The past year got off to a good start, with celebrations to welcome the euro, closer relations with Europe and the expectations that accompany the new and unknown all contributing to a sense of euphoria in politics and business. The new currency’s arrival was not without its attendant problems – another lesson that life does not move in straight lines and one single event is not enough to solve problems that have been around for decades. Expectations were lowered, optimism was replaced by concern and illusions were dashed. So, 2002 was in some ways a year of revelations. The euro did not turn out to be a panacea, businesses showed just how vulnerable they were to competition and the robust health the State claimed to enjoy proved to be artificial, the result of years of concealing numerous items of expenditure. Even the supposedly untouchable November 17 terrorist group was rooted out, revealing the incompetence of the authorities in previous years and the extent of most people’s tolerance of the phenomenon. One might say that 2002 was a year of adaptation and of coming down to earth. Businesses were forced to reject elements of artificial prosperity, and results were adjusted accordingly – a classic example is the recent bankruptcy of the Manos travel bureau. The State is now aware it is under observation and cannot spend too freely without suffering the consequences. Everyone now recognizes just what role the old standbys of work, knowledge, productivity and innovation play in the economy, in society and politics. In politics This year has also been a revealing one for politics in the country, where the message now is «no pain, no gain.» The prime minister knows foreign affairs are not enough, that work also has to be done on the domestic front. And New Democracy party’s program shows it has realized that nothing happens by itself and that the Greek people need evidence on which to base their support for the opposition’s platform. The Third Community Support Framework subsidies are not a solution unless accompanied by rational management, the removal of bureaucratic obstacles and organization in the provinces. The same applies to the Olympic Games, presented as a great opportunity but which entail unbelievable risks if seen as a treasure trove. If its budget is overstepped – although some claim this has already occurred – the country could be in deep trouble. Given this reality check, it is possible to say that 2003 is beginning on a better footing, with an awareness of risks along with potential opportunities for the economy. It is expected that community resources will finally begin to flow into the economy and out into the broader productive sectors. As preparations for the Games reach a peak, there will be opportunities, however temporary, for boosting economic activity. At the same time, apart from the uncertainly over developments in Iraq, there are hopes for stronger economic growth in Europe, as made apparent in reports by international economic organizations. In these conditions, a further reduction in interest rates in the eurozone is possible, while on the home front, the situation is not expected to change radically, despite pressure from the Eurostat revisions of public accounts. Efforts to contain costs by a growing number of businesses and what is clearly a more systematic focus on products, along with a search for opportunities for growth, are all laying healthier foundations than those existing a year ago. Even those companies that appear doomed are making desperate attempts to stay afloat during 2003, precisely because they believe there will be opportunities to improve their position. Banking sector In 2003, in other words, the business environment will be more mature and more mobile, with searches for cooperative ventures throughout all areas of the economy. Everyone seems to be talking to everyone else. Banks – which do not want any more surprises such as the Manos bankruptcy – are even indirectly subsidising activities so as to prevent companies collapsing, giving them time to recover in the hope of acquiring a share of various markets. Given the above, and with adjustments to more realistic circumstances, 2003 might be more muted than 2002, but will create conditions for a healthier economy. Bankers believe it will be a better year and are expecting company profits to rise by about 15 percent, and their own earnings by about 30 percent. If this proves true, and such trends become apparent early in the year – although the first quarter is expected to be difficult because of the rise in petroleum prices – then one can hope for improved stock market conditions. After the Athens Stock Exchange’s long dive over the past three years, one might expect better conditions if improved business conditions materialize and there are no unexpected surprises. With this prospect in mind, banks are setting new funding mechanisms in motion such as corporate bonds, backed by company property assets, which over the past decade have been an unexploited but strong property base. Economic climate Nevertheless, favorable predictions such as these are overshadowed by political uncertainties, the outcome of which is capable of determining the economic climate one way or another. The Cyprus issue, for example, is a crucial factor. Last month’s EU summit in Copenhagen set the tone, but the fate of the UN Secretary-General’s proposal for Cyprus by next spring will be extremely decisive. If things proceed smoothly, if Cyprus joins the EU without any complications, and the political problem on the island is resolved, laying the foundations for the normalization of Greek-Turkish relations, there will be an immediate, beneficial effect on the economy, at least at the level of expectations. If, on the other hand, the situation becomes more complicated, with a new period of uncertainty in relations with Turkey, it will affect domestic politics and everything that involves. There are those who believe that 2003 will be an electoral year in Greece and that once Greece’s presidency of the European Union ends in June, the country will be entering a pre-electoral period, if not an actual election campaign. If elections are held in the fall of 2003, it is clear to all that it will be one of the toughest battles in recent history. ND ahead The ruling PASOK party will be throwing everything it has at ND’s lead, moving mountains to avert an opposition victory. What is sure, is that the coming year, like every other, will not move in a straight line. There will be both ups and downs. During the first months, it will become clear whether there will be an attack on Iraq and if there is to be a confrontation with North Korea, which has activitated its nuclear program. In both cases, there is great uncertainty which affects everyone from the USA and a concerned Europe to the beleaguered Middle East. Whatever the outcome, Greece is entering the new year on a more realistic basis, freed of the arrogance and over-optimism of previous years. Perhaps this last factor will prove to be the most crucial for the country and its people.