Can America’s senior citizens rescue the Greek economy? Will Google and other multinationals prop up Ireland?
That’s the pitch top officials from the two countries brought to Washington last week as they sought to help their crisis-stricken economies move beyond bailouts and budget-cutting and toward some semblance of recovery.
The two nations have both accepted loans from the International Monetary Fund and Europe, and have committed to extensive restructuring of their economies and government spending in coming years. But the breathing room is limited, and the success of the two programs hinges on restoring growth before the countries have to begin borrowing money on the open market again.
For Greece, that means cashing in on tourism with what Tourism Minister Pavlos Yeroulanos called a “back to basics” strategy to leverage what is perhaps Greece’s greatest asset -- its climate and culture.
Yeroulanos was in the United States last week promoting Greek tourism to groups including the American Association of Retired Persons and major Jewish organizations (Israel, he said, has been an important growth market for Greek tour operators, and Greece hopes to repeat that success among U.S. Jews).
The country is also acknowledging some of its failed experiments in state-run capitalism and is ditching the government-owned and money-losing Xenia hotel chain, Yeroulanos said. The country has been sparring with the International Monetary Fund over the sale of state-owned assets, which the IMF says could yield as much as $50 billion for Greece to pay down debts. But in the case of the Xenia hotels, the government is simply turning them over to local governments to get them off its books.
For Ireland, the hope is to rekindle the flow of foreign investment that helped sustain the country during its “Celtic Tiger” years.
Barry O’Leary, chief executive of Ireland’s Investment and Development Agency, acknowledged the challenges. The country’s reputation took a hit during the recent crisis. That left some global corporations wondering whether it was wise to invest in a country that is under pressure from its European neighbors to bring its low, 12.5 percent corporate tax rate in line with other countries that share the euro.
Protecting that corporate rate has been a bright red line for the Irish government, and O’Leary pointed to some modest success this year in rebuilding Ireland’s credibility: Intel, Google and Amgen have boosted their investments in the country, and he said Ireland is becoming a hub of sorts for game companies such as Blizzard and Electronic Arts.
The tug of war with the Europeans is still underway, but “we would not get the investment we are getting if [companies] didn’t think we would stand our ground,” O’Leary said.