25th Oct, 2015, Greece’s technical dramatization of negotiations intensifies, amid gradual restoration of interest for investments

• It appears that there is a disagreement between Greek government and creditors as regards the implementation of measures which are included in the 3^rd MoU. More specifically, there are obstacles on taxation of private education and foreclosures’ threshold. This prevents not only the disbursement of 2 bios euros but the Greek Banks' recapitalisation as well.  

• During his visit in Athens, France’s Hollande reconfirmed his previous position that in case Greece fulfils its obligations which are included in the 3^rd MoU, there should be an agreement as regards Greece’s debt relief. He also added that there should be more discussion as regards the threshold for foreclosures.

• Greece’s current account surplus in August closed at 2.1 bios euros which is 0.232 bios euros higher compared to August 2014. This was due to the reduction of imports by -14.7% and an increase of revenues from tourism by +7.3%. However, the value of exports decreased by -12.8% (due to oil prices’ drop).

• The number of unemployed Greeks who are seeking employment reduced to 806,429 in September 2015, compared to 815,434 in August 2015 and 823,618 in September 2014. This slight improvement is related to growth in tourism. However, the part of unemployed which remains out of local marketplace for more than 12 months is 456,329 (56.59%).

• According to the recent report of 'Review of Maritime Transport', the Greek shipping industry maintained its 1^st position globally as regards a) total capacity of ships bigger than 1,000 tonnes and b) number of ships. In addition, the Greek ship-owners increased their market share as regards global shipping cargo to 16.1% (compared to 15.4% in 2014). Last but not least, the Greek shipping industry transports approx. 50% of total EU’s shipping trade.

• The Coca Cola Hellenic which represents Coca Cola’s no2 franchise at global level, announced that OTE (Deutsche Telecoms’ Greek subsidiary) gained the contract to run its datacentre for the next 5 years. In addition, Cocal Cola will transfer its primary data centre from Switcherland to Greece.

• Renting prices for shops in Greece, are the lowest at European level (even lower than Romania and Bulgaria).  According to data published by the Bank of Greece, the total decrease of renting prices reached the level of 31% during the period 2009-14.

• Bulgaria’s surplus of current account increased by +23.7% (on an annual basis) during the period Jan-Aug 2015. This was mainly a result of a reduction in trade balance’s deficit (exports increased by +9.1% and imports by +3.7%)  

Risk assessment. Tsipras’ government attempts to return to his drama-style negotiations with creditors. However, I remain on my previous view that the impact of capital controls to local economy will be less than it was initially expected. Gradually, this becomes the view of many international economic bodies and EU Commission, which are now evaluating the reduction of local GDP to less than -1.5% (from -2.5% which was the initial estimate).

It becomes evident that the better-than-expected Greece’s economic performance will impact positively the base scenario of stress tests and eventually the recapitalisation Greek Banks’ which appears to evolve comparatively smoothly. In addition, the interest of private sector on the recapitalisation of Greek Banks will be assisted by

a) the current rate differential between Greek bonds' yield and bonds of other Eurozone countries,

b) the potential for upside, if Greece implements the changes which are included in 3rd MoU

c) the gradual increase of Greece's geopolitical role due to the on-going fluid geopolitical situation in Middle East and

d) the significant increase of competitiveness during the last 6 years. 

Although, local media are conquered by news related to a disagreement on taxation of private education and foreclosures, the most complicated item remains the restructuring of local pension system. However, the possibility that SYRIZA’s government won’t fulfil its commitments is low, considering a) Tsipras has agreed on this item b) pension system' burden is unsustainable and  impacts significantly economy and c) the implementation of pending structural reforms impacts directly the recapitalisation of Greek Banks which needs to be completed by end 2015.

Although there is a need of taxing certain parts of Greek economy which traditionally didn’t contribute to state revenues, it is absolutely necessary to reduce the overall non-salary cost to local enterprises, hidden taxes to overall economy/society and  current taxation to entrepreneurship, pensioners and employees.

Last but not least, the significant increase of citizens and enterprises’ debt to the Greek state by 1.5 bios show that further increases of taxation on the current taxpayers, will only increase private debt and won’t bring additional revenues. 

The fact that 95% of state budget is related to the increase of revenues, compared decrease of expenditure, shows that these SYRIZA’s government policies won’t succeed, and there will a shift to realism soon. This means that sooner rather than later, there will be a significant reduction of state expenditure, starting from pension system which represents its biggest and most unsustainable item.

