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The Greek economy would suffer significant losses from a possible military intervention in Syria, and the greatest impact will be on the price of oil. Yesterday, the price of crude oil reached 117 dollars per barrel on international markets and analysts are expecting it to jump to 150 dollars in the case of an attack on Damascus. The direct consequence of this will be increasing energy costs, which production circles in Greece have already determined as too high and negatively affecting the reduction of domestic prices.

Depending on the severity and especially the duration of the crisis, consequences may extend to all goods and services, and in this way make the reduction of inflation impossible, since in terms of energy Greece is dependent on oil. Negative effects on agriculture and transport will be more severe, and anxiety is observed as regards cruise travel too. Greek exports to third countries are expected to report accompanying losses.

The Ministry of Finance

Rising oil prices and the movement of the euro are the two possible initial "blows" that are worrying the Greek Ministry of Finance. The upward trend in oil prices is a natural consequence of all kinds of interference or threat of interference by member states of NATO in an Arab country. Increases in oil prices are more the result of speculation than a major problem in the provision of oil and its production.

However, all previous cases of military intervention in Iraq, Libya, even in Afghanistan, have had many negative effects on an oil-dependent economy like Greece. According to an unofficial index, every 10 dollars increase in crude oil prices causes a 0.5% inflation rate for the Greek economy. And this is because all industries, as well as the functioning of all retail chains, are still very dependent on oil.

Thus, difficulties which manufacturers and retailers will face because of increased oil prices will affect retail prices. This, however, would break the fall in prices that started at the beginning of the year and formed a negative inflation rate of 0.3% in January-July for the first time in decades.

In addition to the direct negative effect on household incomes, this fact would affect the basic assumptions in the preparation of the 2014 budget, which will begin in the coming days.

The second reason for concern in the Ministry of Finance is the movement of the dollar against the euro. If this crisis develops like the previous ones, the dollar will weaken and the euro will appreciate, which will affect Greek exports outside the Eurozone.

The importance of this can be understood if we look at Greek exports depending on the host country. Based on the latest data of the Greek Statistical Office (ELSTAT), the value of exports for the first half of the year was distributed as follows: 6.3 billion euro to member countries of the Eurozone and 7.3 billion euro to third parties.

Reduction in exports will not only be a sign of a new closure of the economy. It will also be a worrying sign for active Greek companies which, after seeing the sharp decline in domestic consumption, have increased their export activity. In this situation, given the lack of liquidity in Greece, a problem in exports may turn companies which are viable today into problematic ones.

The agricultural sector

A possible sharp increase in oil prices is causing great concern in the agricultural sector.

As Director General of the Hellenic Federation of Agricultural Cooperatives Ioannis Tsiforos noted for Naftemporiki, energy is a major expenditure for farmers. For 2008-2012, energy accounted for 20% of their total production costs, ranking second only to fodder, which accounted for 35%.

"The likelihood of increases in oil prices in international markets, due to tensions in Syria will be another serious problem for the local agricultural industry, which has already been pressed up against the wall. It is significant that in the period 2009-2012 the increase in energy costs in farm incomes was estimated at 64%, and at 1.5 billion euro absolute value," said Tsiforos.

In the case of rapid increases in oil prices, attempts which the agricultural sector is making in order to maintain prices of its products will inevitably be abandoned.

The food industry

The food industry is also closely monitoring the development of events and its representatives stressed the need for cold-blooded reactions. Grigoris Andoniadis, a board member of the Hellenic Association of Food Industries, stated that "the branch will continue to try to compensate for the movement in oil prices, and, in terms of production costs in general, this will happen if they are moving within reasonable limits."

Given the vigorous competition that has been developing especially in recent years, and the decline in domestic consumption of food products, companies tend to first exhaust all possibilities for a compensation of production costs, before moving to an increase in prices, since this would probably lead to a loss of market share. In any case, higher oil prices predict changes in prices on the shelves of supermarkets.

According to representatives of the market, "given the situation which the domestic economy is in, and the continuing recession, limited liquidity and flexibility of companies, it is not excluded that some companies may not be able to compensate for the entire burden. Each company, based on its own plans, will calculate the effects of rising oil prices on the prices of its goods".

