by Alexandra C. Vovolini

Dear readers,

Just as we were coming to terms with the pandemic of Covid19, the first war of the 21st century on European territory broke out, bringing back the nightmares of centuries past.

As we are going to press in the next few days, we can only hope that a reasonable solution will be found to stop the Russian army destroying Ukrainian cities, killing civilians and creating millions of new refugees flowing into EU countries to flee the invasion.
If human suffering was not enough, the geopolitical upheaval brought about by the Ukraine crisis looks set to get us back to a Cold War situation; unprecedented sanctions imposed to Russia by the West to stop the aggression underway have caused an equally extensive shock in energy markets that were already disrupted by the fast pace of green transition, as well as price hikes in a wide range of industrial commodities and basic foodstuffs.

Even if the explosive situation in the region where NATO countries border the ex-Soviet region is defused, the upheaval in the world economy will remain present. The dependence of Europe on Russian natural gas and the ensuing electricity costs will be difficult to resorb both for households and businesses; at the same time, a surge of inflation gets us back to the memories of the 1970s and the 1980s, of stagflation and social resentment as the cost of living erodes incomes. Efforts to diversify away from oil and natural gas are underway at an increasing tempo, but alternatives are both slow to develop and costly.

Finding alternative sources of energy is one solution, reducing energy needs is another. More eco-friendly, sustainable infrastructure is essential, with buildings playing a key role. Green buildings in Greece have just started becoming a trend, as the cover story of this issue shows.

The widespread economic interdependence brought about by decades of globalization takes now its toll, with geopolitical games flowing into the increasing disruption of value chains, world trade and shipping. In our close neighborhood, tentative readjustments of the relations between major actors –with Turkey seeking a role of mediator in the Ukrainian conflict, with Israel readjusting alliances, and with Egypt claiming a new stabilizing role– bring about new unknowns to an already tense situation.

An initiative to relieve tensions undertaken by Greek Prime Minister Kyriakos Mitsotakis and Turkish President Recep Tayyip Erdogan meeting in a relaxed atmosphere, overlooking the Bosporus, will be tested in the months to come.

The Greek economy, having succeeded in 2021 to get back most of the GDP losses of the Covid-19 pandemic, is still fragile. The moment gets closer for Greece to exit the enhanced surveillance of its EU partners and for the rating agencies to grant investment grade to its government bonds; still, the geopolitical tremors in the region along with ongoing increases in Greek public debt hold improvements back. The flow of EU support from the Recovery and Resilience Facility established to help European countries to face the pandemic is a positive factor, while there are hopes that a similar scheme will be available to help with the energy shock underway. But the new uncertainties weighing on the economy cannot be underestimated, with the all-important tourist flows being once more challenged.

Odessa, a Greek Black Sea colony founded in 6th century BC, has been the center of a thriving Greek business community. The house of eminent merchant Gregory Maraslis, great benefactor and Odessa mayor 1878–1895, now houses the museum of the Philiki Etaireia.

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This is the editorial of the March/ April issue of Greek Business File  available here.