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Fallacies about the Greek economy and business: Prejudices that hurt investment

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Greece has been in the news constantly over the last eight years due to its sovereign debt crisis and the subsequent recession that has decimated the economy. Most of the talk has been about the Greek economy’s prospects (45 percent of GPD lost since 2008 and is now at pre-Euro levels), the sustainability of its government debt (180 percent of GDP) and the need for investment and growth that can put to work the one million unemployed Greeks (25 percent unemployment, of which over 50 percent for youth) as well as revert the brain drain (more than 400,000 have left since the beginning of the crisis, most of whom are highly educated).
Many that are trying to explain the causes behind the problems of the Greek economy are pointing out to labor and public administration deficiencies and even expand to cultural traits. Most of the articles in the press were simply defamatory, simplistic and prejudiced. See, for instance: “Greeks: Corrupted, Lazy and Disobedient” by Thomas Tsakalakis (in Greek, 2016), and “The Greek Crisis in the Media: Stereotyping in the International Press,” George Tzogopoulos, 2013.
Not surprisingly with all this negative talk, one would expect that nothing works in Greece. However, Greece ranks 86th in the World Economic Forum competitiveness ranking in 2016 (87th in 2017), down from 67th in 2009 before the crisis. It has comparable rankings to the European and North American average when it comes to health, education, infrastructure and lags in institutions, business sophistication and innovation as well as in sectors affected by the economic crisis, i.e. the macroeconomic environment, unemployment, personal development prospects and financial markets (banks that are facing liquidity problems). In actuality, most of the negative ranking is as a result of the economic crisis itself! OECD’s Better Life Index draws similar findings.
Greece’s GDP stands at $195 billion and ranks in the top 50 globally, even after losing 45 percent from its highs before the crisis when it was comfortably in the top 40. Greece’s GDP per capita is in the top 40 globally after again losing one-third during the crisis being at the top 30 before that. Greece has significant mineral resources of iron ore, lignite, zinc, lead, bauxite and magnesite. Exploration is also under way for natural gas and petroleum. And off course Greece is rich in renewables such as solar and wind energy that only now are beginning to be developed to their potential, in addition to other energy resources such as geothermal and hydroelectric. These facts on their own would suffice to counter the fallacy that Greece is poor. But this is a topic for a more detailed analysis elsewhere as it needs to include ways that these resources can be utilized.
Is the negativity therefore blown out of proportion? It might be quite a long time ago now, but when these stories first appeared it were the times that a scapegoat was needed for the mounting bank debt in Europe. The usual narrative in these cases is that there are only irresponsible borrowers but no irresponsible lenders. That is one view at least.
However, finding excuses in repeating about lazy, corrupted Greeks is getting old. How couldn’t it, after so many years of troika intervention? Recently, such rhetoric has been muted, probably as a prelude before it gets discredited and the attention shifts to the cure rather than the disease. The European public is increasingly reluctant to continue with the Greek tragedy as well and busy with its own issues. This has resulted in an attempt to shift the rhetoric, to claims that of Greece having “progressed” and miraculously “recovered.” It seems as people can change and that Greeks are magically no longer lazy or corrupt, all in the space of just seven years. Who knows?
On the other hand, negative talk doesn’t offer a solution and often escalates into defamation, bigotry and stereotyping, maintaining a level of rhetoric more akin to what one would encounter in a bar instead of as part of a mature public discourse. ECOFIN president Jeroen Dijsselbloem recently went as far as saying that Southern Europeans have spent their wealth on drinks and women (!!!). Such statements have merely contributed to rising tension and Euroscepticism.

This article is written for those that stood up to this torrent of negativity and borderline defamation, which would have been condemned as bigotry in another context. This article was also written for those that wanted to respond to those insults with technical arguments, especially for those that live abroad and who have to bear the blame in their everyday life. Outside any intent to restore Greece’s dignity, this article has a very tangible objective to downplay or revert the negative bias among the business community. This is necessary to spur investment and economic growth in Greece’s ravaged economy. Otherwise, the negativity will turn into a self-fulfilling prophecy. Which reputable investor wants to get involved in such a situation and have to justify it to its shareholders? When this occurs, such talk becomes criminal as it affects peoples’ lives and their prospects of economic reversal. At the same time, it distracts investors’ attention and costs them profit opportunities. Although it relates to Greece, the same analysis could apply in other economies.
The article which follows will be split into three main sections, addressing a number of issues relevant to the Greek context. First, labor issues will be addressed, including “laziness,” union problems, high labor costs, high pensions, low productivity, and Greece’s purported incapability to produce or its supposed lack of production. This will be followed by an examination of business issues, including tax evasion, the shadow economy, corruption, inefficiency, and bureaucracy. Finally, this piece will conclude by returning to the claim that nobody wants to invest in Greece.

Part A – Greek Fallacies and Foreign Investment: Labor Issues

“Laziness”

How can you measure laziness? The word “lazy” refers to somebody that’s not working. Yet, Greeks work the most hours among OECD or EU countries: 42 per week on average. The typical workweek in Greece is 40 hours (eight hours daily for five day workweek) but the 42 hour figure is likely based on aggregate data (which is one of the highest globally too).
It is also common for people to work two or more jobs, and sometimes this additional work goes unreported. This means that the actual number might even be higher, as will be further addressed in the upcoming subsection on the shadow economy. Greeks also enjoy fewer vacation days compared to other countries in the EU (four weeks of vacation compared to five in Austria). Now, what they do while working is another question. It depends on the work they have to do (for more on that, jump to the productivity fallacy further down).

