Troubled Greek Economy Is Being Left to Fend for Itself

ATHENS — No matter what happens in this weekend’s elections, Greece is rapidly becoming an isolated economy.

The New York Times 

Carrefour, the giant French supermarket and retail group, said on Friday that it was selling its entire stake in Greece at a loss to its local franchise partner, so it could concentrate “on markets where it sees growth,” a spokesman said.

¶ Coca-Cola’s operations in Greece were also downgraded by Moody’s Investors Service, which cited the increased likelihood that Greece could exit the euro zone. A day earlier, the French bank Crédit Agricole said it was ring-fencing its Greek operations to protect itself should that happen.

¶ Two of the world’s largest import-export insurers, Euler Hermes and Coface, have recently refused to cover transactions involving companies in Greece, imperiling the import of basic goods.

¶ Global businesses and investors are retreating both because of the uncertainty on whether they might be paid someday in a devalued currency, and because domestic consumption has plunged after three years of painful austerity.

¶ Nearly a quarter of the people are out of work. Buying power has shriveled. Sales of clothing and pharmaceuticals have slumped, and even gas purchases are down as people drive less to save money. Companies short on cash have stopped paying one another.

¶ Amid rows of unsold screws, drills and power tools at his hardware store here, Deodoris Diamadis is one of many Greeks awaiting elections that he hopes could bring much desired economic improvement.

¶ “Commerce in Greece is down to almost nothing because of all the economic and political uncertainty,” Mr. Diamadis said grimly on a recent weekday as he watched the occasional customer flit in and out without buying anything. “We’re hoping that a new government will resolve this crisis.”

¶ Those hopes are likely to be dashed, given the bleak outlook. Even the strongest parts of the economy are suffering badly. Tourism, which accounts for nearly 20 percent of all jobs in Greece, is expected to plunge by about 15 percent this year as dire headlines leave visitors uneasy about planning vacations. The shipping business here has been losing steam to China, and its profitability fading, especially in the last year.

¶ “The economic international isolation of Greece is growing progressively day by day,” said Vassilis Korkidis, the president of the National Confederation of Greek Commerce.

¶ Even if a new government wanted to remain in the euro, allaying concerns that the euro zone was breaking apart, it would have to satisfy the demands of the international community for financial aid. Though its coffers are running dry, the Greek government must find 15 billion euros in savings by the end of the month under the terms of its bailout.

¶ The state power agency is warning of imminent electricity blackouts because it can’t pay its bills. And Gazprom, the Russian gas giant, has threatened to cut Greece off unless it is paid by June 22.

¶ Alexis Tsipras, the left-wing leader who is emerging as a front-runner in Sunday’s elections on promises of repudiating Greece’s loan agreement, said in an interview Thursday that growth would mainly be restored by reversing the harsh austerity measures required by the international community for Greece’s bailout.

¶ He promised initiatives to stimulate the economy, without specifying what those initiatives would be or where the money would come from — aside from taxing wealthy businesses and individuals more, collections that have failed repeatedly in this tax-evasive culture. Greece needs to get its finances in order, he added, “but if we annihilate growth while doing it, what’s the point?”

¶ Global companies have been wary about the country for a while, but their concerns shot to new heights last month after Greeks voted in large numbers for Mr. Tsipras’s left-wing party, stoking fears that his willingness to tear up the country’s 130 billion euro bailout agreement could lead Greece to exit the monetary union.

¶ Qatar recently froze a 5 billion euro investment because it wanted to see if Greece was staying in the euro, George A. Papandreou, Greece’s former prime minister, said in an interview.

Such stalling characterizes the financial decisions of everyone from foreign investors down to families, explained Mr. Papandreou. “Every single household said, ‘Are we going to be in, or not? Should we consume? No, we shouldn’t. Should we borrow? No, let’s take the money out of the banks.’ The banks said, ‘Should we lend? No, we shouldn’t.’ ”

The political upheaval has just deepened the problem.

¶ “We would have had much more growth, much more economic activity, if there was certainty,” he said.

¶ At the port of Piraeus, one of Europe’s largest shipping ports, Nikolas Manesiotis’s 93-year-old spice import business abuts docks where cloves, cinnamon and pepper arrive on ships from India and other faraway lands.

¶ Despite decades-long relationships with his family, suppliers have started demanding cash upfront in lieu of letters of credit for shipments that take three months to arrive. “They say ‘It’s not personal, but our insurance companies will no longer cover business we do with Greek firms,’ ” Mr. Manesiotis said.

¶ That means he must get cash from the Greek businesses he supplies before he can deliver the goods — and many of them have little or no money sitting around. On a recent afternoon, Mr. Manesiotis was preparing to drive around 180 miles to collect money he was owed by a client. “I need to get my cash from him, and if I have to drive four hours to do it, I will,” he said.

¶ Throughout Greece, these problems have turned the basic laws of the market upside down. The economy is suspended by a long chain of arrears.

¶ As he stood behind his vegetable stand in the outdoor market in central Athens, Nikolas Vrettos, 62, said he was getting by only because he had stopped paying his suppliers and his rent. “Things are going very badly,” said Mr. Vrettos, who said he had lost 20,000 euros in the last two years. “We just don’t pay anyone.”

¶ That has rippled through the economy, which contracted by a staggering 6.9 percent last year. The International Monetary Fund predicted the economy would shrink by 4.7 percent this year and “improve” to zero growth in 2013.

¶ But Greece’s statistics agency this week said the economy had contracted by 6.5 percent in the first quarter from a year earlier, while unemployment topped 22 percent. More than half the 1.1 million people without jobs have been looking for work for over a year.

¶ “People are only buying essentials now,” said Mr. Diamadis, who feared he might soon have to close shop.

¶ Stopping in to browse though not buy, was Dimitris Tsolakoglou, 48, a married high school teacher with four children.

¶ Two years ago, Mr. Tsolakoglou said, he was making 1,430 euros a month at his job. Today, because of austerity measures, he earns 880 euros a month. “I can’t buy things here anymore, or even buy clothes for the children,” he said. “I need the money to feed them.”