"GREECE NOT FOR SALE" - SYRIZA's mantra before its election that was shamelessly turned into the complete sell-off of Greece.

Greece is sold off and sold out

The following article was published in the “den” of reformism (Le Monde Diplomatique); Signed by a “left-systemic” columnist (member of the reformist Left, as clearly shown by his positions), it highlights in the most vivid way the colonial concessions, in which SYRIZA and its co-governing party, ANEL sell off the Greek public space. We do not share Niels Kadritzke’s “naivety” that the predatory programs implemented are simply bad choices by bad neoliberals, and that there could be a third way, a sort of state-private partnership in privatization, or that in a strange way, “bad” Germans put their hand to cancel the “decent” (otherwise) EU practices in the privatization tenders. Within the EU and the capitalist neoliberal globalization there is no other way. The only alternative way is immediate exit from the EU and the staged cutting of links from capitalist globalization. i.e. the way proposed by the Front for National and Social Liberation (FNSL- ΜΕΚΕΑ in Greece), so that all privatizations that have taken place by the Transnational Elite’s local collaborators will be canceled immediately, obviously without absolutely no compensation for the looter “Investors”, and so that those responsible for the sell-off will be brought to the Special Court, and the public services will be reorganized in accordance with the needs and wishes of the Greek people, and will work to their benefit alone.



Greece is sold off and sold out

China and Germany profit from forced privatisation


Greece’s public assets, including ports and airports, went at discount prices to predatory buyers who will deprive the state of much-needed revenue.


The latest study from the Transnational Institute (TNI) on the effects of the ‘privatising industry’ in Europe concludes that ‘there is no evidence that the privatised companies are more efficient’. Instead, privatisation has undermined wage structures, made working conditions worse and increased income inequality.[1]

Greece is a textbook case. During the debt crisis the country’s creditors forced it to sell or lease as many public and semi-public companies as possible, with the sole aim of paying off the government debt. This selling off of public assets is the most absurd part of the ‘rescue programme’ imposed by the troika[2] that has kept the Greek economy in recession for seven years. Forcing a bankrupt state to privatise public companies in the midst of a crisis always means selling them at discount prices, say the authors of the TNI study. Even the ‘family silver’ can’t be sold off at a fair price during a deep recession; selling it is an act of embezzlement.

That is true regardless of the social pros and cons of having a public sector. Things are admittedly more complicated in Greece than elsewhere, because there are arguments for privatisation in some areas. For example, some state enterprises that provide essential services such as power or transport links have a secondary raison d’être: to provide well-paid, secure and often easy jobs for the supporters of the government of the day, at the expense of the customer and the taxpayer.

This explains why the sale of public service providers was not at all unpopular with many Greeks. A large majority were in favour of the earlier part-privatisation of the telephone company OTE (now Cosmote) and flag carrier Olympic Airlines, and believe they now function better and are more customer-friendly. As late as April 2011 more than 70% of Greeks thought privatisation was ‘generally necessary’.[3]

Another consideration is the state’s empty coffers. If selling public companies or buildings brings about investment the state itself can’t afford, as with the state rail company ESA, many Greeks don’t think that’s such a bad thing. Most Greeks do not want vital services to fuel private profit, but they do wonder whether their bankrupt state runs its companies in an efficient, customer-friendly way.

Crucial questions

When evaluating a privatisation plan there are three key questions to address. Are the proceeds from the sale or lease of a company proportionate to the income that will no longer go to the public purse? Does the privatisation place an obligation on the purchaser to make new investments? What influence will the state retain over decisions of strategic national importance? These questions are particularly important for the two biggest privatisation projects in Greece: the sale of 67% of the shares in the Piraeus port authority, OLP, to the Chinese state-run Chinese Ocean Shipping Company (Cosco),[4] and the lease of the operating rights to 14 airports to a consortium led by the German company Fraport.

A salient feature of Cosco’s purchase of a majority holding in OLP can be seen in almost all of Greece’s privatisation tenders: in the end, Cosco was the only bidder and could therefore dictate not only the price but a range of other conditions. The sale gave the Chinese far-reaching control over Greece’s biggest port, since a Cosco subsidiary had already been operating two of the three container terminals at Piraeus since 2008, on a 35-year lease.

