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Greek government privatizing infrastructure and energy

Following a contraction in Greek domestic product worth at least 15%, the country has, since 2009, been hobbled by market reaction to negotiations with creditors culminating in an (overall) bailout worth $310bn. Greek debt now stands at 171% of GDP.  In part a reaction to this, the Greek government, led by prime minister Atonis Samaras, has put up domestic industry for tender or sale to the private sector.

Depa, Greece’s natural gas corporation, is the subject of a bid by Gazprom: the Russian company, which already supplies 90% of Greek natural gas through Bulgaria, made a preliminary bid for Depa last year worth €900m. Elsewhere, the conservative-led coalition has been wooing Chinese investors who have signalled their interest in Greek infrastructure. In particular, Chinese investors have seen the debt-laden country as a gateway to Europe, and they are both interested and capable of acquiring Greek airports, harbours, and railways. Interestingly, investor sentiment seems willing to follow up Cosco’s (the Chinese state-run shipping company) purchase of Europe’s biggest passenger harbour and one of its top 10 container ports: Piraeus. Elsewhere, the state gambling monopoly Opap was sold for €652m this month to a syndicate of Greek-Czech investors, the Emma Delta fund, for a 33% stake plus management rights

However, it is in the energy sector where the government is looking to raise the most money. It has been revealed by Greek officials that there were plans to sell Desfa, the natural gas operator, to Azerbaijan’s state oil company, Socar. The admittedly breakneck speed at which seemingly systemic assets are being and will be transferred to the private sector (and the alleged possibility of foreign government therefore having a controlling interest by proxy) has led to criticism from opposition parties.

Indeed, the list of public assets up for sale also includes regional airports, island marinas, the rail network, Athens’ and Thessaloniki’s water companies, the Xenia hotel chain, and various real estate. Critics of this increasingly large wave of privatization suggest that any profits will only be repatriated and that the Greek population will cease to be treated as influential stakeholders, instead becoming expendable consumers akin to any other in a global market. Nevertheless, with a huge debt-burden and bond-yields always threatening an increase, as long as the Eurozone remains in monetary crisis it looks like the argument that markets will always constrain government behaviour is being vindicated.

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