   

16th October, 2015, Optimism grow that Greece’s Banks will have manageable capital needs after stress tests

•  The EU has agreed to open new chapters in Turkey's long-stalled accession talks in return for cooperation on the refugee crisis. EU members are also considering billions in financial aid for Ankara. The EU and Turkey also agreed to "speed up" the talks on easing visa restrictions for Turkish citizens.

• According to Greece's Foundation for Economic and Industrial Research (IOBE) economic contraction will be less than it was initially expected for 2015. More specifically, it issued a revised forecast for the course of the economy this year according to which there will be a reduction of GDP by 1.5 – 2.0% vs 2.3% which was initially forecasted.
  

• Press linkages suggest that during the discussions between the Greek Banks’ leaderships and the Single Supervisory Authority’s officials, the latter implied that capital needs of Greek Banks won’t be unmanageable. These discussions occurred at ECB’s headquarters in Frankfurt and all Greek Banks’ leaderships participated in this meeting. There will be a second round of meetings of each Greek Bank with ECB’s officials, today. For the record, Greece’s government will have to submit the recapitalisation bill in local Commons by October 20^th.

• Greek Banks’ stocks rallied by +14% during yesterday trading session due to expectations that capital needs won’t be unmanageable. This helped to the overall increase of local index by 2.74% and to the increase of trading volume which approached the level of 50 mios. For the record, capital controls prevent local depositors to invest to stocks and trading volume is related either to existing investments in stocks or new funds from abroad.

• The team of experts which was appointed by government, to come up with recommendations as regards the local pension system’s sustainability enhancement, announced its conclusions. Although its report didn’t include figures, the committee recommended streamlining of all pension funds into one, a unique National Pension to apply on all pensioners and personal contributions to add to the National Pension.

• It appears that Ministry of Economy’s Stathakis is involved in a case according to which he didn’t declare 1 mios euros from his personal belongings. This represents a crime according to Greek legislation. In another case it appears that Ministry of Defence’s Kammenos uses an anti-submarine helicopter twice a day, to commute from home to his office for a distance of 40 km.

• There was a serious incident between fascist Goden Dawn’s MP Lagos and the MPS of Greece’s communist party (KKE) at the Greek Parliament. Lagos didn’t only attack verbally the MPs of communist party during his parliamentary speech, but he attempted to leave the podium and approach the place where the MPs of KKE were standing. In addition, he attacked verbally the Speaker of Commons. For the record, Lagos is involved in the assassination of anti-fascist rapper Fyssas and currently is in custody. However, he was re-elected as MP in last September’s elections.     

Risk assessment. In Greek mythology, Iphigenia was the daughter of King Agamemnon and Queen Clytemnestra, and thus princess of Argos.  After offending Artemis, Agamemnon was commanded to kill Iphigenia as a sacrifice to allow his ships to sail to Troy. Greece’s pension system appears to represent Greece’s contemporary Iphigenia, which will be sacrificed, in order to allow local economy to breath from extremely high taxation.

According to the Committee’s recommendations there will be significant impact on all pensions above 1,000 euros and less impact on pensions below this threshold. In addition pensions will be linked to pensioner’s income according to Australian system.   

At the moment, there are approx. 3 mios pensioners (including those who are in waiting list) vs. 3.5 mios contributors (employees, professionals etc). In addition, the average monthly pension is higher (approx. 1,000 euros) compared to average monthly income of contributors (approx. 700 euros). It is evident that contributions are not sufficient to feed pension system.

Last but not least, a significant % of existing pensioners are under 67 years old.  According to figures published by Ministry of Labour, the contribution of Greek state to pension funds reached the level of 200 bios euros during the period 2000-2014 which more than country’s annual GDP (approx. 180 bios). Needless to say that a sustainable pension system represents a major pillar not only for Greek economy but for any economy (including European one).

In any case, local pension system isn’t sustainable and represents one of the main reasons which results to significant tax burden and clientelism.
  

14th Oct, 2015, Tsipras proceeds with no opposition, on ratification of measures which are included in 3rd MoU

·         The discussion at Greece’s Commons continues as regards the ratification omnibus bill, which is a prerequisite for a) the completion of current evaluation of 3^rd MoU b) the recapitalisation of Greek Banks and c) the official start of discussions concerning the restructuring of Greek debt.

