ECONOMY

What national champions?

According to a number of his former academic colleagues, Economy and Finance Minister Nikos Christodoulakis in recent months has embarked on a lonely, titanic endeavor to reverse the negative political climate for the government through the promotion of large business deals and investment schemes, mainly in the banking and energy sector. Most of them, maintaining a critical distance from the choices of their former colleague, take the view that Christodoulakis is attempting, for the last time, to «turn back the clock.» To be sure, his first attempts came soon after his move from the Development Ministry to his present post, in the autumn of 2001, with the government’s direct or indirect backing of a number of big business deals that would have had a big impact on the country’s political scene and social situation. Moves in this direction included the tender for the sale of a majority interest in Hellenic Petroleum with the involvement of Russia’s Lukoil petroleum group; the projected merger between the country’s two largest banks, National and Alpha, and the prospect of a gradual reduction in the public share in the new giant banking group; the search in Europe for strategic allies for/investors in the Public Power Corporation (PPC) and the Public Gas Corporation (DEPA); and the scenarios for a reorientation in the relations between OTE telecoms and privileged, long-term domestic suppliers. Political considerations It is not surprising that these pursuits are still vivid in public memory; they generously fed political and party expectations of theoretical «national [business] champions,» whose realization, and chiefly, legitimization, would be sought at market level. This theoretical scheme, which became for a period the «flagship» of the reformist trend in the ruling party, had two main features: first, the creation of big business groups in crucial sectors of the economy (banks, energy, telecoms) that would meet all the criteria for market leadership in their domains; secondly, the role of these leaders in the market, and their relationship with the government and the body politic as a whole. The assumption of a leadership role by the national champions would have been accompanied by their perceived obligation to promote, in their sector and beyond, the broadest possible alliances at an entrepreneurial and social level. Moreover, being national champions, the leaders would have the privilege of being the government’s interlocutors. None of the plans envisaged in the scheme came to fruition. The problem, essentially, was not the national champions but rather their investment with ruling party specifications and consequent expectations of political benefits. Senior banking officials and entrepreneurs take the view that the idea of bringing national champions back on stage – after the recent revival of the stock market which gave the opportunity to publicly controlled enterprises to raise fresh capital for the requirements of the budget, and the government’s decision to sell further tranches of shares in banks – has neither the time to come to fruition nor the objective conditions to produce economic benefits that could have been broadly distributed in the coming pre-election period. But beyond such circumstantial constraints, the critics also point out that the idea of national champions contains an intrinsic problem: The involvement of the State and its mechanisms in the processes for their formation and consolidation. They add that the Greek market, due to size, range of productive activities and administrative restrictions in crucial sectors such as labor relations and social insurance, cannot produce national champions autonomously and, what’s more, cannot maintain their long-term strategic growth. Objections The critics do not disagree in general with the idea of real national champions, nor do they link it to party or other expediency. They simply raise a number of crucial aspects and factors of the whole issue. First, size is not an end in itself; the growth of an enterprise is necessary and contributes to its prospects only to the degree that the enterprise itself has proved that it can profitably manage its size in the competitive arena at home or abroad. Second, a crucial factor, irrespective of size, is a firm’s market behavioral pattern and the type of relationships it develops in its sectoral domain. Even if it is a monopoly, even if it maintains a dominant market position, an enterprise is ultimately judged on the way it chooses to develop its relationships with customers, consumers and other firms, and to manage its more general affairs, particularly during periods of economic crisis or at times of other emergencies. The crucial test is whether an enterprise functions as a catalyst for the development of the market – with the resulting repercussions on the entire gamut of economic and social life – or if it zealously guards its established position, variously undermining any prospective competitors, raising obstacles to the smooth growth of the market and pushing for administrative privileges that ultimately work against the interests of consumers, taxpayers and citizens. Flag is no matter Third, the color of the flag does not matter. An enterprise, irrespective of the national origin of its basic shareholder, is ultimately vindicated through its position in and contribution to the productive process of the country where it conducts its basic activity. The flag is unfortunately lowered if the national champion is not in a position to contribute to the above goals. Fourth is management’s freedom of choice and relationship with an enterprise’s shareholder base, stakeholders and politicians. The main opposition New Democracy party’s critique of national champions argues against the involvement of the State and public managers in market developments and the restructuring of the market map. The phenomenon of neo-statism, as described by its chief proponents, is chiefly maintained through the relationships which the competent ministers form with the heads of public enterprises. Under such conditions, the so-called national champions probably do not have a future; this is perhaps all to the good. As a senior banker says, «if we were to have national champions like Olympiakos Piraeus in soccer – for seven consecutive years at home but with a dismal record in the European Champions League – we had better forget them.»