olympics in the above outcomes? A recent study on these questions has been published at the site of the Hellenic Observatory of the London School of Economics (http://www.lse.ac.uk/collections/hellenicobservatory/research/default.htm, at the «E-papers» section). The paper, by political scientist Antonis Kamaras, who has served as an adviser to Greek financial institutions – notably the National Bank – and is a former research officer at the Hellenic Observatory, is titled «Market Reforms and Urban Disparity: The Cases of Athens & Thessaloniki.» Kamaras’s analysis is based on the observation that Greece has radically changed since the early 1990s. The change is the result of transformation of the Greek society, economy, and politics into what specialized international literature calls the «stabilization state.» The strategic goal of this stabilization process was participation in the European Monetary Union. This goal was not adequately explained to the public in clear terms, because of the daunting task of explaining the highly technical arguments in favor of monetary union. On the other hand, there was no division in Greece over the goal of monetary union, as there is in the three countries that have opted to stay out of it (Denmark, Sweden and the UK) or in countries where participation was hotly debated (as in France and Germany). In Greece, joining the eurozone was perceived as a matter of honor, a proof that Greece was able to play by the rules of its more advanced partners. Therefore, success was a one-way street and failure would have been a catastrophe. The Olympics were much easier to explain to the public and, although putting them on was a more limited goal in scope, it was also one in which Greece could not be seen to fail. The Olympics accelerated the upgrading of infrastructure in the Athens area and were the crowning achievement of the reform process begun in the 1990s. The stock market bubble of 1998-99 also mainly helped Athenian listed firms. None of the FTSE/ASE-20 blue chip firms and only four of the FTSE/ASE Mid-40 firms are based outside the Athens region. The two Thessaloniki-based blue chip firms in 1997 were acquired by Athens firms: Macedonia Thrace Bank was absorbed by Piraeus Bank and Delta Holdings acquired a majority of fast-food chain Goody’s. On top of that, the most active firms in the other Balkan countries are not Thessaloniki firms, but Athens-based ones. Thessaloniki has always measured itself against Athens and has found itself lacking and discriminated against. Local authorities keep clamoring for companies, organizations and works to be set up in Thessaloniki, but most such cases just imitate Athens and do not have any trangible results. Such cases are the Thessaloniki Stock Exchange Center and the Black Sea Trade and Development Bank. There is also the hope that Greece’s second-largest city will be chosen to host Expo 2008 – again with the help of «the center» – while promises for a Thessaloniki metro have not been fulfilled yet. This feeling of inferiority was a major reason why Thessaloniki, and almost all of northern Greece with it, has consistently voted for the New Democracy party in the past three elections, while the Socialist PASOK was in government. New Democracy’s victory in March, and the fact that Prime Minister Costas Karamanlis himself hails from Thessaloniki, has raised expectations, and demands, which will be hard to meet by a government which, after all, is based in Athens.