Greece and its Investments in the Balkans: Trojan Horse or Reliable Partner?

Even as Greece and Macedonia continued to wrestle with the name issue (should the young Republic monopolize the ancient name or not),Greece and its Investments in the Balkans: Trojan Horse or Reliable Partner? Articles the former continued its furious pace of investments in the latter.

According to the Greek newspaper, Elefteros Topos, between the years 2000-2006, Greeks invested almost 263 million USD in their nascent neighbor. That would make Greece the second largest foreign investor in Macedonia. Of the 20 most sizable investments in Macedonia’s economy, 17 are financed with Greek capital. More than 20,000 people are employed in Greek-owned enterprises (c. 6% of the active workforce in this unemployment-plagued polity).

Greeks are everywhere: banking (28% of their total investment in the country); energy (25%); telecommunications (17%); industry (15%); and food (10%).

The foundations of the current presence of Greece in all Balkan countries – including EU members, Romania and Bulgaria – were laid in the decade of the 1990s.

Overview of Greek Investment Strategy in the Balkans in 1995-2000

On December 10, 2001 the Brussels-based think tank, International Crisis Group, proposed a solution to the Greek-Macedonian name dispute. It was soon commended by the State Department. The Greeks and Macedonians were more lukewarm but positive all the same.

The truth, though, is that Macedonia is in no position to effectively negotiate with Greece. The latter – through a series of controversial investments – came to virtually own the former’s economy. So many Greek businessmen travel to Macedonia that Olympic Airways, the Greek national carrier began regular flights to its neighbor’s capital. The visa regime was eased. Greeks need not apply for Macedonian visas, Macedonians obtain one year Schengen visas from the applicants-besieged Greek liaison office in Skopje. A new customs post was inaugurated in 2000. Greek private businesses gobbled up everything Macedonian – tobacco companies, catering cum hotel groups, mining complexes, travel agencies – at bargain basement prices, injecting much needed capital and providing access to the EU.

The sale of Macedonia’s oil refinery, “Okta”, to the partly privatized Greek “Hellenic Petroleum” in May 1999, was opaque and contentious. Then Prime Minister of Macedonia, Ljubco Georgievski, and then Minister of Finance, Boris Stojmenov, were accused by the opposition of corrupt dealings. Rumors abounded about three “secret annexes” to the sale agreement which cater to the alleged venality of top politicians and the parties of the ruling coalition. The deal included a pledge to construct a 230 km. $90 million oil pipeline between the port of Thessalonica and Skopje (with a possible extension to Belgrade). The Greeks would invest $80 million in the pipeline and this constitutes a part of a $182 million package deal. This was not “Hellenic Petroleum”‘s only Balkan venture. It acquired distribution networks of oil products in Albania as well.

After the Austrian “Erste Bank” pulled out of the deal, “National Bank of Greece” (NBG) drove a hard bargain when it bought a controlling stake in “Stopanska Banka”, Macedonia’s leading banking establishment for less than $50 million in cash and in kind. With well over 60% of all banking assets and liabilities in Macedonia and with holdings in virtually all significant firms in the country, “Stopanska Banka” is synonymous with the Macedonian economy, or what’s left of it. NBG bought a “clean” bank, its bad loans portfolio hived off to the state. NBG – like other Greek banks, such as Eurobank, has branches and owns brokerages in Albania, Bulgaria, and Romania. But nowhere is it as influential as in Macedonia. It was able to poach Gligor Bisev, the Deputy Governor of Macedonia’s central Bank (NBM) to serve as its CEO. Another Greek bank, Alpha Bank, has bought a controlling stake in Kreditna Banka, a Macedonian bank with extensive operations in Kosovo and among NGO’s.

The Greek telecom, OTE, has acquired the second mobile phone operator licence in Macedonia (Cosmofon). The winner in the public tender, Link Telekom, a Macedonian paging firm, has been disqualified, unable to produce a bank guarantee (never part of the original tender terms). The matter went to the courts.

Local businessmen predicted this outcome. They say that when “Makedonski Telekom” was sold, surprisingly, and under visible American “lobbying”, to MATAV (rather than to OTE), Macedonian politicians promised to compensate the latter by awarding it the second operator licence, come what may. Whatever the truth, this acquisition enhances OTE’s portfolio which includes mobile operators in Albania (CosmOTE) and Bulgaria (GloBUL).