Greece's
great fire sale
From
pristine beaches to palaces, entire islands and its London embassy, a
nation in crisis is selling its assets, writes Harriet Alexander.
20
April, 2013
As
George Georgas drives his golf buggy along the sea front, the
sprightly 80-year-old muses on why this is the best stretch of coast
in the world.
The
beach is the longest on the Greek island of Rhodes – four miles of
crystal waters, flanked by a gently sloping pebble shore. The 18-hole
golf course that flanks it is lined with olive trees and wild
flowers, and there is scarcely a hotel or high rise in sight.
Mr
Georgas has played here for over 30 years. And now he thinks the
government should sell it.
"We
are like a bankrupt housewife forced to sell the silver, to save the
family," he said. "Greece has no choice."
The
sale of the coast at Afandou is part of the Greek government's
desperate attempts to raise money by privatising its vast portfolio
of state-owned assets – the largest firesale in history. Some
70,000 lots are for sale, ranging from pristine stretches of coast
through to royal palaces, marinas, thermal baths, ski resorts and
entire islands. Only last Wednesday, bidding closed for a stake in
the state gambling company.
On
Monday Antonis Samaras, the prime minister, scraped through another
round of negotiations with the Troika – the EU, IMF and European
Central Bank – and managed to secure payment of the next EU 8.8
billion instalment of the bailout. But privatisation is a
prerequisite for receiving the bailout funds.
On
Rhodes, a mountainous island 50 miles long that was the mythical home
of the sun god Apollo, huge chunks of prime real estate are now up
for grabs.
Beside the 1,850-hectare Afandou estate there is the
peninsula of Prasonisi, a paradise for windsurfers, and the Mandraki
marina in Rhodes Town, where the famous Colossus, a 100 foot high
statue that was one of the seven wonders of the ancient world, once
stood guard over the port entrance.
Rhodes
is unique in having nearly a third of its land owned by the
government, a legacy of being occupied during the Italian invasion in
1912 and later having ownership of that land passed over to Athens
when it became part of the modern Greek state. Yet that hasn't
stopped the inspectors from Athens fanning out across the country to
see what else they could auction off.
The
idea of snapping up a Greek island certainly has its appeal. In March
the Emir of Qatar bought six for £7 million, while a Russian
oligarch bought Skorpios – previously owned by the Onassis family –
earlier this month for a reported £65 million, as a present for his
24-year-old daughter Ekaterina Rybolovlev. While both those sales
were private, it showed there was a potentially lucrative market for
chunks of scenic Greece.
To
that end, the royal palace on Corfu, where Prince Philip was born, is
now also for sale. So too is a large coastal estate which, the
government boasts on its website, is next door to land owned by the
Rothschild banking dynasty.
Officials
refuse to discuss prices, saying that it depends on offers and the
development proposals, but the Afandou coastline is looking for an
investment of 150-250 million euros. The port of Poros, a pretty
cobbled marina in southern Greece, is on the government books, as is
the Athens police headquarters and the Ministry of Culture – a
giant temple-like construction in the centre of the capital. So too
are the buildings housing the ministries of health, education and
justice. Even the Greek embassy in London's Holland Park: yours for
£22 million.
However,
not everyone supports the idea of so many places going under the
hammer.
"We
need to keep state ownership of all our assets – not sell them to
the highest bidder," complained Yiannis Milios, chief economist
for the opposition Syriza party, who would prefer to see more use of
public-private partnerships, rather than sales.
"Experience
shows that the privatisation of public goods is a very bad idea. With
water, for instance, the quality falls but the price rises, which is
totally wrong. The government is very good at finding legal formulas
to work its way round supposed guarantees of public interest. It is
not a good idea at all."
But
others argue that Greece has no choice. Two bailouts from the
European Union have failed to inject life into the economy, which has
been in recession for the past six years. Unemployment is 27 per
cent, and the deficit is forecast to grow to 189pc of GDP this year.
