Then again, Greece was not the only member of the eurozone (a union which, unlike any successful financial organisation, seems to have based its existence exclusively on positive assumptions) to face financial difficulties.
Difficult decisions had to be made by the financially stronger eurozone members to provide assistance to weaker ones. Early in 2010 the decision was made that financial assistance be granted to Greece – not only from European sources, but also from the IMF.
But financial assistance is never free. Severe conditions were imposed, and the country was obliged to start a long and painful restructuring of its public management and finances by imposing strict public policies. However the public reaction against these policies sent Greece back to the top of the news, with images of protests against the austerity measures shown around the world.
Public reaction, however, is just one side of the coin. The other side is that austerity measures, when properly implemented with the support and guidance of the ECB and the IMF experts, may lead to an impressive reform of the legal framework, securing a cost efficient and revenue generating environment for investments. And undoubtedly Greece, especially today, is in great need of anyone willing to make new investments in its troubled but recovering economy. So, Greece has to prove itself – once again – as an investor friendly country.
Greece, even before the financial crisis and austerity measures, held a very strong record in attracting foreign investments. During the last two decades Greece completed a long list of large concession projects, one of the most favoured categories of foreign investments in Greece. Some of these, such as Athens International Airport and the Athens ring road, were undoubtedly the inheritance of the 2004 Olympic Games. Others that followed simply took a free ride on the project finance model, which was developed and tailor-made for Greece. Impressive projects, such as the Rion-Antirion bridge, the longest multi-span cable-stayed bridge in the world, and the new generation of large finance projects, such as the MK or E65 toll road concessions, which reached financial close less than three years ago, were organised and completed based on such a model.
Also, Greece had made it in the list of approved jurisdictions of some of the most rigorous and difficult-to-persuade investors. Equity funds, such as BC Partners, Rhone Capital, TPG or APAX, and strategic enterprises, such as Deutsche Telekom, have already completed a first round of sizeable – and in most cases successful – transactions targeting Greek companies.
This success in attracting foreign investment resulted from Greece’s years of experience in organising projects that require foreign resources. And Greece knows very well that the recipe for attracting foreign investment requires that an investor friendly jurisdiction can tackle one of the most significant risks: the legal one.
Both older and more recent pieces of Greek legislation provide for the creation of a safe legal framework and for the right tools for financing and completing large projects in Greece. An excellent example is law 3894/2010, a very ambitious piece of legislation that Greece enacted in late 2010 to attract foreign investors to Greece by introducing a fast track process for strategic investments. Also, older pieces of legislation deal with the legal risk. Legislative Decree 2687/1953, the oldest piece of Greek project finance legislation, allows for the creation of a secure legal environment for the foreign investments brought under its scope. Originally used in the shipping business, this decree was then applied to a whole range of projects, from casino investments to the international airport.
In addition, acting as a prudent full EU and EMU member state, Greece saw that all the EU directives dealing with various financial markets and taxation issues were adopted in good time. Moreover, the long list of new directives that preceded the Union’s enlargement have now become Greek law. Greece has also kept pace with all significant EU legal developments and directives in the fields of financial collateral, prospectuses, market abuse and transparency, take-over directives, markets in financial instruments and banking, harmonising all of the respective Greek law fields.
Further steps had been taken at a national level before the outbreak of the crisis to mark Greece out as an investor-friendly jurisdiction. These include the very recent modernisation of the bankruptcy and companies legal regime, as well as the enactment of the very useful bond and securitisation Law 3156/2003, which introduced the notion of private securitisation of receivables and modernised the framework for issuance of bonds by Greek entities. Law 3156, by providing for tax relief and finance-associated cost caps and limitations, and by deviating from traditional legal notions such as the assignment of claims, set a safe legal environment to raise funds for investments into Greece. Law 3156 has been consistently applied for the financing of virtually all the major investments made in Greece since 2003.
The austerity measures and strict public policy that came with the IMF and ECB’s support had only a positive impact on this already existing investor-friendly environment. The liberalisation of the provision of services regime, limitations on unreasonable union rights are some examples of such impact, which further facilitated the investor-friendly legal framework.
The recovering Greek economy is expected to provide for significant opportunities to everyone who is willing to take its risk. Whether these expectations will be fulfilled remains to be seen. One thing, however, is certain. Anyone who will take this risk can rely on Greece’s long standing commitment in sustaining and improving its investor friendly legal framework.
