The Greek economy is at a critical crossroads. It needs to make good news, quickly, that will act as a magnet for foreign investors. The risk of a Greek exit from the eurozone has finally been removed and the country’s macroeconomics are back on track.
But the major good news has yet to come. The international investment climate would change dramatically if, for example, bulldozers finally entered the site of the former airport at Elliniko. It would be tangible proof that something is changing. In every international investment forum on Greece, analysts keep asking if Elliniko or any other major investment project has gone ahead.
But lately they have been asking about another issue, which is very worrying. The case of jeweler Folli Follie has caused great harm to the country. Stereotypes are easily created in the markets and are very difficult to eradicate.
In the wake of the crisis, anything Greek has been viewed with a sense of suspicion. It is extremely unfair, because small, serious companies that had begun to export have found themselves hitting a wall and facing questions like “How can we trust a Greek company?”
Even large foreign banks have started making it difficult for shipping companies to access financing if their ships sail under a Greek flag. This climate of suspicion had started to dissipate, but when the case of Folli Follie came to light, all the stereotypes and uncertainty surged anew. The competent authorities acted too slow and failed to contain the damage when it was still manageable.
At recent events abroad on foreign investment in Greece, analysts have raised the subject in a pressing manner, questioning Greek institutions, corporate governance and existence of adequate supervision. Companies that were trying to gain foreign funding found themselves in a deadlock.
Similar cases have emerged in many Western countries. The difference is that a small country can pay a heavy price for such an oversight – something which can’t be said of Germany or the United States.
It is important for the Greek state and private sector representatives to mobilize immediately to limit the damage. One of the aims is achieving catharsis. Another is to change the framework and the oversight mechanism for listed companies – but without swinging to the other extreme, as is usually the case.
We need investments now, but not from Greek-American blowhards or Asian fly-by-night operators. In order to convince serious players to invest in Greece, it is not enough to rely on macroeconomic prospects, we need to restore the country’s credibility.