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Maria S. Topalova

The experts of the International Monetary Fund, the European Commission and the European Central Bank who completed their third mission in Greece today announced an ambitious privatization program worth 50 billion euros by 2015. Mr. Poul Thomsen, Mr. Servaas Deroose and Mr. Klaus Masuch arrived on time to the final press conference which was 5 hours delayed due to lengthy negotiations with the Greek government. The representative of the International Monetary Fund Poul Thomsen calmly explained that he did not remember having a meeting that had not lasted more than planned and that this happened when bureaucrats met.

Servaas Deroose from the European Commission announced that the Greek economy had a great potential for privatization and privatization proceeds. Three different expertise had provided the privatization in the country could be worth 50 billion euros. Public companies listed in the Stock Exchange, government securities in other companies and real estate could be subject to privatization. It is apparent that the Troika’s initial estimates of privatization worth three billion euros were significantly revised.

There was excitement when the announcement was made in the crowded with reporters Olympia Hall in Zapio. A quip came from the back rows: "Did you put the Acropolis in the plans for privatization." The experts smiled. Poul Thomsen warned that it was still early to identify specific priorities of privatization. In any case, he emphasized that the Greek cultural heritage would not be sold. The IMF representative stressed that poor management of public companies was the main source of deficit which, in turn, formed the huge external debt. If they were privatized and managed well it would be good for the Greek citizens. He also said that a few people who controlled the state property should not be allowed to deprive the majority to benefit from operating enterprises.

He explained that the financial stability program had two sides. The first was the fiscal consolidation which included the reduction of salaries and pensions in the public sector and taxes increases. Poul Thomsen said that this was behind already. New income cuts and tax increases were not planned as the effect of fiscal consolidation had reached its upper limit.  The second side was the program of structural reforms and this is what lied before the Greek government. The structural reform had two main pillars - the privatization and reform of the labour market.

The labour market reform proved to be the hard nut to crack the third mission of the Troika. It insists on collective contracts cancellation and introduction of operational employment contracts concluded between the employer and the employee. In fact, this means depriving unions of their power to regulate labour relations in collective agreements and makes them much less significant in public terms. As it is known, trade unions in Greece tend to PASOK. That is why it is so difficult for the government to abandon them. But this is the firm requirement of the Troika which announced that the labour market reform in Greece would undergo 6-month monitoring and if the collective agreements remained in force there would be a new change in the legislation of the country.

The second focus of labour market liberalization is the opening up of closed professions. The representatives of the Troika considered that interests of specific groups were affected, specific professions would lose their privileges and social unrest was expected. Servaas Deroose stated that the implemented program would change the way the Greek society functioned. This transformation would be difficult and it would cause discontent. He was surprised that the protests were not so strong. The majority of people was behind the program and behind the government.

"The stability of the banking system was guaranteed mostly because of the Troika, the Bank of Greece and the European Central Bank, which provides support for Greece in these difficult times," said Klaus Masuch and warned that this could not last forever. "The banking sector must perform its main role, which is to provide loans to private businessmen", reminded the representative of the European Central Bank and advised his Greek colleagues to raise capital and sell their subsidiaries. "Greece receives substantial loans at low interest rates from the European Central Bank. This money should come from somewhere - they are taken from the money which all residents of the eurozone, even those in Slovenia and Slovakia pay as pension and health insurance. Greece must be aware of this", made it clear Klaus Masuch. About the banking stability spoke Servaas Deroose, who stressed on the need for more effective supervision of the banks and insurance companies.

As usual, the three elegant gentlemen refused to say bluntly whether Greece would receive the fourth tranche of 15 billion euros planned for March. They usually leave this decision to be taken by their bosses in Washington, Brussels and Frankfurt. But the three of were adamant that the program was in progress despite the difficulties. Poul Thomsen concluded that this was the turning point of the program. Its further progress depended on the government's ability to obtain public support for its actions. And it is abundantly clear. The Troika’s ambitious goal concerning privatization is privatization of property worth 50 billion euros, and property for 15 billion euros should be privatized only in the period 2011-2012. This will cause enormous social unrest in any case and the government of George Papandreou should have a plan if not how to prevent it at least how to neutralize it.  

As there were objections during the previous press conference why Greek translation wasn’t provided, this time the organizers of the European Commission had taken care of this. In this way the Greek colleagues were able to express themselves more freely and tried to provoke the three experts by directly accusing them that their original program for salaries cuts and tax increases had failed and they turned to privatization to throw dust to people’s eyes for the failure.

Poul Thomsen said that when they came for the first time, Greece had 15.5% budget deficit and no access to international financial markets. The country would collapse without them and the government would be forced to reduce the budget deficit to zero percent overnight. He also said that this was equal to social collapse. He explained further with the peace of a missionary that they intervened at this point and with the loan of 110 billion euros the Greek government could take a breath. Servaas Deroose was even more specific by saying that when the program started urgent measures had been needed to stabilize the economy. The big problem in Greece was the public sector and the public sector salaries had been its heavy burden. So, they had started from there. Both experts were adamant that there won’t be further  salaries cuts and tax increases.