The market for oil and petroleum products

Players on the Greek market are extremely concerned about the rising price of oil on international markets. The unanimous opinion is that there must be stable behaviour in the price of crude oil. At least, this is what refineries in the Mediterranean region want. If the appreciation is very large, then it will be impossible to manage working capital.

The same market participants, however, noted that the direct effect of a price increase will be an appreciation of aviation fuels. Unfortunately, this cannot be avoided and it is believed that there will be a negative impact in the field of exports, which has already reported the worst results at the first half of the year - excluding petroleum products.

However, opportunities of speculation on the internal market by major refinery companies are impossible, since price increases of crude oil on international markets do not imply an increase in the price of all petroleum products, which have a different movement on the stock exchange (i.e., the price of crude oil is one thing, and the price of petroleum products is something quite different).

Of course, if someone has bought petroleum products at low prices and holds large stocks, their prices will increase significantly, but it is not possible to predict what will happen in the future. Anyway, everyone already knows that the possibilities for processing crude oil in the region are frustratingly few.

In any case, the fear of a general conflict seems to be an increasing concern for companies in the industry today. In this sense, at this time, oil prices, which are naturally influenced by the relationship between supply and demand, are formed by the increased geopolitical risk.

Transport

A possible military intervention in Syria implies incalculable, for the moment, consequences for the transport sector in Greece. Oil prices have increased by more than 2 dollars per barrel, and the price of Brent Crude has exceeded 117 dollars, while American crude oil has reached its highest level in two years, leading to disturbances in costs of transport companies.

Thus, the study of the International Road Transport Union (IRU) on the effect of higher fuel prices on transport is even more important, according to which each percentage increase in fuel prices leads to an increase of 0.2% to 0.34% of transport costs.

The International Road Transport Union states that the increase in fuel prices increases transportation costs and is subsequently borne by consumers. Furthermore, in anticipation of a military intervention in Syria, measures for overcoming the most urgent problems in the field of air transport are being taken.

Cruises in the Eastern Mediterranean - the first which are likely to suffer

International cruises in the Eastern Mediterranean will be among the first victims of a possible military intervention by the Western powers in Syria, according to the tourism industry in Greece.

The events in Syria are worrying the Greek tourism industry, although there has been nothing concrete so far which can be associated with any adverse effects because of the developments in recent days at the international diplomatic level. The tourism industry, however, believes that in the case of a prolonged conflict in Syria, it will have a negative impact on tourism in all countries of the region.

In particular with regard to Greece, bearing in mind that the summer season is about to end, the damage will be less. Experts in the industry say that the biggest losses will probably affect cruises which have already been suffering "blows" because of the events in Egypt. They have forced many companies to change the course of their cruise ships and head to Greek ports, which in turn has been beneficial for the Greek economy.

In an interview for Naftemporiki, President of the Association of Greek Tourist Enterprises Andreas Andreadis reiterated his recent statement regarding the events in Egypt. In it, he urged everybody to stay reserved with regard to the development of Greek tourism because, as he emphasised: "a possible destabilisation or "a blaze" in the region hides more dangers than benefits for our tourism."

"It is a fact," added Andreadis "that a prolonged conflict in Syria will adversely affect the flow of tourists in the region." He believes that cruise travel will suffer the worst "blows". At the same time, he assumes that the flow of American tourists will also decline, who, on the one hand, are more sensitive regarding security issues, and on the other hand perceive the whole Eastern Mediterranean as a common area.

Regarding the Greek tourist industry, everything will depend on the duration of the operations. If they are short, at least as it seems by the plans of Western military forces, then the negative effects on Greek tourism will be much less, since the season is coming to an end, and there will be no consequences for the 2014 season, according to Andreas Andreadis.

On the issue of cruises, Vice-President of the Association of owners of cruise ships Michalis Lambros explained that in the event of a conflict in Syria, mainly international cruises will be affected, as well as ports that are adjacent to the region. Regarding the Greek islands and the port of Kusadasi in Turkey, Lambros believes that there will be no problems.