Debt crisis
October 8, 2011
Ahead of last week's brief visit by German Economics Minister Philipp Rösler to Athens, the prevailing feeling was that the trip itself was the important thing. It would be the first time an economics minister from a European Union country was visiting Greece since the outbreak of the country's devastating debt crisis.
The symbolic message of the trip was clear. Once again, Europe was beginning to trust the Greeks. But the overall goal of Rösler's visit was more nebulous. A 23-point joint declaration Rösler signed with his Greek counterpart Michalis Chrysohoidis was full of good intentions but lacked concrete implementation plans.
Positive signals
But there were still encouraging signs for Greece. These could be seen on the margins of the German-Greek business forum that accompanied Rösler's trip. Representatives from the German solar industry pledged to contribute 5 percent of the estimated 20 billion euros ($26 billion) for the Greek government's "Helios" project.
The energy giant E.ON, meanwhile, said it wanted to build a massive pipeline through Greece in order to bring natural gas from Azerbaijan to Europe.
In all, ambassadors from 32 German companies met with around 300 representatives of Greek companies. Although only a handful of deals were actually signed, it was seen as important that delegations were able to get to know their counterparts personally and to discuss cooperation possibilities.
All's well that ends well?
But Greece has plenty of other problems. One of the beleaguered state's biggest headaches is the question of if and when it will be forced to declare bankruptcy. This alone has made many international firms wary of investing in Greece.
Klaus Lutz, chief executive with services and retail company BayWa, pointed out that it was unreasonable to expect large, listed companies to become active in Greece until the question of the country's financial future was solved. The matter of Greece's debt situation was irrelevant, he said. What was needed was clarity.
Financing is not a problem for a company like BayWa, which turns over around eight billion euros a year. But for smaller renewable energy firms that can't get credit, like Thessaloniki-based REW Hellas, investment cannot follow, as the company's chairwoman Victoria Alexandratou underlined.
In Germany, medium-sized businesses are represented by the government-owned development bank KfW. A similar credit institute will be established in Greece following this model. But whether or not the bank can distribute funding obtained from Greece's EU partners, as Rösler thinks it can, is another question.
Germany has also offered the assistance of experts to help streamline the Greek administration and judiciary and help the country handle the billions in financial aid recently made available.
Sensitive talks
One major factor in improving Greece's investment climate is settling the country's debts with several German firms. This was a topic raised in discussions between Rösler and Prime Minister George Papandreou and Finance Minister Evangelos Venizelos.
Outstanding payments worth up to half a billion euros have hit companies like Bayer, Deutsche Telekom, Siemens and Frenesius. The Greek finance minister vowed publicly to try resolve these debts as quickly as possible.
The positive atmosphere that surrounded Rösler's visit was, apparently, not simply spin. Papandreou spent twice as long as had been planned in talks with members of Germany's major political parties - the Christian Democrats, the Social Democrats and the Free Democrats - who also accompanied the Economics Minister.
Venizelos thanked Germany for its support, and even the leader of the opposition New Democracy party, Antonis Samaras, chimed in with the general good cheer. The center-right leader has opposed nearly all the reforms the Papandreou government has tried to push through parliament, but even Samaras apparently believes German investment in Greece is an important development.
Author: Panagiotis Kouparanis / dfm
Editor: Ben Knight