·         At the same time, the process of electing the new leadership at centre right New Democracy party, gradually becomes problematic. The current president of the party Meimarakis, came ballistic to the Elections Committee during its last meeting and withdrew his representative due to issues elated to party' financials and elections process.

·         It appears that there is political scandal in progress, which involves two current Ministers who didn’t declare income and possession of stocks during the previous years. So far, Flabouraris who is Minister of State and Tsipras’ mentor, has admitted that he represents one of the two cases.

·         US special envoy arrives in Athens to discuss the so called IGB gas pipeline project (Interconnector Greek Bulgarian pipeline). US coordinator for international energy affairs Hochstein visits Greece to meet with Ministry of Energy’ Skourletis before discussing the matter in a three-way meeting with the participation of Bulgarian Energy Minister Petkova.

·         Greece’s Statistical Authority, ELSTAT announced that there was less expansion of economic activity during 2014. More specifically, it announced that Greece’s GDP grew by 0.7% in 2014, vs. 0.8% which had initially reported. However, nominal GDP (inflation adjusted) showed a contraction of -1.6%.

·         Hellenic Banks Association's President and Governor of National Bank of Greece’s Chairwoman Katseli stated that Greek Banks won’t need the total amount of 25 bios which have been allocated for the forthcoming recapitalisation. He also emphasized that the potential capital needs aren’t related to internal balance sheet issues but to external factors such as economic contraction.

·         Greece’s social security funds’ financial have been showing a significant deterioration compared to last year. More specifically, revenues declined by 2.5 bios euros showing a primary deficit of 598 mios during the period Jan-Aug, compared to a surplus of 206 mios euros during the same period in 2014. This is due to a drop of 640 mios euros in social security contributions combined by a decrease of 1.5 mios euros reduction of state contribution.

·         Turkish Cypriot leader Akinci stated in NTV television network that the process of transition from the turkish lira to euro has begun in Cyprus occupied territories. He added that the transition to euro and customs union cannot be left for after a positive vote in a referendum on the Cyprus settlement. For the record, there has been an agreement between Cyprus’ President Anastassiades and Akinci on the establishment of a committee for economic harmonisation.

·         Greece dismissed Turkey’s suggestion to set up joint patrols in Aegean Sea with Turkey. However, Greece’s Foreign Ministry stated that is keen to cooperate with Turkey as regards stamping out people-smuggling networks.

·         Turkey’s Erdogan warned Russia that Turkey will seek alternative source of gas supply, after the violation of Turkish airspace by Russian jetfighters during the Syrian campaign. For the record, Turkey gets almost 60% of its gas supplies from Russia’s Gazprom. In addition, Russia has won the contract to build Turkey’ first nuclear plant in Akkuyu.

Risk assessment. Greece gradually returns to reality and normality. I remain on my previous views that a) Greece will fulfil its obligations which are included in the 3^rd MoU and b) Greek Banks’ capital needs will be significantly lower compared to the total amount of 25 bios euros which are included in the 3^rd MoU.

The risk that Greece won’t ratify the omnibus bill by end of this week, is low due to the following reasons: a) Tsipras maintains a refreshed mandate from local electorate and has no internal opposition b) opposition’s political parties (New Democracy and Potami) have entered in a internalization cycle, which weakens their political stance during parliamentary debate and c) vested interests don’t appear as a threat, for the moment.

However, Tsipras has to move fast and secure a) Greek debt restructuring and b) Foreign Direct Investments. Ahead of fluid geopolitical landscape in the region of Turkey, Middle East and Nothern Africa, Greece needs to implement all structural reforms which lead to reduction of taxation and internationalization of local economy, in order to attract significant Foreign Direct Investments.

It is not only the current rate differential between Greece and other Eurozone countries, which make investments in Greek assets appealing. It is Greece’s unique geographical position vis-à-vis the theatre of geopolitical developments. It is mainly its unique position in the region, as it currently represents the only country which is member of Eurozone and NATO at the same time.

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.

 

8th Oct 2015, Greek stock prices might be heavily undervalued

·         as it was expected Greece’s government won last night's vote of confidence; 155 MPs voted ‘Yes’ and 144 voted ‘No’ (there was an absent MP, who stated that he would vote .

