This is the New Privatization Über-Fund

by Thanos Kamilalis

Over 27 national assets will be up for sale, while many of the previous proclaimed “lines in the sand” are being erased; such as the promised protection of the national electricity company. At the same time, this document describes the structure and authorities of the new Privatization Fund which will bring the effort to a completion; To get rid of public Greek property with its sole goal the repayment of the “rescue programs”.

In July, the Greek government signed an agreement which included a wide privatization program, yet it tried to keep it a secret. The section of the memorandum which described which part of the national assets was to be sold was never presented in the parliament. It was only when the Dutch parliament met and discussed Holland's participation in the Greek rescue program, that we were able to get the full list of Greek assets privatizations.

Every shadow of doubt is now blown away. The new memorandum draft (“Memorandum 3.5” as we call it in ThePressProject) between Greece and the European Commission binds Greece to complete a set of previously agreed sales (Ports of Piraeus and Thessaloniki, the Athens airport and others around the country) as well as further sales that were not included in the July agreement. This new list includes everything that is owned by the National Estate Fund and an “introductory” list of public companies, electricity, telephone, petrol, gas and probably more. The memorandum includes special terms on energy and water. All these goals will be reached via a new privatization fund, which is presented in the draft as a 'prior action', one necessary in order for the new deal to be signed.

What is the Privatization Fund?

The memorandum that was signed on July 2015 provided for the creation of the fund. In that, Greece was obligated to make privatizations to the amount of 50bn euro which would then be dispersed as follows: 25bn would go to the recapitalization of the banks and other public companies, 12.5bn would go towards payments on the national debt, and 12.5bn would go towards public investments. This “über-fund” was seen as the most exhausting term of that deal  yet the government insisted that it had come out of that negotiation a winner since it had ensured that a substantial portion of the revenues would go towards the growth of the economy (instead of the previous agreements which saw that every penny from the sales would go towards the debt) and that the fund would be under Greek control. The new memorandum overturns all the previous terms.

The new draft which TPP publishes, describes the new fund in detail:

• -The management will be held by a Board whose members will be appointed by the Greek government. Yet the management will be controlled by an overseeing board whose members will be appointed in agreement with the creditors.
• -The new fund will undertake the sale of: a)27 assets from the previous Hellenic Republic Asset Development Fund (HRADF), b) all assets from the Public Properties Company c) some public companies; the document shows that there is still a discussion over who should have the right to chose which public companies are to be sold.
• -It will be completely independent from the Greek state.
• -Its financial goals remain the same as in the July agreement; 1.4bn for 2016, 3.7bn for 2017, and 1.3bn for 2018.
• –Last but certainly not least: The provision that part of the moneys received from the sales will go towards economic growth is no longer there. The only thing stated is that all the money from the sales will be directed towards the payment of the loan from the European Stability Mechanism.

Are privatizations such a bad thing?

An ongoing public discourse has been going on for years, since the start of the Greek bailout drama, on whether privatizations of public assets and companies can play a part in the effort to rebuild the Greek economy. Perhaps, instead of ideological views, it would be best if we tried to understand how privatizations happen in Greece under crisis.

The previous fund, the Hellenic Republic Asset Development Fund, as it has rather grandly named, failed miserably; members of its previous management are under scrutiny over malicious acts which caused 500ml euro damages to the Greek state. The fund employed, as consultants, companies which were owned by those companies who would become the buyers (Lufthansa for the airports, Eurobank and National Bank of Greece for 28 properties). The fund called for “open” offers which were proven to have been fixed. The public assets which are being auctioned are, in their vast majority, profitable (Piraeus Port, airports, Thessaloniki Port) . It went so far as to block necessary investments when these were to go against its own machinations. It sold the Port of Piraeus for a ridiculous sum, and even that money will go directly towards the debt. The case of Piraeus is not the only one; not a penny from any privatization has gone to anything but the payment of Greece's non viable debt.

It signed scandalous contracts for the concession of the use of public property to “investors” while arming them with unheard of freedoms and legal asyla (COSCO and Fraport are among the companies involved). Without any kind of provision for the creation of new jobs or for the working rights of their employees, the companies have the right to demand state support and compensation from the state for the slightest of reasons. These documents are still treated as top secret and they have not been given to the public from either the Fund or the government.

The Fund has attempted to cover and explain its actions via press releases (posed as journalistic reports by friendly media) or by constant television appearances from its president who tries to present a set of ideological arguments for the privatizations rather than crucial facts, proof and data. The whole strategy reminds of shiny beads when the real evidence tell another story; Greece will immediately receive 350ml euro for the use of Piraeus Port, money which will only cover two weeks of debt payments. The Fund is charging on with this failed strategy while the Greek government seems to be unable, or unwilling to stop it. In the Piraeus case, the Greek minister of Naval affairs has been recently unable to stop the concession even though he repeatedly expressed his disagreement.

The new memorandum ensures that the selloff of the Greek public property will continue, only swifter and broader than ever (the kitchen sink will probably have to go too). After all, who or what, is going to stop it?