Labor/union problems
The Greek labor framework is similar to that of other European countries, which are generally characterized by strong social aspects. This framework has been relaxed lately with the reforms that have been taking place under the IMF restructuring program. This is captured by OECD metrics (Employment Protection Legislation index), as well as the Labor Competitiveness Index of the World Economic Forum (2016). Greece’s ELP Index for full-time workers (2.4) is below both that of developed Western economies (such as 3 in the case of Germany) and similar to that for emerging/Eastern Europe (i.e. Poland 2.4, Czech Republic 2.7).
Much of the low ranking in the WEF Competitiveness analysis can be attributed to low productivity instead of labor characteristics. This is due to low value added in output as discussed, as well as the quality of management (i.e. the extent of reliance on professional management). The latter can be attributed to the large number of small or family-owned businesses (discussed under shadow economy) and can certainly be rectified with training, the utilization of recent graduates and ultimately by the rationalization and concentration of some of the activity in larger companies (refer to the shadow economy fallacy regarding size of businesses).
High Labor Costs
Some might say that salaries in Greece are high. That depends on what you compare them to and where you want to be: a low value added or high value added country, a developed country or a developing one, etc. Based on 2012 data, Greece ranks in the lowest levels of OECD nations in terms of average salaries. Since then, wages in Greece have further decreased as a result of the crisis, GDP shrinkage and the spike in unemployment rates, but also due to regulatory action, such as minimum wage cuts, diluting collective bargaining rights, and other measures.
According to the IMF, there’s no room for further decreases in salaries or disposable income (this has been affected as well through higher taxation). The economy and the public’s well-being is already too stretched. Furthermore continuous decreases will result in a vicious cycle of contraction and consequently decreasing consumption. On the other hand, existing salary levels already provide an attractive entry point when it comes to cost for greenfield investments especially when combined with the fact that Greeks work many hours and are increasingly well educated. And of course besides all, Greece offers a production base within the EU.

High Pensions
There has been a lot of discussion over Greece’s pension system during the crisis. Pensions are among the first that have to go in an economic restructuring to make room for other expenses such as debt servicing. At the heart of the issue lies the discussion over sustainability of the Greek pension system, based on pension amounts, unfavorable actuarial inputs and level of social contributions. The discussion, however, usually fails to make reference as well to the reduction of the pension funds’ assets due to the 53 percent haircut of government bonds as part of the 2012 debt restructuring (PSI). Additionally, such talk fails to emphasize the effects from the reduction of workforce due to the crisis through unemployment and mass emigration of the younger generation, as well as the damage suffered by social security funds due to the abnormally high expenditures for health care. As of this writing, there is an investigation in progress, the so-called Novartis scandal, regarding the overcharging for medicines in Greece between 2000-2015 that may have resulted in damages as high as €23 billion for state coffers.

To analyze pensions, one has to look at it from a broader economic, social and political perspective. First of all, Greece is a typical European country in which social spending is considered a normal expenditure, as opposed to Anglo-Saxon economies and societies such as the United States that adopt a stricter view on welfare. Total public social spending in Greece stands at 27 percent of GDP, which is a comparatively high number within the OECD, only trailing that of traditionally egalitarian and socially sensitive Scandinavian countries and France. One thing to know here is that Greece’s GDP has also fallen by 45 percent during the crisis, which may have impacted the social spending level as well.
On a subtotal basis, Greece’s pension expenditure seems to be the highest in the EU. Where lies the difference? Probably in higher proportion of other type of social spending in other countries. Greece, for example, has very low and limited unemployment benefits. As such and due to the strong family ties prevalent in Greek society, parents usually support their children through hardships. Furthermore, pensions and salaries are quite low in Greece compared to other European countries. The average pension stands at €846 per month compared to €1,233 in Germany. That was EU Commissioner’s Pierre Moscovici point against IMF’s troika representative Thomsen’s call for further pension cuts, countered by the latter on the basis that Germany’s pensions represent a lower percentage of salaries. One has to look at the level of salaries and pensions versus the cost of living though when discussing social spending. The latter is higher in Germany.
Looking at it from another angle, employee welfare contributions seem to be quite high in both Germany and Greece but they are higher than in Sweden or Denmark (who have a generous social security system) and below that of France. So this is not offering a clue. Perhaps certain countries are able to finance welfare from other sources, such as directly through taxes. In any case and when it comes to job creation, high social security contributions shouldn’t be a deterrent for a country such as Greece with already low salaries; much lower than in Germany. Furthermore, social contributions and pensions in Greece have been declining due to the “bailout” plan’s mandates, even if that may not be sustainable in the long run.
However, another way of looking at the pension system is by taking a step back from the numbers and examining it as a political issue. The majority of people can’t understand complex numbers, such as bond yields and actuarial calculations. That’s not their job; there are specialists and the public administration for that purpose. Actually, some may argue that reverting into complicated technical matters serves exactly that: muddling the topic and diverting the topic of discussion. But let’s see if we have the same understanding on what a pension is. A pension is nothing more than trading current income for a future benefit. Let’s say that it is a social contract or a promise between the people (workers) and their own common will as represented by the public administration. The contract says: I will give you something during my working years in order to receive some specific benefit and care in my older days. And that is before tackling whether social security is a right or a good.
As long as both parties are true to their word and of good faith, then there is no room for misunderstanding. There’s no room to argue that the public was not contributing sufficiently. Otherwise, the public administration would have rejected the deal in the first place as not sustainable or adjusted the contributions. Same as with that would happen in a private insurance scheme where safeguards are also instituted for instances that an insurance company is unable to meet obligations. In case it is in a position to meet its obligations then that is not the public’s fault. It is its own responsibility to live up to its promises and provide the agreed level of retirement one way or the other.
In this context, there are already judicial proceedings in Greece stipulating those pension cuts as unconstitutional. The arguments are that those cuts were implemented without proper justification on the basis of protecting the common good but on the other hand disproportionately penalizing the pensioners. Indeed, cuts on pension are heavy and pensioners can’t expect to recover those losses deep in the future when the recovery will come, if at all. If it is the common good that pensioners had to sacrifice for their well-being or property, then what are the sacrifices taken up by other groups, such as banks on, let’s say, lightening loan obligations (note that Greek banks have been capitalized with public funds), or the wealthiest, via paying more taxes on onshore or offshore wealth. The argument can go on for so many groups affected by the crisis and some that have probably escaped or were “bailed out.”
Low productivity
To examine this fallacy we first have to define productivity. It’s quite unfortunate that the productivity that economists refer to in public speech and layman’s words is understood to mean how much work one gets done. However, what the economists refer to in reality is probably a misnomer. In economic terms productivity represents the amount of goods and services produced in one hour of labor. This labor productivity is calculated as real gross domestic product (GDP) divided by total labor hours. That doesn’t say much. If you produce olive oil it doesn’t matter how fast you collect the crops, it’s about the selling price. If you produce gold watches or automobiles on the other hand you can allow yourself some slack and still appear more productive based on the value of output, right? To be fair, labor productivity should probably be measured in engineering terms: i.e. how much output is achieved per labor hour. In order to do that though, one has to know a lot more information, so this is not a realistic option.
It is true that the (economic) labor productivity is low in Greece, but why? That is because Greek GDP value added are low or working hours are too many.

