Greek businesses flee over debt crisis


ATHENS — For 23 years, Marios Vrachnakis has worked to make the thick Greek yogurt that has become almost as much a symbol of his country as feta cheese and olives. But these days, being Greek is a bad business model.

The company where Vrachnakis works, Fage Yogurt, was threatened this year with a ratings downgrade simply because its headquarters were in Greece, which is in the middle of a Depression-level crisis. So in October, the company took a drastic step. Fage, which was founded in Athens in 1926, is now based in Luxembourg. The threat of a downgrade from one ratings agency evaporated within days.

Many healthy Greek companies are being penalized because of the chaos that surrounds them — and some are starting to move to richer climes. Observers say the trend could mark the start of a more permanent shift that would exacerbate the inequalities that the euro was supposed to bridge. And with each departure, Greece moves a bit farther away from getting its economic problems in order.

European leaders last month decided, after months of uncertainty, that Greece would get a bailout payment that will enable it to stay on the euro for the time being. But no one expects the solution to hold for long, and for many businesses the rescue has come too late.

Days after Fage’s move, Coca-Cola Hellenic, the second-largest bottler of Coke in the world and the largest company on the Athens stock exchange, said it would send its top offices to Switzerland. It was immediately able to borrow more cheaply. Both companies said they will leave their production plants in Greece. But the sheer symbolism of healthy Greek companies switching their allegiances could be the first sign of a broader stampede, analysts say, and other companies are considering similar moves.

The movements of investment, tax revenue and even educated workers have already given rich countries a boost while struggling countries have lost out. Now countries such as Germany and Switzerland are pulling in the very businesses that could be drivers of recoveries in their former homes.

For workers like Vrachnakis, 52, the movements are another sign their futures are crumbling. Fage, which makes the yogurt labeled Total in the United States, benefited from the good years in Greece, he said, but it’s escaping the rough ones, since it will avoid the rapidly shifting tax situation and the instability of the grinding austerity measures.

“We must all be patriotic,” companies included, he said. “All Greeks must contribute to save the country.”

But the country’s biggest, healthiest businesses have the most to gain by moving headquarters elsewhere. Many economists say the prospect of a Greek revival remains in doubt, in part because of the churning cycle that is driving companies away. So long as the threat of being pushed out of the 17-nation euro zone remains real, few investors can be secure about getting payouts in euros, not drachmas. And as companies pull back, the country becomes even more difficult to save. “You cannot attract investment when you have so much uncertainty,” said Aggelos Tsakanikas, head of research at the Foundation for Economic and Industrial Research in Athens.


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