By Pratap John/Chief Business Reporter

Very little direct impact is seen on Qatar and the GCC countries due to Greece’s financial crisis although majority of Greeks on Sunday rejected creditor demands for further austerity in return for more bailout funds, which may lead to Greece’s exit from the Eurozone.
Economists say the impact of capital control and a potential exit of Greece from the euro or ‘Grexit’ will have minimal direct negative impact on GCC economies.
“I don’t think there will be a major impact on Qatar and the GCC economy as most of the Greek debt is held by the IMF, European Commission and European Central Bank,” a senior banker told Gulf Times Monday.
He said the major impact, if any, would be on GCC investments in euro-denominated assets classes as the common currency was expected to weaken further.
“Dollar may be at par with euro by the year-end,” he argued.
Heightened volatility in the euro exchange rate in the context of Greek debt crisis has been in the air since the beginning of this year. Therefore many believe Grexit will not be a ‘Lehman moment’ for GCC investors.
Some wealth managers say GCC investors including Gulf central banks, sovereign wealth funds, institutional investors and high net worth individuals had enough time to cover their positions.
Doha Bank Group CEO Dr Seetharaman said, “Despite Greek voting against austerity and present terms of bailout, Greece is expected to continue its negotiations and the outcome from these negotiations will determine the impact on Eurozone and across the globe. It will also depend on European Central Bank's (ECB) response to the situation. If the European central bank decides to stop emergency lending to Greece's banks, it could lead to insolvency of the country's lenders.”
The oil price, he said had also fallen a bit on Greece concerns.
“If there is a persistent and steep fall in oil price, it will have implications on GCC economies. However this and other market movements will be contingent on developments from Greece negotiations and ECB’s response. GCC capital markets are marginally down; however will also look forward to these developments and movements in oil price,” Dr Seetharaman told Gulf Times.
Prominent Scottish banker John R.Wright said he too did not think Qatar would have much if any exposure directly to Greece, unless Institutions and banks were holding Greek government debt securities in their portfolios.
“In that case I am sure there will be rescheduling and a 'haircut' imposed,” he told Gulf Times.
Asked what would happen to Qatari/GCC Companies with commercial exposure, Wright, who worked as the CEO of two major GCC banks said, “It is difficult to say…there will certainly be delays and possibly some renegotiation.”
Wright said, “Given that Greece was relatively small-scale I would not see much impact on the GCC and Qatar at all. There might be some downside in the regional stock markets based on negative sentiment generally on the international bourses......but little direct effect.”
He said it was very difficult to see what happened next in the context of the Greek referendum.
“Politically it is important for Brussels that Greece remains in the EU and the euro, but at what price? The Greeks have to make decision whether to suffer years of economic penury or do what Iceland has done [smaller scale obviously and having the advantage of their own currency] recreate the Drachma; take a large devaluation...40%?
“Tell its (Greece) creditors that they will have to wait for a long time and create a very competitive economy. Lots of short term pain but possibly better than the death by 1,000 cuts! Iceland is now seeing GDP Growth again,” Wright pointed out.

Related Story