  • Could it be that working hours are more because there’s less automation? That’s probably not the case, as most of the activity is in services that are not that much automated anywhere. It might be that there’s a lot of idle time then. If so, to the extent that this work (the GDP in the nominator) can be completed with less hours of work (coming to what the work is about) then by just reducing working hours the labor productivity would increase, wouldn’t it? Eureka! Question is whether employers would agree with reduced working hours but the same pay…

  • On the other hand, what’s needed to raise the GDP and GDP per capita is high-value output (i.e. luxury/branded products, high tech etc). That’s a matter of planning and management decisions. High value added is related to branding (requires marketing expenditure) and technology (requires R&D expenditure) among others. And this cannot be achieved overnight. Branding has worked quite well in tourism even out of serendipity. But Greece hasn’t done much to promote opportunities elsewhere, if not sabotaging branding intentionally or otherwise. At the same time, it lags in terms of R&D or manufacturing entirely. Greece can certainly increase R&D, as it has a large number of PhDs and graduates (1,600 in 2014, similar to let’s say Israel, and in this are not counted the large number of Greeks studying abroad). Greece has more young STEM graduates below the age of 29 than Sweden or Belgium. A lot of those graduates are forced to leave the country to work abroad. More than 400,000 Greeks have left Greece since the beginning of the crisis, most of them highly educated (a brain drain). A lot of them (20 percent) are also unemployed or underemployed. A lost generation. A tragedy if not genocide, and a waste of resources in raising and educating them not to count the psychological effect from family separation!

Greece doesn’t and can’t produce anything
At present, manufacturing’s contribution to GDP is at 8 percent, which is below the 15 percent EU average, while the EU is aiming for 20 percent by 2020. In any case, Greece still has significant manufacturing abilities in shipbuilding, defense, mining, metallurgy, energy, construction, pharmaceuticals, and agribusiness/food processing. However, manufacturing is not as prevalent as in other developed European countries. It was not always like that though. Between 1950-1975, manufacturing activity in Greece increased exponentially, while during the same period GDP grew at a 7 percent annual rate. It is widely accepted that manufacturing creates more value for an economy and better paid jobs than services, while each additional job in manufacturing creates 0.5-2 jobs in other sectors1).
During the 1950-1975 period, Greece was producing electrical appliances, textiles, fast-moving consumer good,s and even assembling automobiles! Actually, one of the first electric cars was produced in Greece back in 1973, the Enfield-Neorion 8000. It is since 1980 that manufacturing activity has stagnated (Editor’s note: Greece joined the EU in 1981), and since 2005 that it dropped off the charts, with many bankruptcies having occurred as well. I won’t expand on possible reasons for this or search for the culprits here.
There is significant potential for R&D in Greece. Greek scientists are well respected and accomplished globally. According to Stamford’s Professor Ioannides (3% of global top researches is Greek, 85% of which live abroad). The Greek universities have respectable rankings according to the QS world university rankings six of them are among the world’s best. All these scientists could develop a global networks of distributed learning and R&D utilizing their local contacts as well.

Finally, a frequent argument that Greece is a small country that can’t offer the necessary economies of scale needed in manufacturing can be easily countered by pointing out to similarly sized economies that have manufacturing. Most importantly, such arguments can be rejected by pointing out to recent technological advances. The production of the future (Manufacturing 4.0) is not be same as that of the past (without long labor and capital intensive production lines). It will be automated and enable small batch production locally versus large production lines of the past. It is estimated that in the near future, most of repetitive manual tasks will be taken over by robots with mainly highly educated employees working in factories; in the UK alone it has been estimated that 57 percent of manufacturing jobs will be eliminated.

Part B – Greek Fallacies and Foreign Investment: Business Issues

Tax evasion
There are multiple articles regarding the Greeks’ alleged dislike for paying taxes and propensity to avoid them, as if that is a Greek only phenomenon (I don’t wish to expand here on complex corporate structure, transfer pricing, tax havens etc. that are used by others). But let’s see in any case how much of the tax evasion issue is reality and how much is a myth:

  • Greece’s total tax income represents 33 percent of GDP, which is similar to the OECD average. Therefore there appears to be no abnormality (differences may exist on whether taxes are direct or indirect). However some might say that tax evasion arises from undeclared income (for that, you’d have to jump to the shadow economy fallacy).

  • Currently Greece has what is probably among the highest tax rates in the EU and beyond. The corporate rate is at 29 percent, the individual rate is as high as 42 percent, the VAT (value-added tax) is at 24 percent and 13 percent, and the real estate tax is 15% (see table for more). Especially during the crisis, tax income has increased significantly to cover inflexible budgetary uses. This gets us to the other reason regarding the difficulty in collecting taxes: deposit drain, GDP shrinkage and eventually fatigue and resistance (i.e. what the Laffer Curve illustrates: the more the tax rates increase the higher the propensity to avoid taxes and for the tax revenue to eventually decrease).

Shadow Economy

Shadow economies exist in all countries. In Greece it is estimated at 24 percent of GDP. While this figure is high, it is actually not the highest in the EU or OECD (the respective averages are 19.7 percent and 17.6 percent respectively). As a comparison, the U.S. has a rather low number of 7 percent (probably the lowest globally) and on the other end Russia is at over 40 percent. The shadow economy results in uncollected taxes (referred to as tax evasion).


There are certain factors contributing to the creation of shadow activity, such as fragmented business landscape as well as large number of transactions carried out in cash (hotels and restaurants, retails, transport). The latter has been reduced since the introduction of capital controls, with more Greeks now using digital money.

