Greece is one of the most important investors in the Balkans and most analysts are concerned that the financial crisis will have a spillover effect on the Balkan countries. Greece dominates the region’s banking sector with ownership or control of nearly 28 percent of the financial institutions. With almost 2,000 branches throughout the region, Greek-owned banks employ over 23,000 people. Furthermore, in most Balkan countries, Greek banks disburse more than 10 percent  of the overall loans to citizens of the region. In Serbia, there are close trade linkages that could also be easily impacted by the crisis. More than 8,000 Greek companies have invested in Balkan countries in the last few years, with an estimated 20 percent annual turnover rate realized.

In Macedonia alone, a politically fragile state with a rather nationalistic government and a 30 percent  unemployment rate, nearly 300 Greek companies have invested during the last five to eight years. A withdrawal of this investment or even its mere stagnation could bring this EU candidate country close to collapse.

Bulgaria and Romania are worried about their admission into the eurozone since EU member states north of Budapest doubt the fiscal discipline of the new candidates.

Before the economic crisis, the Balkans underwent rapid privatization, and experienced high growth rates and foreign capital investments. Now, the forecasts of the European Bank for Reconstruction and Development (EBRD) for the Balkans indicate a serious decline in GDP growth. Lest we forget, all Balkan countries are struggling with their unemployment rates so any destabilization of the economy would likely lead to further migration and brain drain to more economically-sound countries.   This would then push those capacity-striving states backwards, further hindering the seemingly everlasting transition process.

The Bright Side of Life is that this summer, most Southern Europeans will be able to afford a nice holiday in this attractive tourist destination. Prices have already gone down and are aiming to attract as many tourists as possible.

Gordana Delic is a senior program officer with GMF in Belgrade.

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