As Greece lurches toward default, businesses hit the wall

Wed Jun 10, 2015 9:27am EDT
 
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By Angeliki Koutantou

ATHENS (Reuters) - When construction of four 6.5 billion euro toll roads across Greece resumed last year, Greek and foreign businesses rejoiced.

The motorways, largely funded by the European Union and built by companies including Germany’s Hochtief (HOTG.DE: Quote), France's Vinci (SGEF.PA: Quote) and Greek firms Ellaktor HELr.AT and GEK Terna HRMr.AT, had been halted in 2010. Last year, work resumed after the Greek government paid part of a fine to contractors for the four-year delay.

Now, work has slowed once more. With aid from its bailout program frozen, the government has used its last cash to pay public sector wages and pensions, and service debt. That has left it without 230 million euros it needs to contribute its part of the financing for the road.

The hole has put the entire project at risk again, one of many business ventures suffering amid the uncertainty of four months of negotiations between Athens and its international creditors.

"As a country, we need to move as quickly as possible to strike a deal that will resolve issues being faced by big and small (infrastructure) projects," says George Sirianos, head of the association for big Greek construction firms.

Paul Arnaoutis, whose firm sells imported medical supplies to Greek hospitals, has been waiting four months to be paid 1.3 million euros the state owes, nearly as much as his company’s entire 2014 sales of 1.7 million.

Until last year, his Chinese suppliers gave credit for 30-60 days. Now they are demanding cash up front because of the risk of doing business with Greece. He fears a doomsday scenario in which the government quits the euro and pays its bills with IOUs, which foreign suppliers will not accept.

"If there is no deal and the government decided to take Greece out of the euro, all Greek importers would be ruined."   Continued...

 
Paul Arnaoutis, founder and managing director of medical products supplier Paul Arnaoutis S.A, opens medical fridges full of supplies at his company's headquarters in Athens June 9, 2015.   REUTERS/Alkis Konstantinidis