 
On the other hand Greece has an amazingly high number of self-employed professionals (gig economy, services, lawyers, accountants, consultants, etc.) as well as a higher proportion of small companies. Almost 35 percent of the Greek labor force is self-employed compared to 7 percent in the U.S. On the other hand, 58 percent of companies in Greece are very small (up to 9 employees) while the respective figure in the EU is 29 percent. It’s generally difficult to collect taxes from these two sectors. The logistics are just incredible; it may not pay in terms of a cost/benefit analysis considering compliance and supervision expenses. That’s the same everywhere. Small companies are nevertheless crucial, as they generate a large number of jobs. On the other end, in other countries there areenough large companies that, to the extent that they don’t use creative tax practices, can provide the funds necessary to run the governments (33 percent of companies are large in the EU (over 250 employees) compared to only 13 percent in Greece). Apart from that large companies can also invest in R&D and product and people development and move the needle for the whole economy and society the way that smaller companies can’t, as they are usually barely surviving.
Corruption deters investment
Corruption in Greece: that’s a big topic that has been overly discussed, and the most frequent excuse for inactivity when it comes to investments (along with bureaucracy). Let’s see, however, how much of that is exaggeration and how corruption affects investment.
Corruption can be measured by the Corruption Perceptions Index (CPI) that is published by Transparency International. The index ranges from 0 to 100. According to this:

  • Greece has a CPI of 44 in 2017. It ranged between 36-46 over the last five years
  • Greece ranks better in terms of corruption (CPI) compared to China (40), Mexico, Vietnam (33), Philippines (35), Peru (35), Bangladesh (26), etc. However these countries attract a higher level of Foreign Direct Investment (FDI) (see Table based on 2015 data). So at first sight, the argument that corruption matters in investment doesn’t hold.
  • Taking it a step further by running a regression analysis between CPI values and FDI in various countries, the results indicate that there’s no real correlation. In case that you are aware of any other analytical data that support it, please let me know.

Some further thoughts outside numbers:

  • Corruption is illegal, let’s not be misunderstood, but is it critical?: USS’s FCPA guidelines have resulted in heavy fines to companies that use bribery to conduct business (for example Siemens and ongoing investigations for Novartis, Petrobras). However outside the moral question of legality, Bill Gates, in his $38 billion Gates Foundation 2014 annual letter, said that “corruption isn’t nearly the barrier to development that most people think it isbut kickbacks and bribes are an inefficiency that amounts to a tax on aid.” It is also strange that many investors complain about corruption when they end up at the wrong end. I like to say that “when things move slowly investors blame bureaucracy, when things move too fast or too easy they may say it’s corruption.” I know this is quite of an unconventional point of view, but you can think about it. 
  • Talking is branding: Even if corruption is not a deterrent when it comes to investing, discussing about it creates a negative image for the Greek economy and eventually a vicious cycle and a self-fulfilling prophecy. Who want to be associated with corrupted practices? Therefore when coming to these issues the press should be very careful. 
  • Discussing corruption without proof might be irresponsible: the public often overreacts in corruption rumors and this can even lead to unrest, violence and hysteria (for example in cases that affect public health). Even if a system is “rigged,” is it responsible to shake people’s trust in it without trying to correct it? Wouldn’t one be opening the Pandora’s Box by promoting mistrust? 
  • Defaming: how fair is it to draw conclusions over an entire population based on certain incidents? At best this would be considered stereotyping in the U.S. and is unfair to say the least. It is what the association fallacy in reasoning describes: when guilt or merit can be attributed to somebody based on its relation to a particular group. It may appeal to emotion or prejudice. There are two varieties of this fallacy: 
      • Guilt by association: John is a con artist. John has black hair. Therefore, all people with black hair are con artists.
      • Honor by association: country X has higher GDP compared to Country Y. Therefore, John who is a citizen of Country X is superior to Mark, a citizen of Country Y.
  • The culture or “how we do things around here”: The definition of corruption and the public’s attitude towards it could also vary from one country to the other, and this can involve cultural aspects too (here we could refer to the work of Weber, Hofstede etc). For example, individualistic cultures rely on written laws while collectivist cultures rely on societal norms. When certain actions are not in accordance with written laws then this is corruption or criminal as per the individualistic cultures, however it might not appear as such  in a collectivist culture if it is in accordance with unwritten norms that for any reason are not reflected in the law. It’s a rather iconoclastic point of view once again, but you may think about it. If an investor is expecting to find the same laws or practices in a foreign country as that in his own or demand the same regulations, probably he/she could just as well stay home. When in Rome do as the Romans do… 
  • The corruption issue – a case of double standards?: Finally, while there’s a lot of talk about corruption, scandals, inefficiencies in Greece, there are many large scandals from other countries in the news that do not result in a long-lasting negative image; often these negative news fade away quickly or bushed off as extraordinary incidents (isn’t this some type of double-standard?). For example: 
      • Volkswagen’s Dieselgate ($15 billion fine)
      • Siemens bribery scandal ($1.6 billion fine)
      • Deutsche Bank (MBS contracts, $7.2 billion SEC fine and other many fines)
      • Wall Street banks (as part of their role in the 2008 crisis (total fines estimated at $160 billion)

Does this mean that the entire system in Germany or US is corrupted, as the association fallacy in Greece’s case would imply?

Source: The Heritage Foundation (EFI), World Economic Forum (GCI), World Bank (FDI) and computations.


Inefficiency, Bureaucracy deters Investment
Outside corruption, another issue of grave importance and a frequent excuse for abstaining from investment in Greece are shortcomings in public administration, legislation and the legal system such as inefficiency and bureaucracy. These factors can be captured by the Index of Economic Freedom (EFI) that is published by The Heritage Foundation. Taking it a step further, one could also look at the all-encompassing Global Competiveness Index (GCI) that is published by the World Economic Forum. The latter covers all aspects of competitiveness of the economy (12 parameters that involve labor, infrastructure, institutions and innovation aspects).

Source: The Heritage Foundation (EFI), World Economic Forum (GCI), World Bank (FDI) and computations.


Running again a regression analysis between Foreign Direct Investment (FDI-World Bank) vs the EFI and GCI one could see whether there’s a connection between the two.
This analysis comes back again indicating no significant/visible correlation! If somebody thinks different or if I am missing something I would be interested to know. Therefore the discussion of whether efficiencies affect investment is open to debate; one can’t decide other by looking it on a case by case basis.

Source: The Heritage Foundation (EFI), World Economic Forum (GCI), World Bank (FDI) and computations.


Source: The Heritage Foundation (EFI), World Economic Forum (GCI), World Bank (FDI) and computations.


 
 
 
 
 
 
 
The table below shows that Greece ranks higher than China or Vietnam as per EFI but receives relatively lower investment. So it’s not only bureaucracy that counts.

Source: Transparency International (CPI), The Heritage Foundation (EFI), World Economic Forum (GCI), World Bank (FDI).


