ECONOMY

Is Greek economic diplomacy failing in the neighborhood?

Greek politicians, former and present, have never missed an opportunity to boast about the extended presence of Greek businesses in neighboring countries. Still, they have almost all failed to actively promote local company interests in the greater geographical area, according to high-level executives from the private sector. This must change. Economic diplomacy should exercise some leverage, including arm-twisting, to promote local business interests in addition to the popular photo opportunities and handshakes with the leaders of the Balkan countries.  For many years, the local press, politicians and others have led the general public to believe the country is something like a regional economic superpower with considerable leverage on neighboring countries aspiring to join the EU (European Union). Although Greece is indeed the richest country in the area in terms of per capita GDP (gross domestic product) and among the biggest investors, it has failed to exercise its leverage to extract even the modest economic benefits one would expect from any country, not to mention a peripheral powerhouse.  Investment bankers and others who are fully aware of the FDI (foreign direct investment) landscape in Southeastern European countries paint a less encouraging picture. Although there are hundreds and perhaps thousands of small and medium-sized Greek companies in these countries, it is rare to find local business be the major shareholders of local corporate leaders. This makes the presence of Greek firms less influential than it would have been otherwise, with Austrian, Italian and French enterprises getting the most leverage.  With the exception of OTE, which is the majority shareholder in Romania’s telecoms organization, no other local company owns a sector leader in that country. Of course, there are many Greek companies which have either bought or set up their own franchises from scratch. Alpha Bank, EFG Eurobank, National Bank. Chipita, Germanos, the Mytilineos Group, Gregory snacks, Intracom, the Loulis Group and Cretan Plastics are among the most well-known. A similar situation exists in Bulgaria, where National Bank of Greece owns UBB, the country’s third-largest bank in terms of assets, while Coca-Cola HBC and Athens Brewery own the country’s biggest brewery. CosmOTE, OTE’s mobile subsidiary, owns one of the country’s mobile telephony firms.      It is known that Greece has understandably supported the EU’s enlargement toward the east, fully backing the applications of Bulgaria and Romania which are to become EU members in the next couple of years. It has also backed Turkey’s admission to the EU in a bid to encourage its pro-reformist political forces and normalize the historically tumultuous relationship between the two countries. In this context, nobody would expect Greece to be in a position to seek and get a piece of the economic pie from Turkey. No leverage On the other hand, one could expect Greece to be more demanding from the other more friendly neighboring countries, such as Romania, Bulgaria and eventually Serbia. High-level executives and major shareholders of Greek companies doing business in these countries say the Greek state has never played this role. As a result, they claim, the Bulgarian and the Romanian governments have awarded procurement contracts and even major infrastructure projects to companies from other EU countries and the US, perhaps thinking to foster tighter relations in this way. «A good relationship should work both ways but in this case, it is a one way street. Greek companies invest and create employment and wealth in these countries in the hope that they will get back dividends some day, but the governments of the host countries still exclude them from procurement contracts and other projects co-financed with EU money,» says a high-level official in a medium-sized listed company. In such cases, it is normal one to wonder whether this was the result of any bidding process or think that perhaps the Greek firms were not qualified for the project. But, executives quickly point out that this is not the way things work in these countries, noting the example of a Portuguese construction company which was awarded a 350-million-euro road project in Bulgaria. «The problem is more acute in Bulgaria. So, it is a bit ironic for us to see the Greek prime minister shaking the hand of his counterpart and smiling, knowing what is happening,» the same high-level executive adds. «Since it is EU money and Greece is one of the major foreign investors in these countries, it should demand analogous treatment for its companies as other countries such as Austria does for its own companies in the region.» In off-the-record conversations, executives expressed strong reservations about the effectiveness of what they call the kind and gentle foreign economic policy pursued by consecutive Greek governments, predicting things will get worse for them once these neighboring countries enter the EU. «They need Greece and they behave this way. Imagine what is going to happen when they are in the (EU) club and no longer need us,» says another high-level manager. Of course, it is difficult to judge whether the reality described is accurate. On the other hand, it is interesting to note the unanimity of opinions about the alleged unfair treatment of Greek companies in the granting of procurement contracts and other projects in neighboring countries. This, along with the traditional soft line of Greek economic diplomacy, leads us to believe that Greek governments have not done as much as they could to promote local business interests in the greater area.  It is time that this change. Greek economic diplomacy should become more active in supporting local businesses in neighboring countries and trying to ensure that they are not left out of procurements and other projects, even if this means applying a bit of arm-twisting. After all, Greece has always been an unequivocal supporter of their EU cause and has had thousands of small, medium and large firms betting on the future of our neighbors by pouring hundreds of millions of euros in with foreign direct investment. So demanding equal treatment and a level playing field for all EU and non-EU companies competing for contracts and other public works is the least it can ask of our friends across the border.