How is the sovereign debt crisis affecting Greece’s relations with the Balkan countries and Greece’s standing in the region? An initial impact assessment

This specific project attempted a first assessment of the impact that the Greek crisis had on Greece’s standing in the region of the Balkans. It attempted to identify such impact at the level of politics, economy, and business activity, as well as the country’s image.

During the period 1995-2008, Greece’s politico-diplomatic and economic presence in the Balkan region was particularly dynamic. Mutually beneficial bilateral relations were developed at all levels. In the political and diplomatic field, Greece’s successful EU presidency managed to put the Balkans squarely within the accession map through the ‘promise’ offered at the 2003 Thessaloniki Summit. The image of Greece as a successful Balkan and European country and as an indispensable ally in the Balkan countries’ EU accession process was significantly strengthened. Additionally, particularly strong links between Greece and the Southeast European countries were established in the sectors of trade, investment, and banking. Moreover, Greece attracted hundreds of thousands of Balkan migrant workers, whose remittances contributed significantly to their home economies.

However, since 2010, the Greek sovereign debt crisis – and the subsequent far-reaching economic, political, and social impact on the entire region – changed the dynamics of these relationships and had negative ramifications for Greece’s activities and presence in the region. Due to the interdependence between Greece and the countries of the periphery, the Greek crisis produced a vicious circle whereby the economic decline of Greece exacerbated the decline of the already-affected economies of Southeast Europe, which fed back into Greece through, among other factors, a fall in demand for imports from Greece and a fall in the return on Greek investments. Additionally, the political presence of Greece in the region and the image of the country also seemed to be in serious decline.

There is no doubt that the impact of the crisis on the bilateral economic relations between Greece and its Southeast European neighbors, as well as on Greece’s political presence in the region, was negative and possibly long-lasting. The political and economic consequences of this development had to be carefully and thoroughly examined during the period this project took place.

The project was funded by Eurobank.