July 3, 2015 / 10:53 AM / 4 years ago

Across Bulgaria border, fear and gloating over Greek crisis

SANDANSKI, Bulgaria (Reuters) - Greece’s debt crisis is lapping over the border into this southwestern corner of Bulgaria, where the owner of the Felipe Z textile factory worries she may not be able to pay her 60 workers next week.

Employees sew in a factory in the city of Blagoevgrad, Bulgaria July 2, 2015. REUTERS/Stoyan Nenov

Factory owner Snejana Zachariou explains buyers of her goods are exclusively Greek. She will sit down with one of them on Monday to try to work out how she can receive payment for a pile of orders if Greek banks remain shut and capital controls stay in place.

Her plight is an example of how vulnerable the former Communist countries in central and eastern Europe that neighbor Greece are to the crisis. The pain could worsen if Greeks reject international creditors’ demands in a referendum on Sunday. “I do not know whether I can manage, whether there will be money, because this business is no longer very profitable to allow us to build up cash reserves,” said Zachariou, whose husband is a Greek boat captain. “Maybe we will survive for one month to pay something but after that, if money does not come it will be very difficult.”

“And that is why I worry now very much for my people, because they have families, they have loans to the banks. If they cannot pay their loans, they will have problems too.”

Countries like Bulgaria, Romania and Macedonia are particularly exposed to the fallout of the crisis as several of their banks are Greek-owned and economic ties are close.

Greece is the third-largest investor in Bulgaria and is also Bulgaria’s fourth-largest export destination.

While their fate is tied to Greece, Zachariou said her workers are divided on what to make of it all. Some feel pity for the Greeks while others say it is time for their neighbors - who despite years of austerity are still much better off than they are - to start living within their means.

Sales of the company, which sews women’s jackets and dresses, are about 40,000 levs (20,454 euros) to 50,000 levs a month. The crisis has started eating into revenues. Zachariou said a jacket that her firm once made for Greek buyers for 9 euros ($10) only fetches 6 euros now.

“I listen to the women here, because I spend my time between work and home and I do not have time for contact with other people,” Zachariou said. “But they have different opinions. Some are speaking with compassion for the people who are going through difficult times. Others say: ‘Until now they sang and danced’ without knowing what was coming to them.”


While Bulgarians travel to Greece for its beaches and ancient sites, Greek tourists come to Bulgarian mountain resorts or on weekend shopping trips for food and clothes, taking advantage of cheaper prices.

Bulgarian migrant workers head south to pick olives, tobacco or tomatoes. A cluster of textile firms like Felipe Z supply the Greek market, either for domestic sales or exports to western Europe. In Sandanski, a Bulgarian spa town near the border that touts its fine air and thermal springs, dentists have shop signs in Greek to lure those looking for cut-price healthcare.

But a combination of the debt crisis and an unfinished highway connecting Sandanski to the border has seen revenues from Greek tourists plummet in the last two years, according to Sandanski’s mayor Andon Totev.

“Now with the crisis, these visits ceased,” Totev said. “Very, very few people come here now. Before, especially on weekends and the bigger eastern Orthodox holidays you would see 18-20 buses full of tourists, now we hardly see any.”

Greek tourists used to bring in revenues of about 1.5 million euros a month but that dropped to less than 100,000 euros, he said.

“Simply, the Greek tourists are not here,” he said.

Greece’s economy has been battered by years of cuts imposed by its creditors in exchange for two bailouts. One in four Greeks is jobless and by one estimate 59 businesses are closing daily. But Bulgaria, which joined the European Union much later than Greece in 2007, is still the bloc’s poorest member.

Bulgarians went through their own banking crisis in the mid nineties and again last year, after the Balkan country’s fourth-largest lender collapsed.

“The situation in Greece, unfortunately, will have a negative impact on Bulgaria as an investment destination too. Big investors look at the region in general,” said Veselin Iliev, director of International Economic Cooperation at Bulgaria’s leading industrial association BIA.

“And our region is becoming quite unstable because of Greece. The attractiveness of the whole region is decreasing.”

For Kristina Mitova, who runs another small textile company in Sandanski, Greece’s problems look artificial.

“I don’t believe there is a crisis,” she said. “I travel to Greece all the time, and I don’t see any real difference.”

Slideshow (3 Images)

Georgi Petrov, a 45-year-old sitting smoking on the steps of the pawn shop where he works, was angry when he saw a young Greek woman bemoaning austerity on TV, “while we have had to tighten our belts for the past twenty years.”

His parents’ pension is worth about 200 levs ($114) a month, he says, while the Greek average pension is 833 euros ($925).

“When we went to Greece, they were looking down on us,” he said. “When they came here, they were acting like the big shots. I think they should pay for that.”

editing by Janet McBride

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