Bullish on Greece

After hearing from over a dozen businesses, a few economists, several CU alum, and Greek political leadership, the student group is generally bullish on Greece. Interestingly, most people are willing to invest despite the fact that they are of the opinion that Greece has not yet hit rock bottom.

Post-Trip Survey
Post-Trip Survey


So what convinced the buyers?

First, Greece has improved its fiscal situation dramatically, having reduced its budget deficit from 10.5 percent to 1.5 percent of GDP between 2009 and 2012 and projecting a budget surplus of 0.4 percent in 2013. Second, we learned of a number of initiatives that should help boost economic output, including the privatization of Greek airports, the potential redirection of funds from pension programs to social safety net programs that can promote risk taking, and the direct infusion of euro funds into jobs training and education for the country’s desperately underserved youth population. Third, we heard from firms who were committed to a Greek recovery, despite their own diversified and global positions. Folli Follie, for example, has decided to use its global brand to promote the Greek brand. Similarly, Fage used its profitable and global position to reiterate its commitment to its Greek family of employees, stating that as long as they were able to, they would “never fire workers or reduce salaries”.

And the naysayers?

Greece is clearly in a precarious situation where the path to its recovery is entirely dependent on private investment, and at almost every meeting, Charlotte Ng ’14 grilled the leadership on how they could ever attract investors without clarity around the country’s future in the euro zone. In fact, I should clarify that of the 73 percent who said they would invest in Greece, over half of those respondents conditioned the investment on clarity of this issue. Also, despite its dramatic fiscal improvements, the country still has the enormous tasks of implementing structural reforms including further privatization, liberalization of closed industries, and tax enforcement. Cynics about whether or not Greece had the political will to accomplish these tasks included Kathimerini’s chief editor Alexis Papahelas, our very own Professor Charles Calomiris, and our Athens tour guide and historian, Niko (I’m sorry I don’t recall your last name!). Lastly, with unemployment at an appalling 27 percent and nearly 60 percent among the country’s youth, many simply wonder how much longer the people will tolerate these conditions.

A lot is riding on 2013. The country faces an end of May deadline to recapitalize its banks without an all-out nationalization of the industry, a critical factor in attracting private investment. The country is also eagerly awaiting the September German elections with the expectation that rhetoric around continued EU support will soften in Greece’s favor. While I personally share the same concerns of the naysayers, I am still generally bullish on Greece, mostly because I believe that the EU will not allow a euro failure.

Katerina Sokou ’13 and Martin Kleinbard ’14, thank you so much for this eye-opening experience. Travel companions, thank you so much for sharing this with me.

Greece Group
Greece Group, photo courtesy of Jasmine Ainetchian

Dyanna Salcedo ’14

Follow my travels on Twitter! @DyannaSauce

Turkey and Europe: Reject or Be Rejected?

By Aziza Jamgerchinova

One of Turkey’s overriding goals has been an entry into the European Union.  In fact, the country’s Prime Minister Tayyip Erdogan was so keen on aligning the country with the Western norms that he aggressively tackled a number of thorny issues like minority and women’s rights since coming into the office in 2002.  His efforts were often in the spotlight, while the rest of the world pondered whether Europe would let a country of 80 million Muslims join the club.

Turks have soured on the idea of joining a sinking European Union.Photo: Kunal Kain
Turks have soured on the idea of joining a sinking European Union.
Photo: Kunal Kain

The potential impact of the economic and political tie to Europe was an issue discussed during every single company visit on our trip.

While individual opinions may have differed, it was clear that the on-going sovereign debt crisis, which has brought Europe to its knees, made Turkey re-consider its options.  At least within the business circles, Turks have soured on the idea of joining the EU.  The Arab Spring has created new opportunities for Turkey to wield its power in the region, and many are asking the arduous question: Should Turkey reject Europe before being rejected?

As the lure of joining the EU is fading, Turkey is increasingly looking East instead of West, embracing its Muslim identity along the way. Foreign Relations Director at MUSIAD, a religiously conservative business group of 20,000 companies that is close to the prime minister, told our group about his recent trip to Tunisia and Morocco.  Turkish manufacturing and construction companies are vying for government contracts and new business partnerships in that part of the world.  MUSIAD often finds itself in the role of a “middle man,” connecting the right companies with one another.  The demand for the Turkish know-how in road building and residential construction is high in Tunisia and Morocco, and is only expected to grow.

CEO of Abdi Ibrahim, a pharmaceutical company in Istanbul, said the firm has recently acquired the majority stake in Kazakhstan’s Global Pharm.  She emphasized that Central Asia, along with other former Soviet states, was a growing market for them with ripe opportunities that won’t be found anywhere in Europe.  Needless to say that almost half of Kazakhstan’s population is Muslim.

Meanwhile, Turkey’s membership talks have stalled, and recent public opinion polls indicate that the country’s ambition to connect itself to sinking Europe is waning.