·         France's Hollande stated during his speech at European Parliament that Europe will agree on debt restructuring with Greece, if the latter meets its obligations. It is important to mention that this statement occurred just before the vote of confidence at Greece's Commons and while having Chancellor Merkel sitting next to him. 

·         Ministry of Economy’s Stathakis stated that GDP contraction could be less than -1.5% due to spectacular performance of tourism and less than expected impact of capital controls to local economy. He added that approx. 4.5 bios euros of EU funds will be released by end of 2015.

·         Ministry of Finance’s Alexiadis stated that a new real estate tax will be introduced especially to those Greek citizen who own real estate abroad. He mentioned that Greece will replicate Italy’s similar tax. He added that effective 2016, all real estate transactions will be processed automatically through the so-called system TAXIS. 

·         Ministry of Pensions’ Katrougalos stated that SYRIZA’s government will try to protect all pensions below 1000 euros. At the moment there about 900,000 pensioners who earn more than 1000 euros on a monthly basis. Press linkages show that pensions above 1,000 euros will be reduced between -11% up to -13% (in weighted average terms)

·         Greece’s 10 yr. bonds' yield dropped below 8% (at 7.774%) for the first time since November 2014. This was fluctuating close to 20% in 10^th of July 2015. On the other hand, yield of German Bund was fluctuating around 0.6% while Italian at 1.69%, Spanish at 1.83% and Portuguese at 2.35%.

·         Greece’s 2 yr. bonds' yield dropped below 9% (at 8.932%) which represents one year low. As a reminder, the 2 yr.  bonds yield reached the level of 58% in 10^th of July 2015.

·         Local Bourse’s index and trading volume increased during the last few days. More specifically, total gains during last week crossed the level of 6% while banks’ index increased by 28.8% during the last four sessions.  In addition, trading volume increased to over 60 mios on Wednesday from just over 40 mios euros on Tuesday

·         There has been an escalation of geopolitical crisis in Syria. More specifically, Russia said it has launched rocket strikes on Islamic State group targets in Syria from warships in Caspian Sea – about 1,500 km (930 miles) away.

Risk assessment. I remain on my previous estimates that the current SYRIZA – Independent Greeks coalition won’t last long. In addition, Greece's GDP contraction will be less than it was initially expected after the implementation of capital controls.

This, among other things, means that Greek stocks' evaluations remain relatively cheap. Since my previous commentary in which I was stating that Greek Banks’ stocks might be cheap, prices increased by almost 30%. The positive thing is that trading volume is gradually catching up as well but still remain low compared to pre-crisis levels.

It appears that the SYRIZA-led government will proceed on implementation of austerity measures. Although the Greek government will have to implement pension cuts and structural reforms, with a marginal majority of 5 MPs, the country’s risk profile has been improved significantly since July because of a) Tsipras’ fresh mandate and b) the vast majority of opposition remains pro-Europe. This is evident mainly on yields of Greek bonds.

Tsipras' determination to complete the evaluation of current program within the agreed timeframe, has nothing to do with the urgency for disbursement of 2 bios euros. This is mainly due to the fact that completion of evaluation will send the positive message to markets, could attract investments. The resulting improvement as regards overall economic environment, will allow him to proceed on Greek Banks’ recapitalisation. And if everything goes well, he could close the deal as regards the Greek debt's restructuring.

You may ask, ‘how can a leftish politician be so sensitive about markets and banks?’ Although Tsipras is very keen to use populistic language to attack markets and banks, it seems that he understands that a failure on recapitalisation front could result to Banks’ bail-in. A potential bail-in won’t only impact bondholders, and depositors but will cause derailment as regards local economy’s recovery and more importantly could cause social unrest.   

In addition, Tsipras has shown evidence in the past that is very cautious as regards developments in banking sector. More specifically, during the recapitalisation of Greek Banks in 2014, which occurred just after his victory in European Parliament, he kept low profile but started pushing for snap just after the completion of recapitalisation (October '14). 

Probabilities of having a positive scenario are high. In addition, what is beyond dispute is that many stocks in Greece are at this point incredibly cheap by almost any measure.

Although trading volume in local Bourse is tiny, it gradually increases. In addition, Banks’ stock prices have been increased by almost 30% since last week of September. Due to capital controls, all purchases of Greek stocks represent foreign funds. If Greece’s government keep its promises and meet its obligations, Athens Stock Exchange could act as the mean for foreign capital inflow to Greek economy.

