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Privatization in Greece has been delayed for decades and should start immediately

22 February 2012 / 18:02:56  GRReporter
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Anastasia Balezdrova

The utilization of Greek public property has become one of the leading topics in public life, especially after the country has fallen into a very serious economic situation. A year ago, the PASOK government set up a fund for utilization of public property, which has not delivered impressive results at least not yet. Traditionally, any attempt to privatize a publicly owned enterprise faces acute response by trade unionists and the political power does not show great commitment to the utilization of large publicly owned abandoned property.

The topic was the subject of a discussion organized by the Hellenic Foundation for European and Foreign Policy, the Foundation for Economic and Industrial Research, the "Kantor" consulting agency, the organization "Civil Movement" and the Greek branch of "Transparency International".
Eurobank EFG Group Managing Director Nikolaos Karamouzis noted that privatization in Greece began in the 1990s in a particularly hostile environment. "Today, it is conducted within the attempt for structural reorganization of the economy. It has been largely imposed from "above" and was not the choice of the political governance of the country." He said the creation of a balanced market economy and privatization is no longer ideological, but a real choice that is required, especially in the case of Greece.

"We must admit that government intervention has failed to bring the things its supporters planned and did not provide citizens with quality services. Over the past 20 years, the state has gained 24 billion euro from privatization and the main method used was the issuance of shares. It was aimed especially at fundraising, and in most cases, the state kept the control and management in privatized companies.

The second characteristic is that despite the two parties alternating in power, the political system and society have for years been negative to the privatization and utilization of public property, with very few exceptions. "

According to Nikolaos Karamouzis, there are four main factors that prevent privatization in Greece: "The imposition of a state interventionist model of economic development, of a clientelist system protecting the interests of certain groups. The presence of an environment hostile to the private initiative, which was supported by the failure of business ventures in the 1970s and 1980s. Creating corruption connections between the political system and specific business interests that enjoyed privileged relations with power in large sectors of the public sector. Creating clientelist connections between the political system and trade union movements in public enterprises, which have been dominating for decades in the public sector. The result was a mechanism for clientelist appointments in the party "armies" with no criteria, which, in turn, managed to secure three times higher income than in the private sector.

Privatization will not succeed if the political system does not believe in it and its contribution to the development and if the government implements it only because creditors have required it to do this. If this political criterion is not met, I fear that privatization will continue to be delayed as it has been until today."

Nikolaos Karamouzis recalled the "Eureka" plan. "I think that after yesterday's decision of the Eurogroup, this is still an interesting proposal - to give a company future revenues from concession agreements for the use of highways and the toll collecting desks. Based on these assurances, the European Investment Bank should prepare a detailed programme for financing private companies, partnerships between public and private sectors and major projects through banks. This, I think, is the best way to use the revenue from them. No property is sold that way. "

He also pointed out that the value of all public enterprises in Greece does not exceed 3 billion today. "The same companies were worth USD 15 billion in 2007. Therefore, even if we sell them tomorrow, we will reduce the foreign debt insignificantly. Times are very difficult for such privatizations. Furthermore, we will also give a reason to all those who want to prevent those efforts. So, I think we need to connect investment with the investor commitment that will implement a specific programme." Transport companies, which cost the state huge losses, are especially problematic in his view. "Although these issues are not on the agenda today and may cause reactions, we should seriously consider privatizing. Moreover, we have examples of this. Urban transport in Thessaloniki and Chania is private. Intercity transport is private too and it has not caused any problems to anyone so far." His second proposal was to give impetus to private sector involvement in providing social services. "Third, I suggest that loss-making public enterprises, for which there is no interest from private owners, should be offered to the employees against one euro after the state has removed the burden of their obligations. And if they do not want them, to offer the same package to private investors."

In a more political speech, Drasi party leader Stefanos Manos criticized previous Greek governments for their reluctance to carry out privatizations. He, as a minister in the government of Constantinos Mitsotakis, was the person who started this policy in Greece. Subsequently, however, it found no followers. Stefanos Manos said that for as long as Greek politicians themselves do not believe in this policy and do not state clearly to the people their confidence that it is correct, none of them will be implemented.

Tags: EconomyPoliticsPrivatizationPublic property utilizationNikolaos KaramouzisStafnos Manos
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