ATHENS--Fears that Greece's high-stakes parliamentary vote for a
new president could herald a return to economic turmoil have
stalled business development and foreign investment, business
executives and investors say.
If Prime Minister Antonis Samaras and his ruling New Democracy
party aren't able to win the vote in one of three tries this month,
Parliament would be dissolved and national elections called.
Lawmakers failed to elect a president last week in the first round
of voting. A second parliamentary vote takes place this week and
the last is tentatively scheduled for Dec. 29.
Many in Greece's business community fear new national elections
could bring to power the antibusiness opposition Syriza party,
which wants to discard the bailout package run by the European
Union and the International Monetary Fund. The party is currently
leading by 2-5 percentage points in public opinion polls.
The prospect of a Syriza victory sends shudders through
businessmen such as Theodoris Sietis, chief operating officer of
Eltex Anemos SA. "Greece's economy is at a critical juncture," he
said. "At a time when investment should be happening and the
country should be moving forward quickly, instead things are
slowing down."
Mr. Sietis led his energy company to a listing on the Athens
Stock Exchange in July, the first and only listing on the exchange
since the country's debt crisis erupted five years ago.
The listing was seen by many international investors as a sign
Greece was clawing its way back to normalcy after a wrenching
downturn that wiped out more than a quarter of the economy and sent
the stock market to its lowest point in decades.
Eltex Anemos, a unit of Greek construction giant Ellaktor,
raised some EUR35 million ($42.8 million) in July. The sum was part
of an ambitious EUR200-million plan to build wind parks across
Greece, a sector many here see as a catalyst for future economic
growth.
Now the plan is on hold. "There are a number of decisions we
would have taken by now, but instead we are waiting," he said.
So is the government. Two planned privatizations due this
month--one for an airport on the island of Crete, another for the
national power grid--appear likely to be pushed back several weeks,
officials say. Another privatization, of a government-owned tourist
property that was sold off earlier this year, has been stalled
awaiting final approval, a businessman familiar with the deal said.
Meanwhile, tourism industry executives warn that early bookings for
next year's summer tourism season--normally made in December--have
also stalled.
Fears of a descent back into economic tumult sharpened last week
as investors dumped Greek stocks and bonds amid the political
uncertainty. The Athens Stock Exchange has lost more than EUR10
billion in value this month. As Greek bond prices fell, the yield
on Greece's benchmark 10-year government bond soared to around
9%--erasing all of its gains over the past two years--before
staging a modest recovery in the past few days.
Now, those fears are also seeping into the economy. After six
years of recession, Greece returned to growth this year. Its gross
domestic product is projected to expand 0.6% this year and 2.9% in
2015.
The prospect of a protracted period of political turmoil
threatens to upend those forecasts. Greece's central-bank governor,
Yannis Stournaras, warned last week that the political uncertainty
was "taking on serious dimensions" and could have lasting damage on
the country's nascent economic recovery.
"There is a risk that the growth, that has only just started to
resume, may be halted," Mr. Stournaras said. "But there is also a
large risk of irreversible damage being done to the Greek
economy."
Like Mr. Sietis and others, businessman Nikos Manesiotis is
worried. He runs a family-owned importing company started by his
grandfather in 1919. Since its founding, the company, based in the
Athens port of Piraeus, has weathered several wars, foreign
occupation, banking crises and countless changes of government.
The most recent hardship was the credit squeeze at the depths of
the eurozone crisis in mid-2012. With Greece's future in the
eurozone in doubt, many foreign suppliers cut credit lines and
demanded cash only from companies such as Mr. Manesiotis's firm.
Anticipating similar adversity, Mr. Manesiotis, who imports spices,
pet food and tin, has slowly started limiting the credit terms he
extends to some of his own customers in Greece. "In the past few
months, I have been offering some of my customers 40 to 45 days of
credit, as opposed to 60 days. We need to be careful," he said.
Foreign investors are also cautious. This month, dozens of the
world's top fund managers gathered in New York's Metropolitan Club
for a conference touting investment deals in Greece. On offer was
everything from distressed assets to real-estate investments to
shipping portfolios. But there were few takers.
Instead, investors "are all staying on the fence," a government
official said, recalling the mood at thegathering. That compares
with a few months ago, when Greece's turnaround appeared to herald
more prosperous days ahead.
"There is now a feeling of wait-and-see, and I do sense a
reversal in sentiment," said a senior government official who
tracks foreign investment in Greece.
"People are not leaving the room, they are still negotiating
contracts," he said. "They are still paying for lawyers and
engineers to look at projects. But they aren't quite ready to write
a check yet, either."
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