Why Greece needs Azerbaijani money?

By Maksim Tsurkov

It seems that Greece’s relations with the euro are coming to an end. The main question for us is how this may be reflected on Azerbaijan?


In terms of incomes, Greece suffers substantial losses. The country’s government, in such situation, simply needs to find new sources of funding.


In this regard, Athens can accelerate the completion of the Azerbaijani state oil company SOCAR’s deal on acquisition of 66 percent stake in the Greek gas transmission operator DESFA.


Currently, this deal is being reviewed by the European Commission’s Directorate General for Competition, which recently extended the procedure for another month – until April 22.


Given the situation with the European economy as a whole, it must be difficult for the EU to refuse to attract Azerbaijani investments.


On the other hand, it is unknown how much this deal is now beneficial for SOCAR.


The cost of 66 percent in DESFA is $400 million. Taking into account the growth of the dollar against the Azerbaijani manat, this deal can now be more expensive for SOCAR. At the same time one has to remember – SOCAR has dollar assets necessary to carry out this transaction and the responsibility to partners and contracts concluded, which is, by the way, in contrast to the Greeks demanding benefits and more profits from the Southern Gas Corridor project.


On Feb.20, the Minister of Finance of Malta Edward Scicluna said that the bloc of the Euro zone countries led by Germany agrees to Greece’s leaving the currency bloc in case if the agreement on the Greek debt and extension of the program of financial aid to the country is not achieved.


At the same time, return to the drachma makes Greece helpless in the face of lenders who issued debt in euros, and respectively, will want to get them back in the euro. It is unknown how lower the drachma exchange rate will be compared to the euro, and it will surely be lower due to “lack of confidence” to the new local currency. Many of the goods that the country buys in euro will become much more expensive, in particular, oil and gas.


This will also affect the weakening European economy and the euro exchange rate, which has already lost much ground over the last year.


Thus, today the situation is that Europe and Greece need Azerbaijani gas and Azerbaijani investments, so it is in their interests not to delay the implementation of transactions they could benefit from.












April 2016