By Jorn Madslien
Business reporter, BBC News
Jobs and livelihoods across South East Europe could be at risk if the Greek debt crisis spreads across the region
The Greek debt crisis has been widely seen as a problem for the European Union, amidst concerns that other heavily indebted countries could suffer similar difficulties.
But the risks that the crisis will spread to neighbouring countries in south east Europe could be even greater, the European Bank for Reconstruction and Development (EBRD) warns.
"I see three possibilities of contagion," says Thomas Mirow, president of the EBRD.
Firstly, he says, if Greece's difficulties spill over into the rest of the European Union, countries in south east Europe could see their exports to these key markets suffer.
Secondly, concerns about economic stability could spook investors who might then become reluctant to invest in the region, given the relatively greater risks involved.
Thirdly, if Greek banks run into difficulty, it could cause a credit crunch in neighbouring countries, notably Bulgaria, Romania and Serbia, where their subsidiaries are active and important players in the financial markets.
Concerns about economic difficulties in many European countries are very real.
Reduced faith in the Greek banking system is pushing up borrowing costs
Already, the value of the euro has fallen sharply as a result of fears that the Greek debt crisis could spread.
Portugal's credit worthiness has already been downgraded and earlier this week the prime minister of Spain, Luis Rodriguez Zapatero, was forced to deny rumours that Spain would be next to seek financial assistance.
But even if the Greek crisis is contained, it is clear that belts must be tightened in many European Union countries.
"For some time, the market may have underestimated this very considerable debt the sovereigns have taken to overcome this crisis," Mr Mirow observes
"With the amount and the level of debt many states have taken on, there will be an impact on real economies. Austerity measures will need to be taken, not only by Greece."
Investor confidence, severely knocked by the Greek crisis, was further dented by a political brawl in Germany that has seen Chancellor Angela Merkel accused of failing to provide leadership and build confidence in the single currency.
Thursday night's chaos on Wall Street, when an apparent error by a trader contributed to extremely volatile trading, was an indication of how fickle and nervous the markets are at the moment.
Though more important as far as south east Europe is concerned is investors' behaviour during periods of political and economic uncertainty.
During previous crisis, such as the Asian financial crisis, the Russian financial crisis or Argentina's debt default during the late 1990s, investors fled emerging markets and flocked to "quality", shifting their investment on a large scale into stable industries or other assets in sound economies.
New energy generation projects in former Soviet states, or new industries that aim to help these states diversify are unlikely to be deemed "quality", so there is every chance such investment opportunities will lie well beyond the radars of many a prudent investor for months to come.
Equally real are the difficulties faced by the Greek banks. Their customers, both companies and consumers, will be finding it harder in future to repay their debts so defaults may rise sharply.
Reduced bank lending could hit the region's industry hard
The value of the banks' collateral, such as government bonds, is falling "thus weakening capital ratios and the ability of banks to lend", and thus conceivably their willingness to continue supporting their subsidiaries in neighbouring countries, according to IHS Global Insight banking analyst Toby Wight.
The credit worthiness of Greek companies and in turn Greek banks is thus being downgraded, hence both these banks and their customers will have to pay higher interest rates on the money they borrow.
The consequence could be that many companies in south east Europe will be starved of loans, which in turn could result in bankruptcies and job losses.
So there are real reasons to worry about each of the three threats to south east Europe's economies.
Moreover, given the way global economic events often impact on each other, there is every chance that either of the three events occurring could increase the chance of the other two happening too, Mr Mirow acknowledges.
But though the risks are real, Mr Mirow is eager to stress that "we are talking about potential risks".
"We haven't seen any major [contagion] effect. Greek bank subsidiaries have behaved well," he says.
Moreover, he says, the EBRD is in talks with the International Monetary Fund to identify ways to protect the rest of south east Europe from any spill-over from Greece, for instance by providing Greek bank subsidiaries with capital and liquidity.
"It is easy to elaborate on what could be a worst case scenario - and it is certainly scary - but it does not make much sense at the moment," Mr Mirow insists.