Why Has Greece's Oil and Gas Exploration Taken So Long to Attract Attention?

[Andre]

It has been discussed before that Greece is a financial liability for the EU and that it was puzzling that most European leaders continued to believe in a happy end.

But they probably knew this

Greece receives 8 bids for oil, gas exploration...

..The three blocks combined, two off-shore and one onshore, may contain as much as 280 million barrels of oil, Greek officials said last year

I wonder why this has taken so long and if the stock markets will soar next week.

 

[lisab]

Olive oil?

 

[phinds]

... it was puzzling that most European leaders continued to believe in a happy end ...

No, I don't think they believed in a happy end so much as they believed in the LEAST UNHAPPY end, which is for Greece to stay in the Euro zone.

 

[Andre]

No, I don't think they believed in a happy end so much as they believed in the LEAST UNHAPPY end, which is for Greece to stay in the Euro zone.

That could be true, however it would have been an easier decision with this knowledge. Discussions however are ongoing if the EU was a really good idea, beyond a certain level of co-operation. The differences in cultures and financial systems appear too big for that.

Olive oil?

Ah, that could explain the gas too?

 

[phinds]

That could be true, however it would have been an easier decision with this knowledge. Discussions however are ongoing if the EU was a really good idea, beyond a certain level of co-operation. The differences in cultures and financial systems appear too big for that.

Yeah, there are plenty of serious and well-known economists that say exactly that and that without further political union AND a more serious financial union, it really ISN'T a workable "union".

There are several, apparently, that predicted that the monetary union would face disaster as soon as it was presented with any real troubles, exactly because of the point you make about the cultural and financial differences among the participants.

I just read an interesting article yesterday about how the German reunification left a very bitter taste with West Germans, who spent a fantastic amount of money to make the reunification work, and who are therefor now very adverse to giving huge amounts of money to poor countries such as Greece.

And yes, I certainly agree w/ you that knowledge of the possible oil revenues makes the whole situation much more hopeful.

 

[DrClapeyron]

The monetary union has turned into a debt racket. At this point, for Greece, and perhaps soon for Portugal and Spain, leaving the euro may have too unpredictable an outcome, and so staying within the union becomes the best option.

Fear of the unknown is being used against these nation, turning them into protectorates of the Franco-German debt machine. Fear cannot become a motivator of the various individual goernments, but I am afraid it has begun. Some hard-core socialist factions within the EU parliament want to ignore the elected governments of the various heavily indebted nations. They see the overthrow of the sovereign nation as the price they must pay (sacrifice) for being bailed out.

 

[256bits]

It has been discussed before that Greece is a financial liability for the EU and that it was puzzling that most European leaders continued to believe in a happy end.

But they probably knew this



I wonder why this has taken so long and if the stock markets will soar next week.

So ..., enough oil to supply their ( Greece's) need for 2 years - not really that wondrous.

 

[Zarqon]

I think everyone knew that problems would occur at some point, because as has been pointed out, there are large differences between the countries.

However, I do believe that in the long run, EU/EMU is absolutely necessary, because there are just certain problems that can only be solved globally (or at least on as large scale as possible), for example environmental issues. Money does go from the richer countries in europe to the poorer, but they come with demands, and this is what makes EU so important. It's allowing EU to enforce countries to manage their finances, follow environmental treaties and reduce corruption. In the long run, I'm convinced the net effects are positive (and indeed necessary for the EU region to work well).

West vs east germany was mentioned as an example, and sure, some west germans do feel disgruntled that they have to pay, but if you look at the cities in east germany and how much they have improved because of this money, you'll realize it's a clear net positive effect. 50 years ahead in the future when the west has already stopped giving money since long, no one will be bothered by the fact that they once did, and east will be just as wealthy as the west ( and contributing on its own). In the end, the long term effects are much more important than the short term ones.

 

[mheslep]

It has been discussed before that Greece is a financial liability for the EU and that it was puzzling that most European leaders continued to believe in a happy end.

But they probably knew this



I wonder why this has taken so long and if the stock markets will soar next week.

While domestic production is good thing, the report of 280 million barrels is not much oil. That's ~two weeks of US consumption and a total of $2.8B @ $100/bbl over the period of production, say $280M/year. By comparison the article states Greece spends up to $16B on oil imports currently. So not much soaring expected.

 

[mheslep]

Yeah, there are plenty of serious and well-known economists that say exactly that and that without further political union AND a more serious financial union, it really ISN'T a workable "union".

There are several, apparently, that predicted that the monetary union would face disaster as soon as it was presented with any real troubles, exactly because of the point you make about the cultural and financial differences among the participants.

...

I read that the euro zone could work if, and only if, countries in trouble like Greece simply go ahead and default. The hurdle is that larger euro countries don't want to suffer the consequence, which is that some of their banks holding large chunks of troubled foreign debt would fail (ala the US's MF Global that held European debt).

 

[JonDE]

I read that the euro zone could work if, and only if, countries in trouble like Greece simply go ahead and default. The hurdle is that larger euro countries don't want to suffer the consequence, which is that some of their banks holding large chunks of troubled foreign debt would fail (ala the US's MF Global that held European debt).

I honestly don't see anyway that it can work out. How can businesses in Greece ever hope to be competitive with those in Germany when sharing the same currency? Germany now has lower taxes and better infrastructure.

Even if Greece some how manages to get their debt under control, I doubt they will ever be able to compete with Germany.

 

[mheslep]

I honestly don't see anyway that it can work out. How can businesses in Greece ever hope to be competitive with those in Germany when sharing the same currency? Germany now has lower taxes and better infrastructure.

Even if Greece some how manages to get their debt under control, I doubt they will ever be able to compete with Germany.

They can compete like anyone else by having a lower cost of labor and doing business, in part by having *lower* taxes. Cuts in government spending enable lower taxes. Greek taxes are a consequence of Greek choices in their fiscal arena - run away government jobs and benefits, retirement at age 50 to the islands and the like.

The threat from behaving as Greece has done was understood at the onset the Euro zone. At that time agreements were signed mandating no government would run deficits higher than a certain level, because the prior solution of devaluing sovereign currency to correct for runaway spending and noncompetitive labor policies was going away.

But of course those agreements were bound to be violated as there's no enforcement (before the fact). What's lacking now is hard look at enforcement after the fact. There are three, possibly four options: i) end the Euro zone (a disaster), ii) inflate away the debt, iii) sovereign default, iv) growth via liberalization of labor laws and regulation. If Greece fails to do iv), then I see iii) as the only long term solution. I can not see Germany allowing another giant inflation.