10th October, 2015, Geopolitics gradually gain ground in Greece’s daily agenda vs. economy

·         Geopolitical tensions escalate in Middle East – Turkey region. Two explosions at a peace rally in the Turkish capital Ankara have killed at least 97 people and injured 186, according to officials. The blasts took place near the city's central train station as people gathered for a march organized by leftist groups. The attack is the deadliest of its kind in modern Turkish history and it threatens the local general elections of November 1st.

·         Greece’s Prime Minister Tsipras accompanied by Defence Minister Kammenos attended the final phase of military exercise ‘Parmenion’. He stated that Greece is not at war, however is in the middle of a destabilisation triangle referring to Ukraine, Libya and Syria.

·         ECB’s Draghi stated in an interview in Kathimerini of Sunday that he has raised concerns regarding Greece’s debt sustainability and there should be elements of lighting the debt burden. He emphasized the need that the Greek Government will implement structural reforms in order to return to growth trajectory.

·         Eurogroups’s Dijsselbloem stated that Greece’s debt restructuring is feasible if Greece honours its commitments. In addition, he stated that there is ground for an agreement according to which annual cost of servicing debt won’t surpass the level of 15% of GDP.

·         New Democracy’s four leadership challengers, Meimarakis, Mitsotakis, Georgiadis and Gigikostas started their campaign. The centre right party’s elections will take place on 22^nd November.

·         Licences of new cars increased by +7.1% in September, compared to September 2014. During Jan-Sep period, licences of new cars increased by +8.1% compared to the same period of 2014.

·         Industrial output increased by +4.5% in August compared to the same month last year. This increase occurred after three consecutive months of falling industrial production. At the same time, manufacturing production increased by +4.2%, electricity production by +9% while mining output decreased by -6.1%.

·         According to Greece’s Ministry of Agriculture, exports of agricultural products increased by +15.7% during the Jan-Jul period (annualised) vs. a decrease of -9.5% during the same period in 2014. Overall the contribution of agricultural products to total country’s exports increased to 30.6% from 28.8% in 2014.

·         It appears that a Chinese bank is included among the four banks which are interested in Finansbank (Turkish subsidiary of National Bank of Greece). As a reminder, NBG’s leadership has confirmed that is planning to sell 40% of Finansbank’s stake. However, the final decision will be based on NBG’s total capital needs which will be announced after the completion of stress tests.

 

·         According to the Bank of Greece prices of offices have dropped up by -30.4% while prices of shops by -28.3% during Greece’s debt crisis. At the same time, rental prices for offices dropped by -29.3% while shops’ ones dropped by -33.9%.  

·         The former Governor of Bank of Greece Provopoulos, took over the position of the Chairman of the Bulgarian Postbank, which is a subsidiary of Greece’s Eurobank.

·         Albania’s GDP increase by 2.5% during the 2^nd quarter of 2015. Growth in local construction industry (+24.5%), manufacturing (+6.3%) mainly contributed to this increase. According to IMF, Albania’s GDP will increase by 2.7% in 2015 and by 3.4% in 2016.  
 

Risk assessment. It appears that geopolitics gradually gain ground in Greece’s daily agenda. The appearance of Tsipras wearing a military jacket in a military exercise is completely new to local public opinion. This is because local leftish political parties traditionally have been pursuing an anti-military, anti-war agenda. However, geopolitical tensions in Syria have started impacting Turkey.

Although Greece’s geopolitical role has been significantly increased during the last couple of months, due to Syrian crisis, a potential destabilisation of Turkey due to geopolitical crisis' contagion from Syrian crisis represents a major threat for Greece’s security.

Needless to say that Greece’s eastern borders, at the same time represent EU’s south east borders and a significant component of EU's energy corridor to Middle East energy resources.

The fact that at the moment all major EU’s important posts related to foreign, security, defence, management of crisis and military are held by Italians, Greek and Cypriot citizens, show the importance of EU's south eastern group of countries to overall EU's security. More specifically:

Federica Mogherini is an Italian politician and is serving as High Representative of the European Union for Foreign Affairs and Security Policy.

Dimitris Avramopoulos is a Greek politician and is serving as EU Commissioner for Migration, Home Affairs and Citizenship.

Christos Stylianides is a Cypriot politician and is serving as EU Commissioner for Humanitarian Aid and Crisis Management.

General Michail Kostarakos is a Greek Army officer who served as the Chief of the Hellenic National Defense General Staff in 2011–2015. He is the appointed Chairman of the European Union Military Committee, taking office from 6 November 2015.

Last but not least, although the ongoing geopolitical crisis represents a source of risk as regards Greece’s security, it could be proved as a historic opportunity to emerge as a regional safe haven and business, political and cultural hub for the region of Middle East, Turkey and Northern Africa.

As a reminder, Greece represents the only country in the region which is member of both Eurozone and NATO.