Azernews.Az

By Gulgiz Dadashova

The Greek vote is turning out to be one of the most discussed items of the week, as its vote against further austerity demands by its creditors leaves many questions open, beginning from its remaining in the euro currency union to energy projects.

There seems to be no clear winner from a Greek default—neither the country, its creditors who are not likely to ever be reimbursed, nor the few investors in the local economy. With Greece making up less than 2% of the eurozone's gross domestic product (GDP), an exit would set a precedent for other nations that membership is reversible.

Even though a Sunday vote would bring with it some certainty for Greece, it would bring uncertainty for the rest of Europe and that will weigh on growth.

The vote already hit the euro, which declined 0.6 percent to $1.1052 per dollar as of 8:15 a.m. in London. It was down as much as 1.3 percent in Asian trading, bringing it to the lowest level since June 29, Bloomberg reports.

Greece, which is currently experiencing a serious crisis, is a strategic European partner for energy-rich Azerbaijan. Greece is one of the transit and consumer countries for the Baku-backed Trans Adriatic Pipeline, which is designed to bring Caspian gas from the Turkish border to Europe.

Expert Vugar Bayramov noted that taking into account Azerbaijani investment in Greece and the euro assets of Azerbaijan’s state oil fund SOFAZ, Azerbaijan also favors a speedy resolution of this crisis.

“The referendum results expected to affect the EURO/USD rate. The currency exchange market of Azerbaijan also expected to record a slow euro this week,” he said.

The official exchange rate of the US dollar and euro to Azerbaijani manat was set at 1.0490 and 1.1577 manats, respectively as of July 6.

Bayramov ruled out any negative impact of the Greek default on SOFAZ revenues.

“On one hand the Fund has long been pursing ‘less euro’ policy. On the other side, the American and German investors are expected to win from this default. Stocks in those markets are expected to rise in price. This can be a good sign for SOFAZ which keeps more assets in that side of the ocean,” he added.

“The referendum results also will not affect EU-Azerbaijan ties. No changes are expected in the volume or value of Azerbaijan’s export to Europe yet,” he said.

Furthermore, Bayramov said that the crisis in Greece cannot hamper the realization of the energy projects promoted by Baku and Brussels.

“Azerbaijan and the European Union are the decision-making sides on the energy projects. Athens is just a participant,” he said.

The Greek government only offers territory for laying the TAP and doesn’t participate in the construction. There are no Greek companies among the shareholders of the gas pipeline, where energy giants such as BP, Statoil and SOCAR are represented. Moreover, the pipeline construction can create thousands of jobs in Greece, which is currently very important for the country.

Also, there are international contracts on all the work carried out in Greece and any attempt to revise them will lead to the international arbitrage.

As for SOCAR’s interest in DESFA, the then 400 million euro deal will probably be delayed for another indefinite period, which depends not so much on European antitrust authorities, but also on the outcome of the Greek drama.

Also, SOCAR may now pay for DESFA in a different currency, the revived Greek drachma.

One thing remains: Greece still poses a potential threat to the integrity of Europe and how painless it is to the rest of the eurozone now depends on the creditors’ decision.

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Follow Gulgiz Dadashova on Twitter: @GulgizD

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