ECONOMY

Foreign firms eye Greece

The fate of large Greek enterprises seems to be predetermined: Their future lies in their acquisition by some still bigger European or transatlantic group. This prospect is not necessarily negative, as it can contribute to the modernization of the Greek market. An increase in direct private investment from abroad would indicate that foreign capital views worthwhile opportunities in this country. Such a trend should be encouraged, just as we would expect the favorable treatment of Greek enterprises abroad. The question is what role the big multinationals reserve for the smaller Greek entities they acquire? In most cases, they purchase sales networks, possibly a substation with operations in the wider region; in a lesser number of cases, they will target productive units with lower costs than in other more developed countries. If such a wave of acquisitions occurs, it is certain to have a catalytic effect, by creating a relatively numerous group of Greek entrepreneurs who will no longer control their businesses but will possess ample liquidity, which no one can be sure where they will channel. It will be like a club of ex-directors. Some will move among international banking circles as creditworthy clients and others will will set up new ventures. This, in turn, will bring about changes in many of the balances in the country’s social and perhaps political life, and is certain to change the country’s business map. We already have had precedents of big Greek enterprises that have been bought out by large foreign entities; the professional managers who take over the helm strive to impose their own priorities, infusing a substantial measure of professionalism which was previously lacking. Especially in cases where the charismatic and self-made businessman made many decisions based on emotional criteria, the improvements in efficiency are unmistakable. But there is another side, too. Foreign investors do not send their best potential to Greece; the foreign managers coming to Greece are not among those destined for the more illustrious international careers. Viewed from the angle of government policy, the prospect of big Greek enterprises passing into foreign hands poses new priorities. What is increasing import is in what way policy will encourage the creation of new and small but dynamic enterprises. This is where the future of the Greek economy lies. Only the enterprises growing at a fast pace will create jobs and income. They alone will show a tendency to present their full profitability, in order to gather the capital needed to finance their further growth. For this reason, corporate tax rates have to come down, the functions of public administration must be improved and the educational system must adapt to the requirements of speedy growth. All indications lead to the conclusion that after the sale of Inter American, the country’s biggest insurance company – to Holland-based Eureko group – and the impending deal between Piraeus Bank and Nationale Nederlanden, the era of big acquisitions will come to industry as well. It is logical for the financial sector to adapt faster to developments, but it should also be assumed that industry will follow. This will be one of the consequences of membership in the eurozone, which are likely to begin taking shape in the coming months. Greece’s integration into the eurozone cannot only be symbolic, it is bound to have a substantive impact. And, as a rule, reality is more exciting than any forecast. In a large market such as the eurozone, far from being subject to criticism, the transnational acquisitions of businesses should be encouraged. The central issue is how far the economic policy applied creates growth and supports local incomes. This will come to the fore with increasing force in the coming months and this is why the government’s economic ministers have to realize that their grace period is not limitless.