In­vestors can’t be taken for granted

Kathimerini English - - Front Page - BY ALEXIS PAPACHELAS

Let’s be re­al­is­tic. No amount of calls from French Pres­i­dent Fran­cois Hol­lande, former US Pres­i­dent Bill Clin­ton or other high-rank­ing for­eign of­fi­cial is enough to con­vince cau­tious for­eign in­vestors to put money into Greece, as long as the fun­da­men­tal prob­lems re­main. Like many prime min­is­ters be­fore him, Alexis Tsipras will soon re­al­ize that in­vest­ment pledges from for­eign lead­ers vis­it­ing the coun­try usu­ally evap­o­rate soon af­ter take-off. This is be­cause in­vestors al­ways check three things: First, the ex­pe­ri­ence of oth­ers. Sec­ond, the coun­try’s rep­u­ta­tion in terms of bu­reau­cracy, cor­rup­tion and the tax en­vi­ron­ment. Fi­nally, po­lit­i­cal sta­bil­ity and the risk of financial col­lapse. Af­ter an­a­lyz­ing the above pa­ram­e­ters, they will look for in­vest­ment op­por­tu­ni­ties with a sig­nif­i­cant profit mar­gin. They are usu­ally put off be­fore they even get to that point. They are dis­cour­aged by Greece’s bad rep­u­ta­tion. A sig­nif­i­cant num­ber of in­vestors lost their money be­cause some new ad­min­is­tra­tion changed the terms and con­di­tions of a cer­tain deal. There are end­less sto­ries of meet­ings with gov­ern­ment of­fi­cials who turned up un­pre­pared. In­vestors also hear about Greece’s dys­func­tional jus­tice sys­tem, the huge back­log and the con­tro­ver­sial pros­e­cu­tions. Con­nect the dots and what you get is a mine­field. Those who do show some kind of in­ter­est usu­ally end up be­ing bul­lied into do­ing busi­ness with some mid­dle­man. The “Greece” brand has suf­fered huge dam­age. Ex­cept for bank­ruptcy, it has also been as­so­ci­ated with fail­ure. The prime min­is­ter and his aides are de­lud­ing them­selves if they think they can just wink at some Greek-Amer­i­can or for­eign in­vestor and say “it’s okay, you can have the Elliniko site” and he’ll come run­ning. This is not how it works. Maybe it would, if Greece were out­side the euro or a bit fur­ther south. In­stead, it is a hy­brid, an al­most-de­vel­oped coun­try that is try­ing to sur­vive within a Euro­pean in­sti­tu­tional frame­work. More dar­ing in­vestors could per­haps be found in coun­tries like Rus­sia or China. Moscow is still up­set af­ter the Greeks used it as a bar­gain­ing chip in ne­go­ti­a­tions with Ber­lin. And they are not easy cus­tomers. Mean­while, the Chi­nese are fed up by the Pi­raeus port pri­va­ti­za­tion. If and when it hap­pens, they will then con­sider if there is any­thing else they are in­ter­ested in. Again, some peo­ple like to think that the White House will dis­patch 747s full of in­vestors. I wouldn’t bet on that. Any flight from New York and Lon­don will more prob­a­bly be booked by dis­tress fund man­agers look­ing for in­vest­ment op­por­tu­ni­ties in the red loans of Greek banks.

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