The Greek government gazette reveals that a German company Fraport AG has been given the rights to operate 14 regional airports. Fraport AG also runs the Frankfurt airport in Germany among others.
This is just the first of many expected privatization moves as agreed to as part of the bailout deal. Syriza the major party in the Greek coalition government had opposed such privatizations during the election campaign but now has agreed to an extensive program that will be overseen by technical staff from the lenders. Several of the airports are on popular tourist islands.
The deal represents the first privatization decision since the signing of Greece's third bailout deal worth 86 billion euros. Far from being able to repeal the austerity conditions and privatization programs of the earlier bailout deals, the new deal contains an even more extensive and more controlled privatization program than the first two deals and imposes even harsher austerity conditions. Rather than face a bankruptcy and a possible Grexit, Greek Prime Minister Alexis Tsipras agreed to almost every bailout condition that he had earlier opposed. The airport deal will yield 1.23 billion euros or about $1.37 billion US. Several of the airports are on islands that are popular tourist destinations.
The bailout deal needs approval in a number of Europeans countries. It has already been approved in Spain and Estonia. Germany approved the deal by a vote of 454 in favour, 113 against, and 18 abstentions. The bailout agreement will release 13 billion euros just a day before Greece must pay 3.2 billion euros to the European Central Bank. Much of the bailout money will simply be recycled back to the lenders as loan payments. When the agreement was announced on August 11th the Greek stock market rallied. Last Friday, when Tsipras was able to have the agreement ratified in parliament dozens of Syriza party members voted against the deal. Tsipras may call for a vote of confidence in the government this week.
While many economists and the IMF believe that the deal is not workable unless there is further debt relief including a possible write down of some Greek debt, in the short term the provisions will provide ample opportunity for private corporations, many outside of Greece, to buy public assets at fire sale prices. Assets for sale include the national lottery, the port of Piraeus, and large land areas on islands such as Corfu. Privatizing assets such as the national lottery will generate a one time cash injection into government coffers but deprive the government of a reliable and constant revenue stream in the future. That revenue stream will enrich whatever corporation purchases the port.
No comments:
Post a Comment