Another perspective is offered by the World’s Bank Doing Business index. This ranking reflects the ease of doing business in various countries by examining the business regulatory framework. Based on this, Greece ranks 67th in 2017, down from 60th in 2016. That means that with all these reforms mandated through the “bailout” program the business environment is deteriorating rather than improving, even as the government has carried out everything imposed by the lenders and is even been praised for that!!!! And still there’s no bulk investment in sight! This only make us wonder whether it’s really the regulatory framework that needs review or there are other problems and these reforms are meaningless, or worse yet, serving other purposes in distracting the attention or redistributing a shrinking pie in a different way…
However, I wouldn’t disqualify these rankings completely but wouldn’t depend on them entirely either. Businesses invest in a country by analyzing each case separately, trying to find the best match between their strategic objectives vis-à-vis the country’s offering. Investment in Eastern Europe may be impacted by ease of doing business but also by the quality of workforce and growth prospects. Investment in Asia is, in turn, impacted by labor costs, market size and growth prospects. Based on my experience and various references it seems, at least to me, that high levels of FDI appear in countries that offer:

  • Convenience; i.e. favorable tax or legal regime: for example Ireland, Hong Kong, Switzerland, Luxembourg, Cyprus, Malta. 
  • Development/size: Such as the G7, EU, BRICS, Australia. 
  • Emerging economies and/or low labor costs and/or significant resources: such as Mexico, Central/Eastern Europe (Czech Republic, Poland, Hungary), Asia (Vietnam, South Korea, Indonesia, Turkey, Thailand, Singapore), large South American economies (Colombia, Argentina, Chile), resource-rich African countries (Nigeria, South Africa). 
  • Capabilities/know-how in a particular area (for instance, start-ups in California even if it is not the cheapest location). 
  • Geopolitical reasons: A powerful country may invest in an important ally at an important location to help stabilize and grow the economy and increase political leverage. China, for example, has allegedly pledged $100 million for investment in the One Belt One Road countries.

The questions is whether Greece offers any of these features that attract investment. The answer is that it does or it may be in a position to do so, as our analysis will show in the next part.

Part C – Greek Fallacies and Foreign Investment

“Nobody wants to invest in Greece”

There are various reasons that may be given for not investing in Greece. How much of that is true (not much based on the preceding analysis) and how much is simply just an excuse (for not investing)? The latter is well respected when the investor is not familiar with the country or with the industry or doesn’t have the resources to analyze and manage the investments or the funds to do so. The purpose of this is to reduce the instances where this abstention is a matter of misinformation or apprehension or herd mentality.
FDI in Greece amounted to $1.7 billion in 2014 according to World Bank and $39.5 billion between 1990-2015. The top investors are from European countries (Germany, France, United Kingdom and Netherlands), i.e. western economies. Geopolitics and distance may be a factor for European investment compared to the U.S. in terms of why it is not a major investor. Lately, China is investing heavily as well. That brings the geostrategic angle in the big picture. Greece is part of the One Belt One Road initiative, linking countries across the maritime and land route between China and Northern Europe. This will also spur investment and trading opportunities.

Investment and capital formation that are vital for an economy have fallen of the cliff lately, obviously due to the crisis and its consequences in business climate, economy, consumption etc. Many obviously affluent Greeks have taken their money offshore (estimated at over €100 billion, representing 50 percent of GDP or one-third of debt) Furthermore, investment is restrained by a lack of financing. Greek banks are facing liquidity problems and operate under capital controls so they are issuing loans sparingly. There are no other financing options (other than perhaps EU subsidies). The use of Private Equity or Venture Capital domestically is very low, if any, compared to western economies. Some foreign Private Equity funds have been quite active though.
Indicatively notable foreign investments in Greece over the last years include:

  • Blackstone (Lamda) ($40 million)
  • Oaktree (Ikos Resorts, $280 million)
  • KKR-Pillarstone ($1.2 billion of NPL portfolio)
  • Cosco (OLP-Piraeus Port) ($1.7 billion)
  • Fraport (regional airports) ($1.1 billion)
  • Deutsche Telecom (Hellenic Telecom-OTE, $5.5 billion)
  • PSP Investments – Canadian Pension Fund (Athens airport, $1.7 billion)
  • John Paulson (shareholdings in Alpha Bank, Piraeus Bank)
  • Wilbur Ross (shareholding in Eurobank)
  • Fairfax/Prem Watsa (Shareholdings in Eurolife, Eurobank)
  • Olayan Group (Costa Navarino, $150 million)
  • Jermyn, Dogus, Kuwait funds (Astir Palace Hotel Complex, $440 million)
  • Dogus, Temes (Hilton Athens, $190 million)
  • Italian Railways (Greek Railways/TrainOSE) $50 million)
  • Thassos Grand Resort (Bulgarian investor $28 million)
  • Kassiopi Corfu Resort (NCH Capital of New York, $83 million)


As indicated, investment is strong where there is a proven case (i.e. tourism, airports) or strategic issues (i.e. logistics and China). Apart from this, Greece needs (and in my opinion can support) investment in value-added sectors where the young and more educated generation can be employed without having to leave the country.

Areas with investment potential

I provide here an indicative list of sector with potential for investment in Greece. This is a rather brief enumeration just to provide some ideas for anybody trying to counter the negative claims:
1. Established FDI areas:

  • Tourism/Real Estate: There exists a large number of hotels and houses at low prices that can be used for tourism purposes or investment (or trophy investment),in addition to new developments such as the Hellinikon project, even for the Golden Visa project. Greece is a top 20 tourist destination. There are also new forms of tourism that can be developed that will expand the tourist season and target audiences such as City Break tourism, food tourism (wine and other), and experiential/alternative tourism.
  • Infrastructure & Logistics: Greece can be a hub for transporting to Europe (China’s COSCO acquired the Piraeus port). The route from the East to Western Europe through the Suez Canal and Greece is faster by four days compared to following the Atlantic route. Furthermore the infrastructure of highways, railway, airports are being modernized (to be largely completed by the end of 2018).
  • Financial Services: large international investors (Paulson, Wilbur Ross, Fairfax) have invested in the Greek banking sector. Use of fintech applications are quite limited but expanding especially as the market is trying to find ways to operate around the capital controls imposed on use of cash and fund transfers. The Private Equity industry is also negligible and could be a source of financing while realizing significant returns in a not so contested dealmaking space. There is also interest in corporate restructuring funding as well as NPL sales due to the crisis and bankruptcies. One of course has to be careful in analyzing the specifics there and it is also a sensitive issue for the public.


