20-20 Investment Forum, October 8, 2015

Cotsen Hall, Gennadius Library
American School of Classical Studies

October 8, 2015

Thank you, Tania, for your kind introduction, and let me add my own welcome to all of the guests here.  I am glad you’ve had the opportunity to come to Athens, and to one of its most magnificent spots: the Gennadius Library at the American School of Classical Studies.

Since 1881, the School has been the flagship institution for American classicists in Greece.  The Library contains not just work about antiquity, but also thousands of works about Greece in early modern times, much of it written by foreigners who came to experience the turbulent birth of modern Greece.

Even before the United States supported the Greek efforts to free themselves from the Ottoman Empire, there were strong ties between our two nations.  The United States was, after all, founded using principles of democracy that the ancient Greeks first put into practice not far from we are right now.  Over the years, it’s been more than these shared principles that have bound us together.  Successive waves of Greek immigrants coming to the U.S. have all added their own unique stamp to our culture, our cuisine, and our economy.

In the late 1940s and early 50s, the United States contributed hundreds of millions of dollars to help Greece recover after the devastation caused by World War II and the Civil War.  The country was a bulwark against communism in the Cold War.  Greece has been an invaluable NATO ally for decades.  We have remained steadfast friends, through the good times and the bad, and we continue to stand by Greece today, during the current crisis.

And this is indeed a crisis. Unemployment is stuck around 26%, and youth unemployment is nearly twice that.  One in five Greeks suffer from severe poverty, which has led to huge demand for services at soup kitchens and free clinics.  Schools and hospitals have seen their subsidies cut and often face shortages of heating oil and other basic supplies.  On the finance side, Greece has not been able to borrow money on capital markets but instead has had to rely on bailouts from the European Central Bank, the International Monetary Fund, and the European Union. Credit has been tight, and this has made it difficult for small business owners to expand, and for start-ups to, well, start up.  Brain drain is epic: between 2010 and 2013, the latest period for which statistics are available, over 350,000 Greeks found work abroad.   Nearly 80% of them were under 40.

This past summer, as savings dwindled, depositors rushed to withdraw funds, and it looked like the country might have to stop using the euro as its currency, Greece imposed severe capital controls.  Depositors were limited to withdrawing 60 euros a day from their accounts, and transferring money overseas has become very hard.  Companies that required imports to make their products, or to provide services, had to cut back, shut down, or find a way around the controls by having one overseas customer pay another overseas supplier.

In addition to the social crisis and the crisis for businesses, there’s been political turbulence: in just eight months Greeks have gone to the ballot box three times, either for elections or a referendum.  This has complicated Greece’s negotiations with its creditors, which I am sure you are familiar with.    All of this has made international investors confused and often wary about investing in the country.

Then, (if that were not enough) this summer, Greece found itself on the front lines of the worst migrant crisis in Europe since the end of World War II.  The number of migrants who have been recorded as entering Greece in 2015 so far is up 750% over last year.  Over 355,000 migrants have arrived, usually by sea, and usually from Syria, Iraq, or Afghanistan.  They come to a country reeling from five years of severe recession, in which the economy has contracted more than 25%.  They are rarely seeking to stay in Greece, but sometimes get stuck here for a long while. So.

The path out of all these difficulties will not be easy.  But it is in the United States’ interest that Greece emerges from the current crisis stronger, stable, and playing a stabilizing role in the wider region.  For this reason, throughout the negotiation process, senior officials from the White House, the Treasury Department, and State have been in frequent contact with officials here in Greece, in the EU, and in the IMF.  We have advocated for an agreement between Greece and its creditors that would allow Greece to remain within the Eurozone and return to growth.

It’s up to Greece now to implement the measures in the agreement that was finally reached on July 12, something that will not be easy.  In order to become more competitive the country will need to modernize its tax system, its pension plans, and its regulatory structure.  It will need to cut red tape, reform the legal system and public administration, and generally make Greece an easier place to do business.  Greek governments have consistently shied away from making these changes, but now the SYRIZA-ANEL coalition government has little choice but to move these contentious and complex issues forward.

For now, Greece continues to present a challenging environment for both domestic and foreign investors.  While there are several large-scale projects underway, such as the Trans-Adriatic Pipeline and the El Dorado Goldmine, unfortunately these undertakings have faced a series of regulatory hurdles and have been subject to delays imposed by national and local government authorities.

On the bright side, and despite these difficulties, with the focused effort of the U.S. government and American companies, Greece has begun to address a number of important issues related to investment, including payment of arrears, improving intellectual property rights protections, and ensuring tenders and contractual obligations are handled fairly and transparently.  It is important that these gains not be reversed, but built upon by this government.

I have spoken to a number of American companies who, seeing Greece’s potential, want to expand their businesses here.  If it removes obstacles to investment, the Greek government can realize its objective of revitalizing the economy to the benefit of all citizens.  While no government can compel investment and growth, the government does have in its power the ability to create an environment more conducive to the promotion of entrepreneurs, the private sector, and job creation.

Greece, of course, is also about much more than economic and financial issues.  It has immense strategic importance.  It is a NATO ally with unstable neighbors.  The naval installation at Souda Bay, Crete is the only deep water port between Norfolk, Virginia and Dubai where a U.S. aircraft carrier can be replenished pier side.  Hundreds of vessels pass through Souda and thousands of overflights from the U.S. and NATO partners take place every year.   So we want to see a happy outcome here, and not just because we love Pericles (although we do). And not just because there is a large Greek-American community (although there is).  It’s because Greece’s stability and prosperity is in our national security interest.

For over 60 years, Greece has been a committed ally in NATO, helping provide security and safety in Europe. Our special relationship with Greece goes back to the earliest days of the Greek struggle for independence.  So the main task today is not only to sustain and strengthen the ties between Greece and the United States but also to ensure that Greece emerges from its current difficulties stronger, and stable, and playing a stabilizing role in this very important region.

Thank you.