Privatization Of Public Assets In Greece

Privatization Of Public Assets In Greece

The economic recession that Greece fell into in the year 2009 was almost predetermined. Following lavish and almost inconsiderate spending, the government’s poor management of funds quickly drove the country into a financial dead end. With nowhere to turn to for emergency funding, government officials resorted to allowing public assets to be utilized by private interests.

To put into perspective how this works, let’s consider perhaps the most damaging privatization the government of Alexis Tsipras signed in 2016; that of the port of Piraeus. Being almost entirely surrounded by sea, one of Greece’s major sources of income is maritime business. In order for the government to receive the necessary funding to prevent a total financial collapse, they allowed private investors, more specifically the owners of the Chinese company COSCO, to buy the right to 51% of the port of Piraeus for 280 million euros. Moreover, they committed to investing an additional 294 million euros over five years in exchange for an additional 16%, according to ELSTAT. What this means is that 76% of all of the profit generated at the port will go directly to them. Once the deal was signed, they drastically improved the infrastructure and resources of the port, allowing for a business expansion that generated millions of euros.

Unfortunately, this quite voluminous concession was not the only one that Greece made. In previous years, there was a heated argument over whether the privatization of basic commodities should be taken into consideration. EYDAP and EYATH, the two major water distributors in the country, and DEI, the major source of electricity were all brought to the negotiation table. Under Karamanlis, the possibility of such concessions was brought to the polls, with the general consensus being that these companies should remain 100% public. In 2014, the Council of State ruled that even the slightest concession would be unconstitutional. This isn’t, as many have claimed, a case of beggars being choosers. The constitution protects every individual’s right to these basic commodities and allowing private interests to utilize the main providers of these commodities could lead to class exclusion. Unfortunately, despite all of this, today, 49% of these companies are owned by private investors. The only silver lining is that with Greece still owning 51% and thus being the majority stakeholder, the companies remain public and for the most part under Greek influence.

However, the inevitable has begun to rear its ugly head. Even with the aforementioned silver lining, we are observing major class exclusion. What this means is that in order to increase profits, investors can put exorbitant price tags on these basic commodities. However, with the basic salary being at 713 euros gross (650 euros) and unemployment rates at 14.8%, a massive rise that occurred due to the Covid-19 pandemic, according to OAED, families struggle to make ends meet. State funding is scarce and almost everything is seeing a huge markup.

In 2022, the greatest concern is the involuntary privatization of EDUCATION. This is another example of class exclusion; with university admission rates at an all time high and secondary public education in an abysmal state of decay, people are starting to feel that education has an invisible price tag. The majority of greek students have needed assistance from schools to simply receive their secondary education diploma and a position in a public university. This doesn’t come cheap; prices range from 3,000 to a whopping 7,500 euros per year. Multiply that over the three years of senior high school and it quickly adds up. 

What is more, since 2019, diplomas from private schools and colleges hold the same leverage as diplomas from public schools. This has led to students from wealthier families opting for private education. The situation of public education, on the other hand, is so abysmal that every time a student manages to complete it and get into their desired university without paying -AKA the very definition of public education for all- it makes the news, instead of being the norm. Schools are underfunded, overcrowded and understaffed. Due to knowledge and science constantly advancing, many teachers are insufficient when it comes to teaching a subject, simply because they haven’t caught up with it.

But what does all of this mean for Greece? Unlike 2014, where 98% of Greeks agreed that everything should remain public when enquired in a formal poll, in 2022, they are more divided than ever. The view that privatization of underfunded assets is the way to go because that way they can be improved is not new, but certainly flawed, as its supporters appear to have learnt very little from the concessions that have been made so far. It is a solution that only works in the short term, ultimately creating more problems than it solved. Think of it as cutting off your hand to plug a hole in a sinking ship. It works, but not for long, and it will eventually come back to bite. Ever since the 2009 catastrophe, Greece has been stuck in a vicious circle of cutting off its hands to plug holes shut, and with the poor management governments have displayed over the last 13 years, it is unsure whether it will break free anytime soon.

Anna Pendoti – Team Logos


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