2. Mature market sectors:

  • Energy: There’s activity in conventional energy resources. The TAP gas pipeline connecting Azerbaijani gas fields through Turkey to Italy) is under construction and others are under discussion (East Med), and there’s offshore gas and oil exploration as well. Renewable energy accounts for 18 percent of energy consumption and has great potential, although activity has come to a stall lately. The electricity market is being liberalized too.
  • Agribusiness/food sector: Mediterranean cuisine is increasing in popularity. There’s potential for exports and at the same time for import substitution as a large part of food products is imported. Furthermore, there’s room for automation and intensification of production.
  • Healthcare and Medical Tourism: there’s spare capacity in private sector hospitals as well as great human capital. Capacity can be utilized in medical tourism as well (IVF, dental, physiotherapy/spa among others). This is a service that hasn’t been developed yet compared to other countries such as Turkey that offer lower-cost services. During the past couple of years there’s been an ongoing campaign to promote medical tourism, mainly in the US through the International Health Tourism Center and other organizations. There are 6,000 doctors of Greek origin just in the U.S. and many more in Europe that could act as ambassadors. At least 18,000 Greek doctors have left and found work abroad since the beginning of the economic crisis. 
  • Pharmaceutical & Personal Care: The Greek pharmaceuticals sector (generics) possesses significant capacity and know-how. There’s potential in the generics sector where use is limited (18 percent market share compared to 37 percent in Germany, according to OECD data). There’s also potential in natural products, taking advantage of the traditional healing methods (Greece is the birthplace of Hippocrates after all) as well as of pharmaceutical R&D that could absorb the large numbers of graduates.

3. Emerging/Developing Industries and Promising FDI Targets:

  • R&D and technology/manufacturing: As discussed, there’s a significant number of Greek PhDs in Greece and abroad and a large number of them are among the top researches. The European Reconstruction and Development Bank (ERDB) and the Greek state are sponsoring research programs to keep these scientists at home. At the same time, salaries are low compared to other EU countries. Why not develop manufacturing facilities? The modern production of tomorrow will not require large scale production or a large labor force. Greece would not have to go through the adjustment phase but rather leapfrog into the next high value-added automated future straight away, so will be spared the transition expenses. Note that large investment can now take advantage of fast-track application procedures that have been lately put in place by the Greek state. Production could cover a wide array of products from fast-moving consumer goods to household goods and high-tech products, as Greece is currently importing much of these goods, not to mention that Greece could also act as an export base to the EU or other countries. 
  • Business Process Outsourcing: There are already companies taking advantage of the highly educated young workforce in Greece as well as of lower salaries by outsourcing IT work or other BPO services to Greece. Even if Asia may offer a more cost effective outsourcing base it is still paramount to spread risk and redundancies and operate in all time zones. 
  • Arts, culture and education: There’s a lot to say about cultural activities and education in Greece. Classical tourism hasn’t been developed to the extend it could. Arts like filmmaking, apart from shooting revenues, can also create revenues indirectly through promoting the country for tourism or business (see such an effect in New York City from the huge film industry there).

Part D – Epilogue

My fallacy list is continuously growing since it first began, based on conversation I’ve engaged in from and reading the news. But it stops here for now. Hopefully there is enough information here to engage any defamatory, negative illustration of Greece. If there is one more to fallacy to add, it could be that things are getting better in Greece. That would be easy to reject. Based on public opinion polls and economic data things are pretty bad. However it’s not for this piece to analyze.
What’s needed in order to revert this situation is investments; a lot of it, over €100 billion missing according to PwC research, but also high value added jobs to keep the youth of the brain drain at home. Investment, however, is not easy to attract; it needs time and effort, more so if it has to overcome all of the aforementioned prejudice and negative publicity. That goes to those that are irresponsibly accusing the country either from within our outside or those hoping for an investment boom to turn around the economy quickly. In doing so, they revert to oversimplifications or wishful thinking. It sounds irresponsible or distracting, except if they are promoting a specific project, in which case it sounds suspicious. And the same holds for those making defamatory statements.
In any case, when considering an investment, more so if it is a sizable one, it is imperative to use advisers that are familiar with the particular environment and who can navigate through it. Making presumptions based on an investors’ own business environment or ignoring inconveniences that may arise from differences in the legal system or culture or inability to tame bureaucracy can be a recipe for failure. In the end there are no shortcuts. If you don’t want to invest in advice and research you’ll have to live with the consequences. If you don’t want to invest or can’t do so, it is better walk away instead of hiding behind excuses about the country.
But in order to promote investment and capital formation, the defamation has to stop so that a positive story about investing in Greece blossoms little by little. This also requires some development plan as well. Until then, we hope that this article gives enough arguments for those that want to defend Greece or simply restore reality through facts rather than locker room talk.

1 Commission calls for immediate action for a European Industrial Renaissance, January 22, 2014.

 
 
 
 
 
 

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Putin Keeps Cool and Averts WWIII as Israeli-French Gamble in Syria Backfires Spectacularly

Putin vowed that Russia would take extra precautions to protect its troops in Syria, saying these will be “the steps that everyone will notice.”

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Authored by Robert Bridge via The Strategic Culture Foundation:


By initiating an attack on the Syrian province of Latakia, home to the Russia-operated Khmeimim Air Base, Israel, France and the United States certainly understood they were flirting with disaster. Yet they went ahead with the operation anyways.

On the pretext that Iran was preparing to deliver a shipment of weapon production systems to Hezbollah in Lebanon, Israeli F-16s, backed by French missile launches in the Mediterranean, destroyed what is alleged to have been a Syrian Army ammunition depot.

What happened next is already well established: a Russian Il-20 reconnaissance aircraft, which the Israeli fighter jets had reportedly used for cover, was shot down by an S-200 surface-to-air missile system operated by the Syrian Army. Fifteen Russian servicemen perished in the incident, which could have been avoided had Israel provided more than just one-minute warning before the attack. As a result, chaos ensued.

Whether or not there is any truth to the claim that Iran was preparing to deliver weapon-making systems to Hezbollah in Lebanon is practically a moot point based on flawed logic. Conducting an attack against an ammunition depot in Syria – in the vicinity of Russia’s Khmeimim Air Base – to protect Israel doesn’t make much sense when the consequence of such “protective measures” could have been a conflagration on the scale of World War III. That would have been an unacceptable price to achieve such a limited objective, which could have been better accomplished with the assistance of Russia, as opposed to NATO-member France, for example. In any case, there is a so-called “de-confliction system” in place between Israel and Russia designed to prevent exactly this sort of episode from occurring.

