Greece: the dangerous power of symbolism

The gripping drama of Greece and its creditors drags on, but the obvious lessons should by now have been learned: lenders can’t force the insolvent to pay, no matter how hard they try, and bad credit risk lingers long after the event. As such, Europe’s credibility is already tarnished and no traditional banker will lend to Greece without a hefty premium. As for the common currency, its failure to unify fiscal policies across Europe has crippled the experiment from the start.

Whether Greece is let off the hook and stays in the eurozone matters mainly symbolically, so couldn’t they have figured it out in private?

Symbolism and scale

I was in Shenzhen this week at the headquarters campus of telecoms equipment maker Huawei. It employs 200,000 people on a single site with almost constant construction to support still more growth. Next door is a similarly vast complex run by Foxconn. The scale of what these companies are doing to drive growth is epic, and the impact on the world at large is huge.

By comparison, Greece’s biggest firm, Coca-Cola Hellenic Bottling Company, just announced that it will move its corporate headquarters to Switzerland and shift its stock market listing from Athens to London.

A similar move is apparently underway at FAGE, whose yoghurt is the only Greek-made consumer product I’ve consistently seen abroad. A handful of well-paid jobs will move away and the corporate tax base will shrink, but, on balance, the impact on the wider world will be small.

From a global supply chain perspective, resolution of the current crisis doesn’t matter much. And yet, Europe’s leaders feel compelled to show toughness so that others in trouble don’t perceive an easy way out of indebtedness. If the larger economies of Spain and Italy believe they can get the same break, then symbolism becomes substance. At which point the euro itself becomes dubious and we have a problem at full scale.

Too bad the whole thing had to play out in public. Germany worries irrationally about inflation and therefore takes an unnecessarily hard line on monetary policy. Greece believes it deserves a break because it’s already suffering so much and therefore won’t vote for a leadership that clamps down on pensions.

Greek premier Alexis Tsipras adds fuel to the fire with his casual open-shirt posturing, just as the Germans’ obvious disdain for perceived Mediterranean laziness offends the proud Greeks.

Greece should look ahead

When we look at how supply chain executives view Greece in comparison to other European countries it is clear that the future won’t be built on a traditional industrial base as it has in China or Germany.

Our 2014 CSCO survey data shows that Greece tops the European league table as a country “too risky to operate in” but secures not a single vote as “one of our top three growth opportunities”. This means that virtually no one sees Greece as a place to build new plants, invest in new technologies or develop new channels. Little surprise then that Greece’s private-sector economy is reportedly 95% small business.

And yet, there is a potentially rosy future. Greece has an outstanding tourist sector, a ridiculously rich cultural heritage and a worldly, educated diaspora of people able to thrive in the emerging idea-based economy of the coming century. Should the country develop its opportunities around content businesses it may well thrive on rising consumer spending in entertainment, education and pure art.

The transition to such a future economy will depend on long-term investments in computing, communications and other digital technologies. It will also require better governance at the top and compliance among citizens. Digitisation could very well improve transparency at all levels, which would make a big difference to Greece’s fiscal self-sufficiency.

Stop the madness

Christopher Clark’s book, The Sleepwalkers, examines Europe’s self-destructive descent into World War I. In spite of their largely common history and decidedly co-dependent futures, Europe’s great leaders chose symbolic correctness over practical wisdom and, in the end, traded world domination for death and decline. The Greece situation is not as deadly, but perhaps just as unnecessary.

It’s time to stop the public posturing and quietly make a deal.