Greece?s difficult financial situation, along with the need for foreign investments, has resulted in the country?s financial stagnation. Under the circumstances, it is crucial that Greece attracts foreign investors that would help the recovery of the economy and promote ?healthier? and speedier financial growth. Despite the gravity of these needs, Prime Minister George Papandreou?s government seems unable to cope with the challenges of foreign investment. One of the most significant examples of this failure is the case of Astakos Port. In addition, rumors of potential political and economic instability in the country are leading to the loss of crucial foreign investment opportunities. If the country is going to restart its economy, it is essential that foreign investment in Greece be further guaranteed.
The Bretton Woods system, which consists of institutions including the World Bank and the International Monetary Fund, established the Multilateral Investment Guarantee Agency (MIGA) in 1988 in order to ensure foreign investments were made by industrialized countries in developing countries. MIGA supports investors and lenders by providing them with security against currency transfer restrictions, expropriation, war and civil disturbance, breach of contract and non-honoring of sovereign financial obligations. Its stabilizing activities further include deterring harmful actions, resolving disputes, providing extensive country knowledge, social development and environmental protection.
The previously established stability of financial, monetary and political systems in developed countries cannot be taken for granted anymore, since the global financial crisis has affected and destabilized many countries. New challenges for foreign investors are arising. In addition, an institutional gap exists regarding guarantees of foreign investments in developed countries. MIGA insures investments only for developing member states, while Greece has been a member of the OECD for several decades now. In the face of these new challenges, there are some options that the international community could choose, among others, in order to boost foreign investment in developed countries that have been slammed by the storm of the financial crisis.
By establishing a ?MIGA Plus,? MIGA could temporarily extend its list of guaranteed recipient countries to include developed countries in a state of financial crisis, in order for them to be able to benefit from MIGA?s services.
If not MIGA, then the EU could set up a similar agency that would secure foreign investments in the European countries that have been hurt by the global financial crisis. The creation of such an agency is concurrent with the goals of the EU and its political integration. At the same time, it would promote viable and attractive opportunities that could lead to sound economies and markets.
Last but not least, an array of international investment and financial institutions, including the European Investment Bank, could take the lead and establish such a foreign investment guarantee mechanism for developed countries.
In the current financial crisis economies are falling and rising so rapidly that the boundaries between developed countries, countries in transition, rapidly developing nations, and developed nations are becoming more blurred than ever before. Since all countries should enjoy a high quality of life, sustainable growth and economic stability, it is high time we devised new institutions and instruments. What it will take for world economies, and Greece, to recuperate is a change of perception, creativity and leadership on the global level toward a new, instrumental, ethical economic governance.
* Dionysia-Theodora Avgerinopoulou is a member of the Greek Parliament and a member of the Young Global Leader Forum of the World Economic Forum.