And then there is the matter of the timing of the French-Israeli incursion.

Just hours before Israeli jets pounded the suspect Syrian ammunition storehouse, Putin and Turkish President Recep Erdogan were in Sochi hammering out the details on a plan to reduce civilian casualties as Russian and Syrian forces plan to retake Idlib province, the last remaining terrorist stronghold in the country. The plan envisioned the creation of a demilitarized buffer zone between government and rebel forces, with observatory units to enforce the agreement. In other words, it is designed to prevent exactly what Western observers have been fretting about, and that is unnecessary ‘collateral damage.’

So what do France and Israel do after a relative peace is declared, and an effective measure for reducing casualties? The cynically attack Syria, thus exposing those same Syrian civilians to the dangers of military conflict that Western capitals proclaim to be worried about.

Israel moves to ‘damage control’

Although Israel has taken the rare move of acknowledging its involvement in the Syrian attack, even expressing “sorrow” for the loss of Russian life, it insists that Damascus should be held responsible for the tragedy. That is a highly debatable argument.

By virtue of the fact that the French and Israeli forces were teaming up to attack the territory of a sovereign nation, thus forcing Syria to respond in self-defense, it is rather obvious where ultimate blame for the downed Russian plane lies.

“The blame for the downing of the Russian plane and the deaths of its crew members lies squarely on the Israeli side,” Russian Defense Minister Sergey Shoigu said. “The actions of the Israeli military were not in keeping with the spirit of the Russian-Israeli partnership, so we reserve the right to respond.”

Russian President Vladimir Putin, meanwhile, took admirable efforts to prevent the blame game from reaching the boiling point, telling reporters that the downing of the Russian aircraft was the result of “a chain of tragic circumstances, because the Israeli plane didn’t shoot down our jet.”

Nevertheless, following this extremely tempered and reserved remark, Putin vowed that Russia would take extra precautions to protect its troops in Syria, saying these will be “the steps that everyone will notice.”

Now there is much consternation in Israel that the IDF will soon find its freedom to conduct operations against targets in Syria greatly impaired. That’s because Russia, having just suffered a ‘friendly-fire’ incident from its own antiquated S-200 system, may now be more open to the idea of providing Syria with the more advanced S-300 air-defense system.

Earlier this year, Putin and Israeli Prime Minister Benjamin Netanyahu reached an agreement that prevented those advanced defensive weapons from being employed in the Syrian theater. That deal is now in serious jeopardy. In addition to other defensive measures, Russia could effectively create the conditions for a veritable no-fly zone across Western Syria in that it would simply become too risky for foreign aircraft to venture into the zone.

The entire situation, which certainly did not go off as planned, has forced Israel into damage control as they attempt to prevent their Russian counterparts from effectively shutting down Syria’s western border.

On Thursday, Israeli Major-General Amikam Norkin and Brigadier General Erez Maisel, as well as officers of the Intelligence and Operations directorates of the Israeli air force will pay an official visit to Moscow where they are expected to repeat their concerns of “continuous Iranian attempts to transfer strategic weapons to the Hezbollah terror organization and to establish an Iranian military presence in Syria.”

Moscow will certainly be asking their Israeli partners if it is justifiable to subject Russian servicemen to unacceptable levels of danger, up to and including death, in order to defend Israeli interests. It remains to be seen if the two sides can find, through the fog of war, an honest method for bringing an end to the Syria conflict, which would go far at relieving Israel’s concerns of Iranian influence in the region.

 

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This Man’s Incredible Story Proves Why Due Process Matters In The Kavanaugh Case

Accused of rape by a fellow student, Brian Banks accepted a plea deal and went to prison on his 18th birthday. Years later he was exonerated.

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Authored by James Miller of The Political Insider:


Somewhere between the creation of the Magna Carta and now, leftists have forgotten why due process matters; and in some cases, such as that of Judge Brett Kavanaugh, they choose to outright ignore the judicial and civil rights put in place by the U.S. Constitution.

In this age of social media justice mobs, the accused are often convicted in the court of (liberal) public opinion long before any substantial evidence emerges to warrant an investigation or trial. This is certainly true for Kavanaugh. His accuser, Christine Blasey Ford, cannot recall the date of the alleged assault and has no supporting witnesses, yet law professors are ready to ruin his entire life and career. Not because they genuinely believe he’s guilty, but because he’s a pro-life Trump nominee for the Supreme Court.

It goes without saying: to “sink Kavanaugh even if” Ford’s allegation is untrue is unethical, unconstitutional, and undemocratic. He has a right to due process, and before liberals sharpen their pitchforks any further they would do well to remember what happened to Brian Banks.

In the summer of 2002, Banks was a highly recruited 16-year-old linebacker at Polytechnic High School in California with plans to play football on a full scholarship to the University of Southern California. However, those plans were destroyed when Banks’s classmate, Wanetta Gibson, claimed that Banks had dragged her into a stairway at their high school and raped her.

Gibson’s claim was false, but it was Banks’s word against hers. Banks had two options: go to trial and risk spending 41 years-to-life in prison, or take a plea deal that included five years in prison, five years probation, and registering as a sex offender. Banks accepted the plea deal under the counsel of his lawyer, who told him that he stood no chance at trial because the all-white jury would “automatically assume” he was guilty because he was a “big, black teenager.”

Gibson and her mother subsequently sued the Long Beach Unified School District and won a $1.5 million settlement. It wasn’t until nearly a decade later, long after Banks’s promising football career had already been tanked, that Gibson admitted she’d fabricated the entire story.

Following Gibson’s confession, Banks was exonerated with the help of the California Innocence Project. Hopeful to get his life back on track, he played for Las Vegas Locomotives of the now-defunct United Football League in 2012 and signed with the Atlanta Falcons in 2013. But while Banks finally received justice, he will never get back the years or the prospective pro football career that Gibson selfishly stole from him.

Banks’ story is timely, and it serves as a powerful warning to anyone too eager to condemn those accused of sexual assault. In fact, a film about Banks’s ordeal, Brian Banks, is set to premiere at the Los Angeles Film Festival next week.

Perhaps all the #MeToo Hollywood elites and their liberal friends should attend the screening – and keep Kavanaugh in their minds as they watch.

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Clinton-Yeltsin docs shine a light on why Deep State hates Putin (Video)

The Duran – News in Review – Episode 114.

