American businesses with exposure to Greece are preparing for the worst, after Greek voters on Sunday rejected more cost-cutting measures and an international bailout deal from European leaders.
In recent weeks, few Greek exports have reached U.S. ports. What used to be a vibrant network of import-export activity among Greek and American business owners has trickled to a near standstill. And all this was unraveling before the weekend vote that could alter Greece's place in Europe.
A question of inventory
In "Little Athens" in Queens, New York, nearly every food market and mom-and-pop has a TV or stack of newspapers, devoted to Greece, which is essentially bankrupt. Now in the aftermath of Greece's referendum, U.S. business owners are bracing for shortages of everything from Greek olive oil to Greek sea sponges on American store shelves.
Shop owners have several weeks' worth of inventory. But if trade doesn't resume and capital doesn't start flowing again, the fear is that Greek product shortages will eventually trigger price spikes for U.S. and global consumers of Greek goods.
"This is the first time we are dealing with something like this," said Costas Mastoras, owner of the Greek supermarket Titan Foods in the Astoria neighborhood of Queens.
Mastoras first immigrated to America for graduate studies, and stayed to run his successful small business for 31 years and counting. The bulk of his storefront is devoted to Greek food imports. But his last shipment of anything from Greece was about two weeks ago.
"Our existence depends on our colleagues and supplies in Greece," he said. "Unfortunately, due to the bad economic situation, people are not shipping anything to us."
"The country is paralyzed, and it's a desperate situation," Mastoras said. "This is happening, but I don't believe this is happening."
Over the weekend, Greek voters overwhelmingly rejected a bailout from European leaders. Those who voted "no" celebrated in Syntagma Square in central Athens. It may seem odd that joyful citizens would take to the streets as their country buckles financially. But many Greek voters were exhausted by years of soaring, double-digit unemployment, tax increases and pensions cuts—all with echoes of America's Great Depression in the 1930s.
Mastoras would have voted "yes" had he been in Greece.
Now after the "no" vote, Mastoras and other Greek-American business owners are grieving for their homeland, while simultaneously wondering how to support their life's work as thriving immigrant entrepreneurs.
Please wire money outside of Greece
Mastoras works with more than 400 Greece-based suppliers, and he said about a dozen of those suppliers have requested he wire money to bank accounts established outside Greece.
"At least a dozen of my suppliers, they gave me accounts in Switzerland and basically Germany, England, where I can wire the money over there because the Greek banking system is almost shut down," he said.
Some products—including Greek olive oil, cheeses, nuts and dried fruits—are sitting idle in Greece storage units. And the problems aren't isolated to idle products. Even if Greek companies want to stomach the risk and ship goods overseas, many can't afford the taxes and expenses to get goods through customs.
If you can scrounge up the money to conduct business, there's a shortage of shipping and packaging materials. Even then, there's not enough fuel, and the transportation system including railways has ground to a halt. The ripple effect of Greece's financial crisis only seems to be getting wider.
Meanwhile here on U.S. soil, Mastoras and other business owners are watching their inventories dwindle. They're calculating how much supply they have left—maybe a few weeks—before American consumers start to see shortages of their favorite Greek Kalamata olives and filo dough.
"If our stock starts going down, and things start to be scarce, then obviously prices will rise," Mastoras said.
Despite the uncertainty in his home country, Mastoras last week made time to attend the Fancy Food Show at the Javits Center in New York City. Healthy Mediterranean food has grown in popularity among Americans, and Greek food manufacturers make a strong showing at the annual specialty food trade show. Several dozen Greece-based food companies and manufacturers made the trip to New York last week.
Mastoras' customers include food chains such as Whole Foods. Most had one question for him. "Are you going to be able to supply to us?"
Exports to Greece also stalled
Outside of New York City in Deer Park, Long Island, business owner Nick Stamatakis is also struggling with Greece's financial crisis. As owner of the Sponge Co., Stamatakis specializes in manufacturing and trading natural sea sponges and related bath accessories. Greek sea sponges date back centuries, and his sponges are sold in 100 Manhattan locations, including Whole Foods.
Stamatakis exports processed sponges and raw sea sponges internationally. He recently was set to export about $15,000 worth of goods to Greece.
Then last week, Greece failed to make a scheduled debt repayment of roughly 1.5 billion euros, or $1.7 billion, to the International Monetary Fund. Big picture, missing IMF payments can potentially lead to other Greek debts' being classified as in default, which triggers uncertainty among lenders and generally halts economic activity.
Banks closed and capital controls were imposed. Citizens lined up to withdraw money.
Stamatakis assessed the unfolding chaos and retreated. For now, the sponges, bound for Greece, sit waiting in Long Island. "I really can't take the risk and go ahead with the shipment to Greece," he said. "There's no way of knowing if I'm going to get paid."
In Greece, the young, leftist Prime Minister Alexis Tsipras, who came into power in January, is working to resume negotiations with European leaders, including those from Germany.
As leaders debate the future of the multination euro currency, Stamatakis and Mastoras are treading uncertain territory.
Without new shipments, Mastoras suspects long-lasting, dry goods like pasta, rice and olives will disappear first from shelves; followed by cheeses and frozen goods.
"At any rate, if we're not going to be able to resupply in the next three to four weeks, our stock will vanish," Mastoras said. "Things are going to get a lot worse."
This article originally appeared on CNBC.
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