Tuesday, June 9, 2009

Greek investment in F.Y.R.O.M falls sharply

Nations are engaged - alongside their national companies - in offensive policies to conquer external markets and to take control of sectors of activity considered to be strategic. For Nations today, the quest for power and assertion of their rank on the world stage depends more and more on their economic health, the competitiveness of their companies and the place that they occupy in world trade. In this world which is becoming global, nation’s political interests are taking second place to economic interests. This shift signals the start of a new era, that of geo-economics.

The above passage was written in 1999 by Pascal Lorot, the renowned French political scientist, economist and president of the Institut Choiseul for International Politics and Geoeconomics, as part of a larger commentary on the emerging discipline of geo-economics. Although, the recent credit crisis has probably seen a re-emergence of the State at the expense of the economy in international relations, Lorot was documenting an increasingly important phenomenon.

However, the author most responsible for the current usage of the term geo-economics was Edward Luttwak which Antipodes has written about previously here. As described by Luttwak in 1993, the term geo-economics means nothing more than "the continuation of the ancient rivalry of the nations by new industrial means". War has been substituted by industrial conquest. Geo-economics describes a situation in which instead of "measuring progress by how far the fighting front has advanced on the map”, “worldwide market shares for the targeted products” that are the yardstick.

The implication of Lorot and Luttwak's thesis is that geo-economic strength can change power relations between nations - which may lead to subjugation or domination. Therefore, the news that Greek investment in F.Y.R.O.M has dropped sharply is disappointing.

The articled titled “FYROM: Significant reduction of Greek investment” written by Alexandra Gkitsi and published in Greek at Euro2Day describes how there has been a significant drop of Greek
investment in neighbouring F.Y.R.O.M. Relying on reports from the Office O.E.Y. at the Greek Embassy in Skopje, a Skopjan newspaper reported that Greek investors have begun to withdraw from F.Y.R.O.M and have left “the field open for the Slovenian capital”.

According to the Central Bank of F.Y.R.O.M, in 2008 Greek investments were only 12 million euro, of which 2 million were reinvested profits, while the remaining 10 million were loans awarded to ensure ongoing operations of companies. The above figure shows a significant reduction of investment when compared with that of 2007, which amounted to 44.6 million euros (5.3 million equity, 35.5 million reinvested earnings and 3.8 million euro loans) and 2006, which amounted to 40.7 million euros (3.1 million equity, 35.3 million reinvested earnings and 2.3 million loans).

More than likely something is happening, in terms of economic relations between the two countries Greece and F.Y.R.O.M, and the underlying reasons are probably political (i.e. problem with the name "Macedonia"). If this trend continues any potential for Greek political leverage declines.

Source: Euro2Day (Alexandra Gkitsi), Antipodes

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