Cosco paid €368.5m for its shares in OLP, but how this price was established is still completely unclear. The Greek privatisation agency Taiped rejected the first Chinese offer as inadequate, but has never revealed how much the appraisers thought would be a fair price, or how much extra Cosco agreed to pay. However, Taiped has estimated the deal’s total value to be €1.5bn. This includes future tax revenues for the Greek treasury, which no one is able to predict, and the agreed €350m investment.

This calculation is double-dealing, as until now OLP has received annual lease fees of around €35m from the Cosco subsidiary for the two container terminals it has been operating. Now, 67% of this money will go to OLP’s majority shareholder — in other words from one of Cosco’s pockets into another. This means the Greek state will lose out on at least €700m in fees over the term of the lease, which should logically have been deducted from the total value of OLP’s privatisation.

Even more absurd is Taiped’s calculation of the agreed investment amount: it includes €115m of EU subsidies for the expansion of the cruise ship terminal at Piraeus. But this amount would have gone to OLP even if it had remained purely state-owned. Furthermore, there is no guarantee the agreed investment will actually be implemented: a clause in the contract protects Cosco from any sanctions for violating its obligations in the first five years.[5]

Bankers and stockbrokers in Athens point to the long-term benefits of the deal with Cosco — the transhipment centre the Chinese are building for their exports to Europe should bring in annual revenues of €5bn and create 125,000 jobs.[6] However, these bold predictions are based on assumptions that are far from certain. The first is that the Chinese will also buy the Greek rail network (a plan now abandoned, leaving the Russians as primary bidders); the second is that booming Chinese exports to Europe will continue uninterrupted. Both of these assumptions have recently started to look shaky. And is it really in Greece’s interest to sell the choice parts of its logistical infrastructure to a single buyer?

This question should also be asked of other privatisations that have already taken place. The German company Fraport, and Greek oligarch Dimitris Copelouzos,[7] have acquired a licence to operate and expand 14 Greek airports for 40 years (with an option to extend to 50 years). The consortium made a one-off payment of €1.23bn, and the annual lease fee and tax revenues could bring the Greek state a scant €8bn over 40 years.

Detractors of the sale argue that the 14 airports already made profits totalling €150m, which would add up to €6bn over the term of the lease. But Fraport itself admits this income is likely to grow considerably, given the growth potential of flights to tourist islands such as Rhodes, Mykonos, Santorini and Corfu: traffic on these routes has grown by 20% a year over the last two years. Financial director Matthias Zieschang calculates that in 2017 the company will make ‘fully €100m … from the Greek airports alone’.[8]

How the deal was made

How the deal was made is a story in itself. There were originally three bidders for the airport operating licences, which was exceptional for Greek privatisation procedures. Fraport’s CEO Stefan Schulte claimed the German company had simply ‘beaten strong competition with a convincing offer’. But two points in the procedure stand out: the first is the surprising decision to invite tenders for the licence to operate 14 highly profitable airports. Until early 2013, a different procedure was planned: Greece’s 37 airports would be split into two groups, each containing profitable and loss-making airports, to prevent cherry-picking and force buyers to use some of the profits they made on flights to fashionable destinations to subsidise airports on remote islands. This plan was rejected by the troika, which insisted that the ‘package’ to be privatised should contain only highly profitable airports.

There is a strong suspicion that this decision was made at the behest of the troika’s central power, the German government. This is supported by the second point concerning the procedure: when inviting tenders, Taiped chose as its ‘technical consultant’ Lufthansa Consulting, the subsidiary of a company with an 8.45% holding in Fraport. This presents a serious conflict of interest, going against all the rules of common decency — and of the European Union — for tender procedures.

The authors of the TNI study come to the same conclusion, and highlight another factor. The majority of shares in Fraport are held by the federal state of Hesse and the city of Frankfurt (a total of 51.35%). This means a large proportion of the revenue from the most profitable Greek airports will go to the budgets of local authorities in Germany, a creditor country of Greece. Whether this is blatant pillage or not, the result is the same: Greece has lost a long-term source of income, which would have been far more useful for stabilising government finances than a one-off (and cut-price) privatisation payment immediately used up in servicing its debt.

