Greece for Sale!!!!!!! Sells Assets to Whittle Down Debt
ATHENS—Debt-strapped Greece is about to hold an epic yard sale.
For the taking: four wide-body Airbus jets, a state lottery, a state horse-racing concession and sports book, stakes in a casino, several ports, a national post office, two water companies, a nickel miner and smelter, a munitions maker, electricity and gas monopolies, a telecommunications operator, shares in a half dozen banks, hundreds of miles of roads, a defunct airport, old Olympic venues and thousands of acres of land, including magnificent stretches of Greece's famed coast.
That wasn't what Greece had in mind when it began wrangling with other euro-zone countries and the International Monetary Fund for a second dose of bailout money. But the nation's rescuers are leaning hard on Greece to come up with fresh cash. Selling off government goodies, the rescuers hope, will raise €50 billion (about $71 billion) by 2015. Every euro drummed up that way is a euro that Germany and other healthy countries don't need to lend.
But finding buyers for that grab bag of assets is likely to be a very tall order. Obstacles abound, including unions hostile to selling state-owned companies, citizens opposed to the privatization of state-owned land and a bureaucratic labyrinth that has long thwarted would-be developers.
To make matters worse, many of the available properties have already been offered for years, with no takers. Since 2000, Greece has netted some €10 billion from privatization. Now it must do five times that much in less than half the time.
"The markets in Greece now, as a result of the economic and financial situation, are not good for proceeding to sales," says Yannos Papantoniou, a former finance minister who now heads a think tank linked to the ruling Socialist party. "Prices are low." Hitting the sales target, he predicts, will be "a difficult thing to achieve."
Greece has no choice but to try. Despite the €110 billion of bailout money it already has received, it is running low on cash and needs another €100 billion or so to pay its bills. The European Union and the IMF have made both privatization and budget cuts a condition for new aid. Greece's parliament will hold a key vote on its five-year austerity and privatization plan on Wednesday.
The Greek finance ministry didn't respond to requests to interview the country's privatization chief or other ministry officials. An EU spokesman declined to discuss privatization. Both Greek and EU officials have said it is essential that the Greeks follow through on the plan.
Several of Europe's other sovereign-debt patients are trying similar medicine. Portugal is hustling to find buyers for its state-owned oil company, electric utility, grid operator, airline, airports and a government-owned bank.
In Ireland, a government commission in April recommended selling much of the country's electric utility, privatizing ports, dumping the state's remaining shares in Aer Lingus, disposing of forestry assets and a company that makes power from peat, auctioning fishing rights and selling state tour-bus operators. Also potentially on the block is Ireland's National Stud, a thoroughbred farm that bills itself as "Our National Treasure."
Even Spain, which is in relatively better shape than the other three nations, is planning to sell stakes in its national lottery and airports, in case it needs the cash.
As recently as early last year, Greece had estimated that privatization could yield, at best, €1 billion or €2 billion a year. EU authorities originally asked for just €3 billion in privatization revenue over the period of the first bailout, which runs until mid-2013.
That changed in early 2011. Greece's effort to increase tax revenue was undermined by tax evasion—a common scourge—and a deep recession that pummeled small businesses. To substitute for the missing tax revenue, the bailout's planners settled on privatization. At a press conference in Athens in February, the IMF official in charge of Greece said the fund and the EU expected to see €50 billion raised through privatization.