Multinationals are forced out of the country as others are turned away. British Petroleum is leaving Greece after 58 years of
commercial activity in the country, because the present environment
allows it no room to expand, according to its officials.
The
departure from Greece of two major multinational companies, British
Petroleum (BP) – which has already occurred – and soon Shell as well as
the very low amount of foreign direct investments should all be a
reminder to most that the country remains less than hospitable to
multinational firms and foreign companies in general.
The
financial crisis, the small size of the market and, most of all, the
mountain of bureaucracy, unstable tax framework, competition
distortions and domestic financial interests are driving droves of
multinationals away from Greece.
A closer look at almost all
sections of the market reveals that it is no coincidence that the Greek
economy ranks among the stragglers on the global competitiveness list.
Instead of initiating policies that would offset the drawbacks of its
small market, Greece not only fails to easily attract foreign capital
but is also unable to hold on to it for any length of time.
Since
the start of the decade, more than 150 multinationals have created
subsidiaries in Greece. They have faced a hostile environment and
growing corruption, forcing out even companies that had seen the Greek
market as a launching pad for expansion into Southeast Europe.
The
losses for the Greek economy are enormous. The decisions that have been
made were driven by the fear of the political cost but these have
condemned entire sectors in the country that are crucial for its
development.
The problem of attraction and permanence for the few
foreign companies that have taken a foothold is greater in domains
where the competition is virtually nonexistent. This is true across the
entire spectrum of the Greek economy, which continues to take on an
ever more introverted character, undermining its own growth.
“In
order for us to remain in Greece, we would have had to make
investments. However, the existing environment did not help us expand;
it actually forced us to shrink. We therefore opted to make a better
deal,” a top official of BP in Europe stated to company officials in
Greece last Tuesday, when explaining why the energy giant has decided
to sell its chain of 1,200 gasoline stations here to Hellenic Petroleum
after 58 years of commercial activity.
“The existing environment
was such that it would not allow us to expand,” BP Hellas Chairman and
CEO Sotiris Christoyannis told local subsidiary officials when the deal
was announced on June 26. Shell, in turn, has put off the deadline for
the tender regarding the sale of its network until July 10. The market
expects Motor Oil to win the tender, given it will want to maintain its
competitive position against Hellenic Petroleum.
Both energy
multinationals had been expected to react for some time now to the
fines imposed on them by the Competition Commission, which charged them
with harmonized practices and fined BP 30 million euros and Shell 19.5
million euros. They both suggested they had been made scapegoats as
“fighting multinationals is popular politics.”
It is true that,
as the Competition Commission itself acknowledged, the political
leadership cannot put an end to “the distortions seen at all stages of
fuel traffic.” But none of the measures that are essential for true
liberalization of the market has proceeded, even though some of the
delays have gotten Greece into trouble with the European Commission in
the European Court of Justice.
The domestic fuel market is
therefore entering a new historic phase of falling into Greek hands,
with unknown impact for its transparency and health. The picture is
similar in the electricity market, which has shown a model of
development that is unique to Greece. There is not a single foreign
investor that has managed to enter the Greek market without having to
forge an alliance with a local player, not necessarily a producer but
someone with a permit for a plant or a plot on which to build it. From
inital contacts with the competent authorities, foreign investors
realized that they would not be able to deal with the required red tape
and various vested interests in order to proceed with investment in a
strategically important market.
They, therefore, had to use Greek
groups as their vehicle. In hindsight, the foreigners wake up to the
problems of the domestic industry but are still surprised by decisions
made overnight and with no strategic plan in place. One such decision
was the ban on coal, which overturned Spanish firm Endesa’s investment
plans and played a key role in that company’s decision to depart. It is
also no secret how disappointed foreign players are in the domain of
renewable energy sources: In a typical case of the Greek model,
bureaucracy, the complexity of the licensing framework and various
local players keep investments frozen for years, undermining Greece’s
hopes for any “green” development.
(from "KATHIMERINI" eng;ish edition, 06/07/2009)