BUSINESS

Merkel called out over creditor pressure to sell Athens water

BRIAN PARKIN

TAGS: Business

Pressure on Greece from its partners and creditors to sell water assets in cities like Athens was criticized by Germany’s public water-supply industry.

As the plan to scoop up state assets in a new 50 billion- euro ($55 billion) privatization fund takes shape, Germany’s AoeW municipal water lobby blasted Greece’s partners including Chancellor Angela Merkel’s government for pushing policies they’re reversing in their own countries. German cities such as Berlin, Stuttgart and Rostock are buying back private water supply concessions as they expire, said the AoeW.

“There’s a wave of public repossession of this resource going on in Germany after it sunk in that pricing it can’t be left to profit-seeking boardroom managers,” AoeW Managing Director Christa Hecht said in a telephone interview from Berlin. “Water is a vital public asset and the Greeks are right to want to keep it that way.”

The Hellenic Republic Asset Development Fund’s portfolio includes the Athens’ and Thessaloniki waterworks. Its assets have been earmarked for a new faster-track privatization unit in Greece’ third bailout. Sales since the fund’s 2011 inception are desultory and protests have put Thessaloniki’s water sale on ice despite the fund’s current for-sale sign.

The creation of the new sales vehicle marks a bitter reversal for Prime Minister Alexis Tsipras’s anti-austerity platform that launched his Syriza party to victory in January. Germany is adamant that the fund will generate more for Greece than just cash to shore up its budget.

Tap Costs

“Privatization isn’t just about raising money, it’s about changing parts of the economy,” German Deputy Finance Minister Jens Spahn said on German breakfast television on Tuesday. “Think about what the privatization of our federal post and federal railways meant for those industries in terms of competition and new opportunities.”

Spahn’s claims bear close scrutiny, according to the AoeW, which represents 2,000 public water companies. It says that Portugal’s sale of water-supply assets drove up end-user costs by as much as 400 percent. In 2013, the city administration of Berlin bought back 24.9 percent of its water supply held by Veolia Environnement SA after tap costs soared.

Merkel’s government still holds owns 31 percent of Deutsche Telekom AG and 21 percent of Deutsche Post AG, perpetuating state influence in the companies in policy fields from pensions to broadband strategy.

[Bloomberg]

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