The Iraq war and the economic uncertainty it has fueled have exacerbated the longstanding problems of Greek enterprises – a high debt load, high-cost structure and lack of liquidity – already evident amid a prolonged global downturn. Growth prospects have further diminished, consumption is ebbing and a projected fall in tourism is sending jitters throughout the economy. Industrial production fell 5 percent in February, exports fell 12.5 percent in 2002, industrial investment is estimated to have declined 2 percent and the current account deficit reached 6.5 percent of gross domestic product last year. Many businesspeople appear apprehensive that the situation may slide further before it gets better, and fear the worst. Even leaders of listed firms considered the most capable of weathering worst-case scenarios, complain that they face an acute liquidity problem, which puts a brake on growth and exports. «Borrowing is not an easy option under present conditions; on the one hand, debt exposure is already high, eating into profits, and on the other, banks are now tight, and uncompromising as regards collateral guarantees, which now as a rule include businesspeople’s personal property assets,» says a business leader. The situation appears quite critical for many listed firms; a chief financial officer of a large retail group claimed that «companies’ balance sheets and results are no longer reliable tools for assessing their financial standing.» «The figures are not necessarily false, but assets have been mortgaged and are unable to back the requirements of daily business activity,» he says. «I doubt whether we can say with any certainty that even 30 of the 370 or so listed firms today can take the pressure; these are mainly large enterprises, with a strong capital base and a privileged relationship with the market,» he adds. «The Greek business environment has taken a dramatic turn for the worse, for many and varied reasons, all equally important,» says Nikos Koutsianas, chairman of the Cosmetics Manufacturers Association and a member of the Federation of Greek Industries’ General Council. No national strategy «The most obvious one, perhaps, is the prolonged global recession. However, there are serious intrinsic factors which have been underestimated. Many enterprises with growth potential made forays into many sectors, believing they could overcome the deficiencies of the economic environment: the result of the lack of a national strategy, transparency and efficient management of Greek and EU investment subsidies, and the impediments posed by the intensely bureaucratic state machine,» he notes. These problems, he continues, have always existed and firms have always contended with them. But today, they have accumulated to a serious extent and at an adverse moment, feeding uncertainty, leading to dead ends and eroding and weakening the country’s business fabric. «This is a vicious circle that is not at all easy for firms to break out of. The worst thing is that the government is largely inert. I would say that firms do their bit: they cut down costs, reduce production, pressure their clients and suppliers as much as they can, lay off as many staff as they can. But this is not enough; the way out is for enterprises to acquire an outward-looking attitude and greater flexibility; to lay emphasis on exports, merge with others and create dynamic groups. «In many sectors, including cosmetics, there is a large potential for export activity. However, enterprises feel insecure and unprotected. There is no national strategy and a systematic effort in this direction. Lately, there has been some movement, which is timid, however. We need a really energetic mobilization,» says Koutsianas.