Ukraine's likely impact on Greece
There are more questions than answers right now, as the war in Ukraine unfolds and the West's response is still being formed
Energy: One of Greece’s first concerns on day one of the war (Feb. 24) was securing supplies of natural gas. At the outset of a National Security Council meeting on Thursday, prime minister Kyriakos Mitsotakis said, “at a national level, the supply of energy has already been secured and we are working on scenarios that will involve the greatest possible absorption of market fluctuation in energy prices.”
Energy minister Kostas Skrekas elaborated after a crisis council meeting on Friday: Greece’s LNG terminal at Revythousa is well stocked, having just taken delivery of 108,000 cubic metres this week (it has a capacity of 225,000 cubic metres). DEPA and other gas importers are standing by to purchase further shipments, and Greece can increase its supply from the Trans-Adriatic Pipeline, which traverses northern Greece. Greece has 30 days’ worth of lignite (coal) on hand, and hydro-electric dam resevoirs are at “satisfactory” levels for the season.
Greece is already suffering from high energy costs through increased natural gas prices (energy minister Kostas Skrekas says prices are on average five times what they were a year ago) and electricity bills. Since the start of the year, the government has committed 2bn euros to subsidising those costs for households, businesses and farmers. But heavy industry leaders - particularly in the energy-intensive aluminium industry - say this is not enough, because Greece is the only EU country in which the full increase in energy costs was passed on to the consumer. This is because Greece has not developed long-term supply contracts between producers and high-volume consumers, which would stabilise the market. Instead, all electricity purchases by the Energy Regulatory Authority (RAE) are spot-priced on the Energy Exchange.
Wary of the costs of going it alone, Skrekas has asked for an emergency meeting of the European Council to discuss what measures can be taken to protect European consumers.
A few background facts and figures:
The European Central Bank says energy costs are directly responsible for more than half of January’s 5.1% inflation rate for the euro area, and indirectly responsible for much of the rest
The OECD says energy prices rose 15.4% last year, the highest annual rise in 40 years. The annual rise in inflation was 4%, the highest in 21 years.
In Greece, between December 2020 and December 2021 electricity prices tripled, mainly due to gas prices (Source: Institute of Energy for Southeast Europe (IENE)).
Refugees: Displaced Ukrainians are already driving over the borders of their country into Poland and the Baltic states. It is not yet clear how many refugees Greece may be called upon to host, nor has Greece announced any specific number of reception spaces. All Greece’s migration ministry has said, after convening a crisis management committee on Friday morning, is that it discussed sending humanitarian and technical assistance to countries currently receiving Ukrainian refugees.
Greece has received hundreds of millions of euros in funding for border security, asylum processing and integration, and it would be difficult for it to refuse a European request to take people in.
Greece does have one argument it is likely to use, that 150,000 Ukrainian nationals are ethnically Greek, and priority needs to be given to them.
Shipping: On Thursday Greece reported nine merchant ships in the Black Sea with 66 Greek officers on board. Barring any hostile action that might sink or hinder ships, shipping is likely to benefit from this crisis, as it has from previous crises, through higher commodity and transport rates.
Sanctions: If the US and European Union call for a broad freezing of Russian assets in Europe, as has happened in the United States, this could impact on Russian assets in Greece and especially Cyprus, where Russian bank depositors and property owners are a dominant group.
Geopolitical risk: It is not yet clear what effect Ukraine’s war may have on Southeast Europe. Russian president Vladimir Putin has mentioned that fighters from Bosnia and Kosovo are among the forces arrayed against him. His secretary of the Kremlin’s Security Council, Nikolai Patrushev, was reportedly due to visit Serbia. It is also not clear whether the flux in the broader region might encourage Turkish president Recep Tayyip Erdogan to pursue his policy of maintaining tension with Greece.