Greek president’s visit shows potential of Saudi ties

This week’s visit by the president of the Hellenic Republic, Prokopis Pavlopoulos, and 11 Greek ministers and top businesspeople to Saudi Arabia ushers a new era in bilateral relations. 

Diplomatic ties between Greece and Saudi Arabia started from as early as 1926. The first Greek Embassy in the Kingdom was established in Jeddah in 1943, but in 1963 it was moved to Riyadh, where it became operational in 1985. 

Greece has a longstanding relationship with the Arab world and Saudi Arabia in particular. Saudis have long visited Greece for tourism: Many from the Kingdom have fond memories of their honeymoon days in Greece in the 1970s and 1980s, while members of the new generation are flocking the islands of Mykonos, Santorini, Crete and Corfu.

Greece has traditionally maintained strong ties with the Arabs. It was the only European state, for example, to vote against the partition of Palestine in the UN General Assembly in 1947 and since then it has consistently backed the Palestinian cause. Even the leaders of Greece’s pro-American military dictatorship (1967-1974) had refused to grant the US over-flight or ground facilities to supply Israel with arms during the 1973 war, while allowing Soviet planes to pass through Greek airspace for the airlift of military supplies to Egypt. As a result, Greece was excluded from the Arab oil embargo.

Yet there were also economic factors behind the Greek-Arab relationship. Since the 1970s Greek companies have achieved a prominent role in the Arab world, with some executing significant construction projects. Furthermore, Arab markets have been important in the export of Greece’s agricultural products. The Arab world continued to be the second-largest export market for Greece (after the European bloc) throughout the 1980s and the first half of the 1990s.

Saudi-Greece economic ties

Saudi Arabia has for a very long time been one of the top markets for Greek products in the Middle East and food has always been one of the top Greek exports to the Kingdom. 

Greece’s thriving tourism industry has also proved a draw to investors. More than 22 million tourists a year choose Greece as a holiday destination. Saudi investors have been one of the largest equity participants in tourism over the last three years. The Hilton Athens Hotel, Costa Navarino resort and Astir Palace in Vouliagmeni are recent notable investments by Saudis. And many from the Kingdom have bought Greek real estate, benefiting from the right to get a residence permit, should they own a property worth at least €250,000 or a 10-year timeshare contract.

Some Saudi investors have a strong and historic presence in Greece. For example, Olayan, one of Saudi Arabia’s most respected investment groups, has a long-standing presence in Greece, as one of the biggest stakeholders in bottler Coca-Cola HBC and the Chipita food company. The Saudis have also participated in the share capital of Athens-listed company Flexopack. 

The next decade in Greece is set to see sustained growth in tourism, technology, energy, environmental sciences, food, beverage and agriculture, logistics and life sciences. Greece’s exceptional human capital, advanced infrastructure, geostrategic position and potential for economic expansion are attracting investor interest from across the world. And Greece’s newly designed investment framework supports the creation of new businesses, synergies and partnerships.

Saudi Arabia has embarked on the most pivotal economic reform program of its 85-year modern history. Vision 2030, announced less than a year ago, has set the Kingdom apart from any emerging-market economy and outlines a specific and much-needed roadmap for an era beyond oil. 

Saudi Arabia is the largest free-market economy in the Middle East and North Africa, with a 25 percent share of the total Arab gross domestic product (GDP). 

The Kingdom’s geographic location provides easy access to export markets in Europe, Asia and Africa of more than 450 million consumers. It has a continuously expanding domestic market, which is adding to a young population with strong buying power. The Saudi riyal is one of the world’s most stable currencies, with no critical changes in its exchange rates during the last three decades. Saudi Arabia permits transferring of capital and profit abroad. 

A deeper relationship

There are possible synergies that could be deepened. Saudi Arabia is investing heavily in defense and security. Its view of security is not limited to traditional arms purchases and defense alliances. Under Vision 2030, Saudi Arabia plans to “localize” half of its arms purchases domestically within 13 years. 

The location of the Gulf is crucial for eastbound flights to destinations such as Australia, home to the second-largest overseas Greek population. Many skilled Greeks with degrees in engineering and medicine are working in Saudi Arabia. Almost all private hospitals in Saudi Arabia have a Greek doctor on the staff. 

Economic diplomacy is the core characteristic defining bilateral relations between the two countries. Greece’s economic crisis requires it to search for new markets whilst Saudi Arabia’s diversification efforts can be strengthened with a trusted partner that is less than three hours away by plane. Greeks and Saudis have much more in common than meets the eye.  

• John Sfakianakis is the director of economic research at the Gulf Research Center in Riyadh.