This Sunday, July 12th, will mark what some consider to be the most important moment in the European Union’s history: the Eurozone leader meeting that will determine whether or not a “Grexit” is necessary. As analysts debate the likelihood of a separation, Greek citizens struggle with dwindling supplies and the risk of their savings disappearing. While food and oil are readily available, certain supply chains – most worryingly, pharmaceuticals – are in danger of being disrupted at various levels.
Greece’s supply chain problems stem from the fact that Greek businesses rely heavily on imports that they no longer have funds to purchase. Greek banks can no longer distribute money or credit to businesses who need it, and many small companies do not have the cash to continue manufacturing products. Domestic suppliers, also cash poor, are insisting on upfront payments that their buyers cannot afford. Goods like olive oil and Greek wine are being held up by suppliers, who would rather keep their inventory and wait until they can be paid in cash. Sales in Greece are down 20 – 25%, according to the Economist, which could lead to further unemployment if the low numbers persist.
Whether or not Greece stays in the Euro, its supply chain problems will continue to plague Greek citizens and countries that rely on Greek products. According to Spend Matters, the European Federation of Pharmaceuticals Industries and Associations warned that the Greek medical supply chain is far more complicated and fragmented than in other European countries, exacerbating an already alarming dearth of medicinal supplies. Nearly all Greek drugs are imported, but hospitals cannot shell out any more money. In fact, Greek hospitals owe pharmaceutical companies a combined $1.2 billion dollars. If a Grexit does happen, only large-scale pharmaceutical providers would be able to afford to do business with Greece. For example, AstraZeneca, a UK-based pharmaceutical company, has been developing contingency plans to better understand how to maintain the medicine supply chain to Greece.
A Sisyphean Task
So while the Greek crisis might cause olive oil supplies to dwindle in the United States, Greek citizens are facing much worse. Grecians are struggling to pay for basic goods, and Greek suppliers are refusing to ship their products without cash payments. The Economist and many others believe that Greece must stay in the E.U. in order to survive – a switch to a new currency could be fatal to the country’s economy. Regardless, Greece needs to examine its broken supply chains and figure out how to keep its suppliers afloat.