Almost 1,000 jobs have been lost every day over the past three years
in the private sector, and as part of Mr Samaras's deal made on
Monday, 15,000 public sector workers are set to be made redundant as
part of a Troika's programme for slimming the bloated public sector.
As
well as political resistance, the other problem for privatisation
programme is finding buyers. While the more picturesque islands might
seem attractive busy, the same cannot be said of vast, loss-making
behemoths like the Hellenic Railways Network and the Public Power
Corporation. Both have militant unions that have vowed to fight
privatisation tooth and nail, making them highly risky prospects for
investors.
That
partly explains why Greece has only raised about EU2 billion from
privatisations since its first bailout loan in May 2010, missing its
target of raising EU3 billion by last year. The country's longer-term
aim of raising EU50 billion by 2019 has repeatedly been scaled back,
and the best it now hopes for is to raise around EU 11 billion in
privatisation proceeds by the end of 2016.
From
his office overlooking the Mandraki marina in central Rhodes Town,
Stathis Kousournas, mayor of Rhodes, sees no alternative.
"We
want this investment – we actually fought for it to happen,"
he said. "We have to make sure that we are getting a fair price
and respecting the environment, but those who have come to me with
concerns are in the minority.
"It
is not all being sold permanently – some of it is a long-term
lease. We're all anxious to make the best of this – it is a
development for all of us.".
Unemployment
on the island is low compared to the mainland, averaging 17 per cent
over the year thanks to the influx of tourists. But life is still
hard.
Maria
Karabini, a 40-year-old civil servant, has seen her salary drop by
half over the past three years. Now, after paying her mortgage, she
only has EU200 a month to live on.
"This
sale of the land must happen," she said. "We need this now,
quickly. Tell the Russians and the Qataris to hurry up!"
Across
the island, almost everyone seems to embrace the proposals, so
desperate are they for relief from austerity measures, although Lucas
Georgas, a Bath University-educated businessman, sounded a note of
caution.
"What
I don't like is the 'sale' aspect of it," he said. "I would
like to see the government renting it out for 20, 30, 40 years so
that the business venture can make a profit, then return ownership to
the state. This land does not belong to my generation to sell it."
In
Athens, though, the man with the task of directing the firesale is
convinced that there is no other way.
Stelios
Stavridis, chairman of the Hellenic Republic Asset Development Fund,
has only been in the job for three weeks – his predecessor
resigned, reportedly before he could be sacked, over the slow pace of
sales.
"I'm
an entrepreneur, not a politician, and I have been screaming my head
off that this is all about growth, job creation, wealth creation,"
said Mr Stavridis. "I am the anti-bureaucracy man: we need to
bring in this money – there is no other way."
In
Mr Stavridis's office in central Athens, not far from the parliament,
a pair of American businessmen discuss in hushed tones their
negotiating position. A ticker tape flickers above the head of the
receptionist, detailing the latest hot offers: Afandou, Corfu lands,
the disused Athens airport.
"We
have been acting so stupidly for years, making rules against our own
interest," Mr Stavridis added. "Being state-owned and well
run is a contradiction in terms."
For
those who do take the plunge, there are still myriad hurdles to
overcome, despite the efforts of Mr Stavridis's team. Land registry
is patchy at best, while investors must also promise to commit their
own equity, but many foreign banks are wary of lending to Greek
projects. Greece would appear to be only acting now because the
Troika has forced its hand.
Back
in Afandou, Vassilis Anastasiou, the manager of the golf course for
the last 30 years, looks out every day on concrete proof of the
"stupidity" of previous government programmes.
A
grand breeze block clubhouse looms over the golf course; completed in
1973 and, strangled by bureaucracy, empty ever since.
"At
least under the military junta it only took three years to build that
site," said Mr Anastasiou. "Governments since would have
taken 50 years to do the same."
His
club has around 100 members, paying EU400 a year and with 60 of them
playing regularly. But he is adamant that the land must be privatised
– even if it means increasing the fees.
"Anyone
who argues against it is either an idiot, or a state employee who
doesn't think about economic reality and just likes to lounge on the
beach," he said. "We have our heads in the noose."
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