Alex Christoforou

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Bill Clinton and America ruled over Russia and Boris Yeltsin during the 1990s. Yeltsin showed little love for Russia and more interest in keeping power, and pleasing the oligarchs around him.

Then came Vladimir Putin, and everything changed.

Nearly 600 pages of memos and transcripts, documenting personal exchanges and telephone conversations between Bill Clinton and Boris Yeltsin, were made public by the Clinton Presidential Library in Little Rock, Arkansas.

Dating from January 1993 to December 1999, the documents provide a historical account of a time when US relations with Russia were at their best, as Russia was at its weakest.

On September 8, 1999, weeks after promoting the head of the Russia’s top intelligence agency to the post of prime minister, Russian President Boris Yeltsin took a phone call from U.S. President Bill Clinton.

The new prime minister was unknown, rising to the top of the Federal Security Service only a year earlier.

Yeltsin wanted to reassure Clinton that Vladimir Putin was a “solid man.”

Yeltsin told Clinton….

“I would like to tell you about him so you will know what kind of man he is.”

“I found out he is a solid man who is kept well abreast of various subjects under his purview. At the same time, he is thorough and strong, very sociable. And he can easily have good relations and contact with people who are his partners. I am sure you will find him to be a highly qualified partner.”

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the nearly 600 pages of transcripts documenting the calls and personal conversations between then U.S. President Bill Clinton and Russian President Boris Yeltsin, released last month. A strong Clinton and a very weak Yeltsin underscore a warm and friendly relationship between the U.S. and Russia.

Then Vladimir Putin came along and decided to lift Russia out of the abyss, and things changed.

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Here are five must-read Clinton-Yeltsin exchanges from with the 600 pages released by the Clinton Library.

Via RT

Clinton sends ‘his people’ to get Yeltsin elected

Amid unceasing allegations of nefarious Russian influence in the 2016 presidential election, the Clinton-Yeltsin exchanges reveal how the US government threw its full weight behind Boris – in Russian parliamentary elections as well as for the 1996 reelection campaign, which he approached with 1-digit ratings.

For example, a transcript from 1993 details how Clinton offered to help Yeltsin in upcoming parliamentary elections by selectively using US foreign aid to shore up support for the Russian leader’s political allies.

“What is the prevailing attitude among the regional leaders? Can we do something through our aid package to send support out to the regions?” a concerned Clinton asked.

Yeltsin liked the idea, replying that “this kind of regional support would be very useful.” Clinton then promised to have “his people” follow up on the plan.

In another exchange, Yeltsin asks his US counterpart for a bit of financial help ahead of the 1996 presidential election: “Bill, for my election campaign, I urgently need for Russia a loan of $2.5 billion,” he said. Yeltsin added that he needed the money in order to pay pensions and government wages – obligations which, if left unfulfilled, would have likely led to his political ruin. Yeltsin also asks Clinton if he could “use his influence” to increase the size of an IMF loan to assist him during his re-election campaign.

Yeltsin questions NATO expansion

The future of NATO was still an open question in the years following the collapse of the Soviet Union, and conversations between Clinton and Yeltsin provide an illuminating backdrop to the current state of the curiously offensive ‘defensive alliance’ (spoiler alert: it expanded right up to Russia’s border).

In 1995, Yeltsin told Clinton that NATO expansion would lead to “humiliation” for Russia, noting that many Russians were fearful of the possibility that the alliance could encircle their country.

“It’s a new form of encirclement if the one surviving Cold War bloc expands right up to the borders of Russia. Many Russians have a sense of fear. What do you want to achieve with this if Russia is your partner? They ask. I ask it too: Why do you want to do this?” Yeltsin asked Clinton.

As the documents show, Yeltsin insisted that Russia had “no claims on other countries,” adding that it was “unacceptable” that the US was conducting naval drills near Crimea.

“It is as if we were training people in Cuba. How would you feel?” Yeltsin asked. The Russian leader then proposed a “gentleman’s agreement” that no former Soviet republics would join NATO.

Clinton refused the offer, saying: “I can’t make the specific commitment you are asking for. It would violate the whole spirit of NATO. I’ve always tried to build you up and never undermine you.”

NATO bombing of Yugoslavia turns Russia against the West

Although Clinton and Yeltsin enjoyed friendly relations, NATO’s bombing of Yugoslavia tempered Moscow’s enthusiastic partnership with the West.

“Our people will certainly from now have a bad attitude with regard to America and with NATO,” the Russian president told Clinton in March 1999. “I remember how difficult it was for me to try and turn the heads of our people, the heads of the politicians towards the West, towards the United States, but I succeeded in doing that, and now to lose all that.”

Yeltsin urged Clinton to renounce the strikes, for the sake of “our relationship” and “peace in Europe.”

“It is not known who will come after us and it is not known what will be the road of future developments in strategic nuclear weapons,” Yeltsin reminded his US counterpart.

But Clinton wouldn’t cede ground.

“Milosevic is still a communist dictator and he would like to destroy the alliance that Russia has built up with the US and Europe and essentially destroy the whole movement of your region toward democracy and go back to ethnic alliances. We cannot allow him to dictate our future,” Clinton told Yeltsin.

Yeltsin asks US to ‘give Europe to Russia’

One exchange that has been making the rounds on Twitter appears to show Yeltsin requesting that Europe be “given” to Russia during a meeting in Istanbul in 1999. However, it’s not quite what it seems.

“I ask you one thing,” Yeltsin says, addressing Clinton. “Just give Europe to Russia. The US is not in Europe. Europe should be in the business of Europeans.”

However, the request is slightly less sinister than it sounds when put into context: The two leaders were discussing missile defense, and Yeltsin was arguing that Russia – not the US – would be a more suitable guarantor of Europe’s security.

“We have the power in Russia to protect all of Europe, including those with missiles,” Yeltsin told Clinton.

Clinton on Putin: ‘He’s very smart’

Perhaps one of the most interesting exchanges takes place when Yeltsin announces to Clinton his successor, Vladimir Putin.

In a conversation with Clinton from September 1999, Yeltsin describes Putin as “a solid man,” adding: “I am sure you will find him to be a highly qualified partner.”

A month later, Clinton asks Yeltsin who will win the Russian presidential election.

“Putin, of course. He will be the successor to Boris Yeltsin. He’s a democrat, and he knows the West.”

“He’s very smart,” Clinton remarks.

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