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Victoria Mindova

"The main priority of the country should be the restoration of the Greek banking system," the managing director for Central and South-eastern Europe at the European Bank for Reconstruction and Development (EBRD) Jean-Marc Peterschmitt said. He explained that the banking system has become a "civilian victim" of the financial crisis. Peterschmitt insists on restoring the capital that the debt restructuring has melted and on regaining the access to financial markets.

The lack of liquidity and funding for new projects is one of the biggest problems of the Mediterranean country at present. The coming recapitalization of banks and the repayment of part of the old obligations of the state to the private sector are not expected to allow the real business to take a breath. They will only fill the gaps that have been formed after the deepening of the financial crisis and the debt haircut.

This is also the opinion of the president of the Hellenic Federation of Enterprises Dimitris Daskalopoulos, who spoke at a business forum the union had organized. The event aimed to introduce Greek corporations to the opportunities the European Bank for Reconstruction and Development offers for the funding of projects and corporate strategies for growth.

Daskalopoulos claims that it is utopian to believe that the aid to banks to the amount of 25 billion euro, which will come with the new tranche from Europe and the International Monetary Fund, will benefit the business. "It will cover the losses from the PSI and their own (the banks’) optimistic expectations about the level of risk. The additional pressure from the issuance of short-term government bonds will further drain the capital from businesses and households," Daskalopoulos said.

Major financial institutions that have funds available to invest in projects with long-term returns can provide a temporary solution to the lack of funding.

"While the Greek financial system is stabilized, the European Bank for Reconstruction and Development can play a crucial role in the funding of major projects of Greek companies that already operate in the Balkan and other regions," Peterschmitt said. He explained that the institution has supported projects of Greek companies in countries such as Romania, Russia, Serbia and Bulgaria. He encourages the Greek enterprises to seek new development opportunities that will deepen trade integration.

Development of infrastructure projects between the countries will be crucial to improving the economic situation in the Balkan region. This is the opinion of Peter Sanfey who is Deputy Director of Country Strategy and Policy at the European Bank for Reconstruction and Development. Such projects will support employment in the short and medium term and in the long run, they will improve conditions for interstate commerce and development. They will also facilitate the business development in the countries and stimulate bilateral projects between the neighbours in the Balkans.

Bill Zacharias, CFO of the cement production holding Titan, which has 110 years of history, presented the opportunities provided by major financial institutions to support ambitious projects in different countries. In his opinion, the cooperation of industrial companies with banks such as the EBRD has many advantages. They have cycles in their investment approaches, flexibility in the means of financing and are not afraid to support projects in emerging markets. They can use not only credit lines to finance projects, but also direct investment in projects of strategic importance.

Zacharias stresses that the cement industry requires serious investment in order to build a typical cement plant. This initiative needs a base investment to the amount of 200 million euro. Titan has been present on the Bulgarian market since 2004 with the purchase of the public Zlatna Panega cement plant, but has strategic investments in other Balkan countries, Turkey, USA and Egypt. It has 148 manufacturing units in different parts of the world and relies heavily on geographic diversification to expand its strategic development.

"We believe that our decision to invest in the Balkan region was logical for many reasons related to long-term planning - long-term GDP growth, the demographic importance of the region and the need to build a strong infrastructure in the Balkan countries in order to reach European standards," Zacharias explained the Titan’s decision to invest in the Balkan countries.

He does not deny that there are still difficulties in doing business in the region. "There are ethnic and historical memories to the surface, which create political constraints and social unrest in many cases. Political instability in turn creates business instability due to the lack of strong administration, operating independently of political developments in the separate Balkan countries. As a result of the lack of operational capacity of institutions in these countries, there are still many challenges in working with local authorities that are not able to assist in finding a solution to even ordinary business matters," the businessman claims.

Institutions such as the European Bank for Reconstruction and Development can be a mediator in the implementation of projects of Greek firms in the Balkan region, relying on its experience of the last twenty years, experts note. Despite the crisis, Greece and neighbouring countries can be of mutual benefit. The development of cross-border projects of strategic importance will improve the quality of trade and industrial relations and will boost economic development.