Greek Businesses Fear Possible Return to Drachma [View all]

[FarCenter]

Worries that Greece might default on its debts or even leave Europe’s currency union have deepened since May 6, when Greeks voted in shocking numbers for a left-wing party willing to tear up Greece’s $170 billion international bailout agreement. These days, even though 80 percent of Greeks say they want to stay with the euro, talk of “drachmageddon” can be heard in conversations all around Athens — in executive suites, at mom-and-pop shops and even in nightclubs.

“A return to the drachma would be a nightmare,” said Mr. Ioannidis, whose bookings began to trail off a few months ago and slumped badly after the election. “It would create a panic for businesses and also for people wanting to do business with Greece.”

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Aside from shipbuilding, most of Greece’s industrial base has eroded in the 30 years since the government nationalized large areas of industry. Wealth-generating businesses diminished, and tens of thousands of laid-off workers were absorbed by the state to reduce unemployment.

Today, Greek exports of manufactured products account for only 10 percent of gross domestic product, compared with a 30 percent average for the rest of the euro zone. In addition, Greece’s adoption of the euro hastened a steady shift away from agricultural production. Today, Greece imports nearly 40 percent of its food, most of its medicine and almost all of its oil and natural gas, a situation that may lead to shortages if international suppliers halt business for a period.

http://www.nytimes.com/2012/05/23/world/europe/greek-businesses-fear-switch-from-euro-to-drachma.html