BUSINESS

Greek businesses buffeted by economic storm

TAGS: Economy

Greece's dive into financial uncertainty is forcing struggling businesses to take unusual steps to survive, including hoarding euros in cash.

The government's announcement it was closing banks this week to stem a panicked rush to withdraw money, left many ordinary Greeks high and dry.

"I put aside as much cash as possible" in advance, said an Athens baker Taso Paraskevopoulos, who had expected the controls to be imposed as the country staggered towards a default on a debt repayment to the International Monetary Fund.

"I sometimes need hundreds of euros a day to pay suppliers and expenses, I can't allow myself to be caught short," he said, making it quite clear he blames the radical left ruling party SYRIZA for the crisis.

Five months of fruitless negotiations between Greece and its EU-IMF creditors ended with the government enforcing strict credit controls to prevent an already weak banking system from hemorrhaging.

In theory, the controls will be lifted following Sunday's referendum on whether or not Greece should accept the creditors' conditions in the latest bailout offer – though many here believe the fallout will go further and deeper.

Air Liquide, a gas supply company that employs 130 people, told AFP it paid its employees in advance this month to make sure they could access their money.

"We are lucky we produce locally, sell locally, and work with local people. We've told our few foreign suppliers about the government's decision, asking them to be patient," a spokesman said.

The capital controls forbid money transfers abroad, except by express permission from the Finance Ministry.

Businesses which import their raw materials have been the hardest hit, says Vassilis Korkidis, head of the National Confederation of Hellenic Commerce (ESEE).

Established marble company Moschous, which boasts clients around the world, thought ahead "by ordering machines in advance", boss Constantin Baxevanakis said.

He is more worried, however, about the future. Baxevanakis believes the measures "are going to last."

Stathis Potamitis, head of a law office which employs around 100 people, agrees.

"It's easy to close banks, more difficult to re-open them... A big client called me on Tuesday to say he would pay in 120 days," he said.

As unease spreads, getting ones hands on cash has become a sort of national sport, with businesses from restaurants to car mechanics telling customers paying by card is no longer an option.

And what if the crisis drags on? asked Sotiris Papantonopoulos, head of online insurance broker Insurancemarket, which employs 70 people.

Launched in 2011 despite the financial crisis, the company was in expansion and had intended to take on other 60 people in the coming months, "but now everything is on hold," said Papantonopoulos, visibly upset after having to ask some of his employees not to come to work this week.

"If the measures remain in place for two months, well close, it's over. Our turnover has already dropped 70 percent over the past few days" as clients who were supposed to renew contracts this week failed to do so.

Withdrawals from ATMs are limited to 60 euros ($66) a day, which has severely complicated economic activity in a country where electronic money transactions are far rarer than cash transactions.

Thomas Douzis, 28, head of the high-end grocers "Ergon," said it had caused a real headache for many.

"Our supply chain relies on 300 or so small producers from across the country who are not always equipped to take card payments -- and in any case want cash," he said.

Douzis, who has six shops in Greece, was supposed to open a third shop abroad at the end of August -- this time in Miami -- but may be forced to put that project on hold for the unforeseeable future.

[AFP]

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