Fraport has set out to maximise the benefits of its Mediterranean venture. Its strategy is not only based on growing passenger numbers. To ‘generate very quick additional turnover,’ Zieschang says it is looking to ‘significantly expand and optimise the commercial space.’ The conditions set out in the small print of the transfer agreement are clearly very favourable to the lessee. Fraport is not only exempt from property and local tax, but also has the right to terminate the contracts and leases of all existing suppliers, shops and restaurants at its airports, and issue new licences to partners of its own choice, without having to compensate those it throws out. The Greek government must pay any contractual penalties.

That’s not all. The Greeks must also pay off any employees dismissed by Fraport; compensate victims of workplace accidents, even when the fault clearly lies with the enterprise; and finance the environmental assessments required when expanding an airport. They even have to pay if extension works are delayed by archaeological discoveries.[9]

This transfer of costs to the bankrupt Greek state is not only incredibly cynical, but also makes a mockery of the principles set out by the European Commission itself, which in October 2012 told NGOs protesting against the privatisation of water services that ‘the privatisation of public companies contributes to the reduction of public debt, as well as to the reduction of subsidies, other transfers or state guarantees to state-owned enterprises’.[10]

Need for a third way

When it comes to Fraport, the opposite is true: the lessee of the 14 airports can claim wide-ranging subsidies, transfer costs and guarantees from the Greek state. Yet the Greeks have no say on critical decisions affecting one of the country’s key economic sectors, such as landing fees, which can be decisive for developing tourism on an island.

Supporters of the Fraport deal assert that the refurbishment of dilapidated, unappealing airports such as Corfu and Santorini cannot be financed without foreign investment. This begs the question of why it wouldn’t have been possible to modernise their infrastructure with loans from the European Investment Bank. (Incidentally, this would also have guaranteed neutral technical supervision of planning and cost-efficiency.) Productive investments like this would create guaranteed and growing income for the Greek state.

In terms of sustainably stabilising government finances, the Fraport deal is the worst of all worlds. This is true of most of the 19 other privatisations (including gas, electricity and the port of Thessaloniki) started or planned in a state that is still in crisis, with the possible exception of the sale of publicly owned real estate, which is likely to be put to relatively sensible use by private investors.

This is not at all a justification of the way things were. The best solution would have been a third way, between privatisation and patronage. Most public companies in Greece do need radical reform of structures that have only ever benefited the privileged clientele of the political class. Those who really want to help Greece should facilitate the creation of efficient, provident service providers, who would finally honour their claim to serve the public interest.



Niels Kadritzke is editorial director the German edition of Le Monde diplomatique. This is an abridged version of the article published on his blog ‘Nachdenken über Griechenland’ (Thoughts on Greece); www.monde-diplomatique.de

source: Le Monde Diplomatique


[1] Sol Trumbo Vila and Matthijs Peters, ‘The Privatising Industry in Europe’ (PDF), Transnational Institute, Amsterdam, February 2016.

[2] Informal group of the European Commission, European Central Bank and International Monetary Fund that has imposed a series of economic adjustment measures on successive Greek governments, in return for further loans.

[3] http://www.publicissue.gr/1733/private-sector/  (in Greek).

[4] See Pierre Rimbert, ‘China lands in Greece’ and Panagiotis Grigoriou, ‘Greece not even getting by’, Le Monde diplomatique, English edition, February 2013 and April 2014.

[5] These details were revealed by independent Greek website The Press Project.

[6] www.embassynews.net/2016/01/…

[7] Copelouzos made his money in energy and infrastructure, thanks to his political connections in Greece, and his contacts with Russian group Gazprom.

[8] Börsen-Zeitung, Frankfurt am Main, 27 February 2016.

[9] A list of the conditions imposed on Greece has been published by The Press Project.

[10] Sol Trumbo Vila and Matthijs Peters, op cit.



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