We’ve been reading with ears pricked the comments coming from leaders around Europe following the victory of left-wing party Syriza in this week’s Greek elections. They centre mostly around whether Greece will be allowed to shirk some of its duties to pay back its bailout and the future of the Euro (and therefore eurozone) should Greece pull out.
According to numerous sources, including the Figaro, we’ve had Sarkozy, French centre-right UMP leader, saying the cancellation of Greece’s debt should be “ruled out.” We’ve had Germany’s Steffen Seibert, head of the government press and information-agency, saying “The position of the European partners and Germany has not changed. Since the beginning of the crisis, the goal has been to stabilise the whole of the eurozone, including Greece, and that remains the goal of our work.”
We’ve had Reuters reporting on UK Prime Minister Cameron’s spokeswoman saying “Greece must tackle its deficit, meet its international commitments …” and France’s Le Pen calling it a “giant democratic slap in the face by the Greek people to the European Union.” Holland’s Finance Minister Jeroen Dijsselbloem warns that there isn’t much support for writing off Greece’s debt across the eurozone, which appears to be a widely held belief.
And Christine Lagarde, head of the IMF, told Le Monde that Greece cannot be given special treatment “There are internal euro zone rules to be respected. We cannot make special categories for such or such country.”
So it would seem from this (small taste of expressions) that the only certainty is that the future balance of Europe is uncertain. As Charles Robertson at Renaissance Capital investment bank says: “… the Greeks, whether in anger or real enthusiasm, have voted for a hard left-movement that is fundamentally opposed to the current profile of the German-led eurozone. We take that seriously. It suggests we’re in for months or years of uncertainty.”
But our favourite quote of the week came from the Figaro: “Whoever has heard of a debtor dictating its terms to its creditors, particularly after pocketing the money?”
Whatever anyone else is saying, this sums it up! A procurer (Greece) making unprecedented requests from a supplier (primarily the IMF)! Whatever next?
Well – we have some idea of what MAY come next: either:
– Greece will back down and there will be no write-off of debt – status quo – apart from some red faces among Syriza;
– EU eventually negotiates with Greece and rescheduling is allowed, with some annoyance from other indebted EU countries;
– Europe panics over Greece leaving the euro and backs down, fearful of the beginning of the end;
– Greece leaves the Euro and is on its own again – financial chaos ensues.
With our procurement heads on, it’s vital at this time that anyone involved in procurement keeps a close eye on their supply chain and the currency implications. What might it mean for contracts that have Greek suppliers (or indeed Greek buyers) if the country does leave the euro? Pricing and payments certainly will be affected as euro charges are replaced with a “New Drachma”. If you’ve got a contract to supply a Greek buyer, they might end up wanting to pay you in New Drachma – does that mean you will be giving them a discount by default? If you are buying from a Greek supplier, they may still demand you pay them in euros – nice for them. And there might even be questions around which laws govern the contract, certainly if Greece gets thrown out of “Europe” altogether! That seems unlikely, but matters are far from clear – “What a tangled web we weave …