Few things are as little understood as investing, and rarely are they as misunderstood as when they are most interesting and useful. For all reasons explained above, current prices of Greek stocks represent a typical example of heavily undervalued assets.

Oct 1st, 2015, Tsipras does capital markets

·      Greek Prime’s visit in US continues; he met the Secretary of State John Kerry. In an unprecedented u-turn, Greece’s leftish Prime Minister Tsipras, chose Wall Street Journal to state that a satisfactory debt restructuring deal could help Greece to return to bond markets soon. 

·       Greece remained in the same position as previous year (81^st among 140 countries) in the Global Competiveness Chart, which is published by the World Economic Forum. It maintains lower ranking than Ruanda (58^η), Botswana (71^η) και Tadzhikistan (80^η). On the other hand, France (22^nd), Portugal (38^th), Spain (33^rd) and Italy (43^rd) further advanced on competiveness ladder.  However, it was mentioned in the report that data regarding Greece were collected before the agreement of 13^th July.

·       The Alternate Finance Minister Alexiadis confirmed that as of next year, only the taxpayers who use bankcards for transactions who represent at least 10% of their annual income, will benefit from the income tax free threshold. This measure will also include medical bills.

·      The number of new business starts reduced during the period Jan-Sep 2015, compared to the same period in 2014 (21,761 vs. 28,334 last year). This figure was even worse in July’15 when new business starts dropped by 47.7% (compared to July'14), due to political uncertainty.

·       Hellenic Financial Stability Fund’s Michelis expressed his confidence that Greek Banks’ bail-in will be avoided and his hope that recapitalisation process will proceed fast and smoothly.  

·         New Democracy’s Meimarakis is set to announce his candidacy for the party leadership. He has received the support of two major party's barons Karamanlis and Bakoyanni. On the other hand, Tzitzikostas who is the elected head of Central Macedonia prefecture seems that gathers support from some younger generation's party executives, who also maintain connections with the former King of Greece, Constantine.

·         Russia has begun carrying out air strikes in Syria against opponents of President Bashar al-Assad. The strikes reportedly hit rebel-controlled areas of Homs and Hama provinces, causing casualties. The US says it was informed an hour before they took place.

Risk assessment. I remain on the view that Greek Banks’ capitalisation will evolve smoothly. This is due to three factors:  

1.      the impact on GDP due to capital controls has not been significant

2.      Tsipras maintains a recent, strong mandate; anti memorandum, Eurosceptic forces suffered a humiliated loss; he will be supported by other pro Europe political parties in certain cases concerning structural reforms.   

3.      the recapitalisation process appears to be the critical path for the completion of current review of Greece 3^rd MoU, which will lead to debt restructuring

As it was mentioned in previous commentaries, it will be very critical that the forthcoming recapitalisation process won’t impact significantly the existing private shareholders, who participated in previous recapitalisations. Considering that Banks could separate regular NPLs from strategic defaulters, this could be achieved either a) through the creation of a Bad Bank or b) or through selling corporate NPLs and NPLs concerning ‘strategic defaulters' to special funds, which will manage funds collection, restructuring and/or turnaround of companies.

Tsipras’ statement regarding Greece’s return to capital markets, doesn’t only represent a significant political U-turn and adjustment of his previous leftish, populistic rhetoric to reality, but also represents a critical step towards Greece’s return to European normality. This is because the return to capital markets will increase government’s flexibility to implement policies (within MoU context) but also a) will reduce country’s risk profile and b) will increase confidence among international investors.

The on-going attacks of Russian aircrafts against Assad’s opponents (including ISIS), increase geopolitical instability in Turkey-Middle East region. The situation becomes complicated as a) attacks occur close to Syrian-Turkish borders, b) Turkey also supports Assad’s opponents and c) there is an ongoing war between Turkey and Kurdish PKK.

Greece's geopolitical role has increased significantly because it represents the only country which is member of NATO and Eurozone in the region and this gradually promotes Greece as a regional safe haven.

Considering the ongoing refugees’ influx to Greece, the ongoing negotiations with international creditors, the open disputed matters with Turkey and the need to attract Foreign Direct Investments, the Greek administration has only one strategy to pursue which is a) it will represent West’s interests in the region and b) it will always remain part of the solution.