Selling Greece, A Very Private Matter

By Andy Dabilis

Pay cuts, tax hikes, slashed pensions, and layoffs — Greece has tried almost everything to satisfy international lenders, putting up a first bailout of 109 billion euros, and a second planned rescue of 130 billion euros to keep the country afloat from bankruptcy. Privatisation, however, has lagged, despite building pressure from the EU Troika — the EC, IMF, and European Central Bank (ECB) — footing the bill to save Greece.

While the country wallows in a 344 billion-euro debt and a deficit around 10%, an interim coalition government headed by former ECB Vice-President Lucas Papademos is charged with keeping the lifeline loans coming and implementing attached austerity measures, while privatisation plans are running far behind schedule and hopes.

Yiannis Koukiadis, the head of the privatisation fund TAIPED, told SETimes that dire times have worked against Greece.

“We know there’s insecurity in the market,” and that has limited interest by buyers, he said, but he thinks that will change soon. “This privatisation has been directed by the Troika and their logic was to pay off the debt,” he said.

“The logic isn’t to sell off at any price. We have to find a price that can bring a profit and is worth it for the state. By privatising, there will be opportunities for development and employment,” he added.

The Greek Horse Racing Organisation (ODIE) may be sold to French MPU, but Koukiadis, said the Germany company Hochtief does not want to extend its deal to run the international airport, and that overall targets are lagging.

“If there are no significant offers, how can anyone proceed to exploit state assets without being accused of performing a clearance sale?” he asked. He said a 2012 target to raise another 9.3 billion euros is unrealistic now.

Aliki Mouriki, a professor of sociology at the University of Athens, said buyers know Greece is desperate and may be waiting to cash in on fire sales.

“The timing is very bad. Many privatisation efforts should have taken place earlier when the prices were much higher,” she told SETimes.

Mouriki said some state-run operations were run so poorly they should be sold to companies who know how to make a profit.

“The French are interested in buying the railways and they are much better at running them than we are,” she said.

OSE will lose more than 231m euros this year, and has a total debt of 10.7 billion euros — the result of decades of running nearly-empty trains on some routes and paying some workers as much as 60,000 euros a year, five times the salary of a teacher.

Mouriki said, however, Greece has little choice left. “Is it better to sell your assets at a lower price or go bankrupt?” she asked.

Greece hopes that potential buyers will see an opportunity. OPAP paid the government 474m euros in November to license 35,000 video lottery terminals and the government wants to sell 34% of the operation. Greece earlier raised 390m euros by selling a 10% stake in the Balkans telecom giant OTE to Germany’s Deutsche Telekom.

It has not come easy, as labour unions have resisted and taken to oppose the looming sell-off. The government plans to transfer the revenue of state lotteries to a special purpose limited company for the next ten years. Shares of the company will be sold to private investors.

Haralambo Tsardanis, director of the Institute for Economic and International Relations in Athens, told SETimes that Greece and the Troika vastly overestimated the worth of Greek assets during the crisis.

“The procedures were not ready and the new agency was not ready to surmount enormous difficulties for selling some of the sites. It’s not very clear what they are trying to do,” Tsardanis said, adding “They don’t want to sell cheap and this is why they are not ambitious now, and even the Troika understands that.”

Energy Minister George Papaconstantinou said in late October that Greece will need all it can get, because many of the government-owned properties and facilities have been costing the country a fortune in losses.

Those entities, and state properties, although not such treasures as the Acropolis despite demands from some German critics, are now viewed as a kind of partial salvation for the economic woes, if they can be sold or leased.

There are some lucrative entities, including a new massive, 10-gigawatt solar energy project called Helios, spurred by German investment, that the Troika said could generate 15.7 billion euros earmarked to pay debt, but the project could take until 2050 to develop.

Vassilis Xenakis, secretary of national affairs for the country’s largest public worker union, ADEDY, said its members are battling for economic survival on several fronts, in the wake of pay cuts, tax hikes, slashed pensions and scores of thousands pending layoffs, and that privatisation is another worry.

He said the services the public sector provides should remain under the government. “We are fighting for benefits, for our wages,” he told SETimes.