By Vangelis Mandravelis

The letter sent by Qatari Diar to the state privatization fund TAIPED last Tuesday was polite but firm: The subsidiary of state firm Qatar Investment Authority (QIA) would not be continuing with its bid for the development of the old airport at Elliniko, confirming the fund’s greatest fears despite a succession of meetings held in recent weeks in Doha and in Athens with Qatari Diar officials.

But the damage had been done earlier as the main reason why the Qataris abandoned the Elliniko project was that they had been told when they first initiated talks under the George Papandreou government that the deal to develop the plot could be made bilaterally between the two states. “The Arabs,” said an industry insider, “are not familiar with tender procedures. They do not like competition. They prefer contacting political leaders directly – as happened with the PASOK government [at the time] – and seal the deal orally.”

Yet despite the Greek side breaking the original agreement following the intervention of the European Union, TAIPED officials had kept QIA in the running, at least for as long as that did not cost the Qataris too much. So, in April 2012 when the invitation of interest expired, QIA was present through Qatari Diar but had set seven terms, which is unusual in tender procedures. Some of the terms were reasonable, such as the clarification of the legal nature of the property, but others were not.

One of the more unreasonable conditions concerned the transfer of all of the government agencies (ministries, secretariats etc) to Elliniko and securing accommodation for the relocated civil servants. That would mean relocating some 400,000 civil servants and securing the sale of at least 10,000 houses for employees in the public sector. This provision, according to QIA, was a way to start the repayment of the investment that the Qataris would be making at Elliniko.

The new government was not prepared to undertake any committments of this nature. It was also drafting a new, more ambitious plan for the use of the Elliniko plot that would turn it into an instrument for growth and a landmark development.

Another condition set by the Qataris that the Greek government could not accept was that they wanted 100 percent ownership of the land on which the entire development would take place. Greece, however, was willing to concede land ownership only where the residential development was concerned. QIA also wanted Elliniko to be designated a special economic zone, with a separate tax and labor status.