On Saturday, the Greek government Syriza’s unexpected announcement that it would hold a referendum on the bailout terms being offered by the troika was met by anger and consternation in Europe. Officials suggested the decision had wrecked the chances of reaching a deal to save the country from default and a possible exit from the euro.
The Greek people will vote on 5 July, five days after the deadline to pay the IMF €1.5bn, which the government says it cannot afford without a deal. In order to prevent a run on the banks, the Greek government has introduced capital controls, strictly limiting cash withdrawals, while foreign transfers out of Greece are prohibited.
According to George Kallitsis of Thessaloniki-based exporter Protofanousi Fruits, fresh produce companies that are currently doing business will be severely affected. “We are in the middle of the cherry season,” he told Eurofruit, “so every day we need to pay our growers and the transport and packaging companies.”
Some time ago, Protofanousi took the precaution of opening a bank account abroad, allowing it to pay its foreign suppliers, including transport companies, the majority of which are Bulgarian and require payment upfront.
“When it comes to our producers, however, it is different,” he said. “They are supplying us with cherries every day, and they need cash to pay their workers who harvest the fruit. We are not panicking, but it is a bit of a nightmare. We hope it will only last this week. If it goes on any longer we will need to seek alternative solutions.”
“Electronic banking and transfers within the country are still possible so in principle companies can continue operating,” said George Frangistas of exporter Gefra. “For example, an exporter can buy fruit and packaging and pay for transport by electronic means, but somehow the driver needs cash for fuel, tolls, food. Assuming he can do that with credit cards, which is a huge assumption, he will hit a dead end once the delivery is completed. His search for return cargo will be pointless, as imports are impossible as long as transfers abroad are not permitted. If this lasts only a week, we will somehow get over it, but beyond that our sector will simply grind to a halt.”
Exacerbating the current situation is that, in Greece, invoices over €500 must be paid by bank or cheque, not cash. “A cheque is not much good if all the banks are closed,” said Kallitsis.
Prime minister Alexis Tsipras has argued forcefully for the Greek people to reject the “unbearable” bailout plan from Greece’s creditors, at least for a few more months. Nevertheless, should the Greek people agree with their government, many hope Greece’s paymasters will still find a more favourable solution to the crisis.
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