In Greece, wisdom of privatizations under question

The approach of a new budget year in crisis-hit Greece has rekindled talk of more spending cuts, along with a renewed EU-IMF creditor push for a breakthrough in the country’s clogged-up privatization programme.

But after three years of effort, with paltry results, worries are growing on the wisdom of state asset sales made on the quick and on whether they will ultimately benefit Greeks themselves.

Unions have long warned that the planned offloading of stakes in utility and transport companies will impose higher water and gas prices to a population already struggling through a six-year recession.

Wages have fallen by over 22 percent since 2010 according to state statistics, and unemployment has soared to over 27 percent of the active workforce.

Right now, the agency tasked with the privatisations, the problem-prone Hellenic Republic Asset Development Fund (TAIPED), is pushing a laundry list of Greek state holdings.

Up for sale: Greeces main oil refiner, a cluster of land developments, a motorway, a dozen ports, the national post office and a trio of struggling defense and mining firms.

And reports in the last few days said a plan to divest up to 55 percent of Athens International Airport was being sped up.

But economists are divided on the net effect of privatizations carried out under a tight time pressure and in a depressed market environment, with some critics fearing the potentially corrupting power of vested interests.

“The privatization of ports and airports will help build credibility, create positive investor sentiment and, more importantly, will start delivering benefits in terms of quality services to the population,» said Gikas Hardouvelis, chief economist at Eurobank.

“The net sum for Greeks will be negative,» countered Costas Melas, a professor of economics at Athens’s Panteion University.

“When the troika leaves, the wealth of the Greek people will have sustained a major blow. Not only in terms of public corporations but also in terms of their own assets,» he said.

“Anything that moves, flies or walks in Greece has sustained a devaluation of 30 percent on average,» Melas told AFP.

The privatization program is far behind schedule and planned sales have repeatedly been delayed.

Athens recently revised its estimated asset sales for this year down to 1.6 billion euros from an initial target of 2.6 billion euros.

And in August, the privatization agency’s head was sacked after travelling with a businessman who was part of a consortium which had just bought state gaming group OPAP for 652 million euros.

The chairman job at the agency has already changed hands three times this year.

His removal was the second blow to Greeces privatization drive, following the sudden withdrawal in June of Russian gas giant Gazprom from a deal to buy the country’s state gas operator DEPA.

Meanwhile, the OPAP deal has raised broader questions on whether standards are being compromised to secure a quick sale.

OPAP, in whose locations thousands of Greeks gamble everyday, is a key sponsor of the country’s soccer clubs, and the businessman who now partly owns the gaming company also controls AEK Athens, one of the most popular teams in the country.

A few days after the OPAP deal was announced, the gaming company announced a new AEK sponsorship of 1.9 million euros, a sum deemed overly generous for a club that was relegated to the third division this year over unpaid debts.

Questions on the issue were sent to the offices of the European commissioners for finance and competition, but there was no response.

TAIPED likewise did not respond to a request for an interview.

The OPAP case «proves that vested interests still operate, the economy is not free…or transparent», said Melas, who also castigates a recent EU decision to approve a takeover by Greece’s Aegean Airlines of its main rival, Olympic.

“Perhaps the EU does not take this into account because they want to see immediate privatization progress…and get their money back,» he said.

European officials have barely been able to contain their impatience towards the sluggish pace of state asset sales.

Earlier this week, European Central Bank executive board member Joerg Asmussen once again urged Athens to focus on its privatization program to make up a looming financial gap in 2014.

And Prime Minister Antonis Samaras was forced last month to deny rumours that the privatisation programme would be transferred to a European holding company to achieve better results.

“(TAIPED) will remain in Greek hands,» Samaras said in a newspaper interview.

“If we fix the economy first, and potential investors see Greece growing, asset prices will rise,» says Hardouvelis, the economist.

“This is why we should tell the (creditors), let’s stabilize the economy first and then privatize. Or sell some asset first, to persuade them we mean business, and then sell the rest after the economy stabilises.


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