Balkan States Weigh Impact of Greece’s ‘No’

06 Jul 15
Balkan States Weigh Impact of Greece’s ‘No’

Officials in the Balkans are weighing up the potential impact of the Greek referendum result on their countries amid warnings that a deepening of the crisis could damage economies in the region.

BIRN team
Belgrade, Skopje, Zagreb, Prijedor, Podgorica

‘No’ voters in Greece. | Photo by Beta/AP

As political leaders surveyed the potential fallout from the Greek referendum, Belgian foreign minister Didier Reynders warned on Monday that if Athens leaves the Eurozone, it could destabilise economies in the Balkans.

“We must not forget that the Greek influence in the Balkans is very significant, as it is one of the key investors in the region. The consequences can affect not only the Former Yugoslav Republic of Macedonia and Montenegro, but also… Bulgaria,” Reynders told Belgium’s RTL radio station.

In Sunday’s referendum, Greek voters overwhelmingly rejected austerity proposals from the country’s creditors – the ECB, the EU and the IMF. As a result, an emergency Eurozone summit has been called for Tuesday.

Macedonia’s central bank said however that it did not plan any new measures to protect the country’s financial system. The bank last week restricted capital outflow from Macedonian banks into Greece.

“We will monitor the situation with the solvency of the Greek banking sector and we will react if necessary,” Macedonian central bank governor Dimitar Bogov told media.

In Montenegro, the central bank said last week that analysis indicated that the country will not be significantly affected by the crisis because its banking system is not closely linked to Greece and mutual trade levels are low.

The head of the parliamentary committee on the economy and the budget, Aleksandar Damjanovic, said on Monday however that Montenegro should be ready if Greece leaves the Eurozone.

“Montenegro should already have a ‘plan B’ with a clear and precise measures for all the institutions, which would be launched in case of a ‘Grexit’, in order to reduce the risks and impacts on Montenegro in case of such a scenario,” Damjanovic said.

Meanwhile Bosnia and Herzegovina is already facing a serious liquidity crisis in the coming period after officials have announced last week that reforms, which were initially agreed with the EU and the IMF, will not be implemented.

As Bosnia’s currency, the convertible mark, is directly linked to the euro, any fluctuation in the euro as a result of the ongoing Greek crisis will be immediately felt in the country, Banja Luka-based economist Sinisa Pepic told BIRN.

“This would significantly worsen the position of our foreign debt, which is mostly in US dollars, and would reduce the amount of money from collected VAT that would go into the budgets,” Pepic said.

In Serbia, Prime Minister Aleksandar Vucic did not address the Greek vote directly but praised the austerity measures his administration has introduced to make the country “financially healthy”.

“My job is to be sure that, when I leave the government, somebody else does not deal with bankruptcy like some Europe countries are facing today,” Vucic told reporters on Monday.

Serbian economist Goran Nikolic told BIRN that the banking sector in the country could face problems because four Greek banks own around 15 per cent of the entire banking sector.

“Greek bankruptcy could cause panic and this is what could put the banks [in Serbia] in jeopardy,” Nikolic said.

A source within the Serbian national bank told Belgrade newspaper Blic on Saturday that the bank is carefully monitoring transactions between the Greek banks in Serbia and their headquarters in Greece because it wants to prevent the uncontrolled outflow of money from Serbia.

Serbian Labour Minister Aleksandar Vulin, whose Movement of Socialists party is close to the Greek governing party Syriza, said meanwhile that the EU had to understand the message from Greece – “that there were small, ordinary people to be taken into account”.

In EU member state Croatia, senior officials made no comment on Sunday’s referendum. But former president Ivo Josipovic said that it showed there were deep divisions in Greek society.

“From this should be drawn a lesson that spending beyond one’s means will have to be paid off eventually,” Josipovic said.

He added that “a common language, compromises and a sustainable resolution of the crisis must be found”.

Source: Balkan Insight (Montenegro)