Greece debt: Government sees hope in privatization despite protests

Officials see privatization as a way to dig out of Greece's debt, but newly unemployed workers are taking to the streets of Athens in protest. Tuesday's 10,000-strong demonstration may foreshadow larger protests to come, some say.

Kleanthis Tratras was among 10,000 Greek protesters Tuesday in the fifth general strike this year against government spending cuts. He, like many of the protesters, has found himself unemployed because of the government's privatization of state companies to raise money.

The heavily indebted Greek government has adopted the International Monetary Fund's recommendation to raise some of the €320 billion ($390 billion) it owes foreign lenders through privatization. And that has transformed central Athens into a stage for daily demonstrations, even in the heat of summer when many here typically take long vacations.

While Tuesday's demonstration was smaller than past protests this year, strikes are expected to pick up again when vacationers return from the beach.

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That spells trouble unless the government can convince people like Mr. Tratras that privatization is essential along the country's road to economic recovery.

His former employer, the national air carrier Olympic Airways, was privatized in September 2009. As the new owner attempted to trim costs, it also decided in March to cut 4,400 workers, including Tratras. Months later, he and other former workers have yet to receive any compensation or pension payments, despite legislation that ordered their pensions be paid.

“We’re living through a waking nightmare,” says Tratras, who also demonstrated during protests in March soon after he was laid off. He worked for Olympic Airways for 30 years. Now, he is having to face the fact of a pledged compensation going unfulfilled even while hiding from his family exactly how dire their financial straits are.

“I have two children in college who need €2,000 ($2,400) a month," he says. "What can I ask them to do? Leave university?”

China to the rescue?

Privatization continues at a rapid pace. The government hopes to raise another €3 billion ($3.7 billion) through another round of state sales that will privatize public utilities and lease airports, seaports, railways, and highways to private firms for fixed periods of up to 40 years. The government is currently looking for bidders and has given few details on the number of companies that will be sold or the number of state workers that will be laid off.

As Greece sells assets and looks to create a more business-friendly environment, foreign investors are expressing interest. Perhaps the most successful example of privatization came last October, when Chinese shipping company COSCO started running one of the docks in Athens’s Pireaus port, the largest in southeastern Europe, on a 35-year, €3.4 billion ($4.1 billion) concession. The dock was formerly operated by the state port authority.

Sections of the Greek media hailed COSCO a redeemer for the Greek economy. “The Yuan Will Save Us,” ran one business newspaper’s headline.

COSCO is now planning to construct a €550 million ($670 million) second dock as well as a transhipment center that would promote Greece as a hub for western Europe and northern Africa. The company's president visited Athens in May to meet with Greek government officials, including Prime Minister George Papandreou.

In a further sign of Greece's opening up to private foreign investment, Chinese Vice Premier Zhang Dejiang visited Athens in mid-June and signed 14 commercial deals in shipping, real estate, and farm exports, though these did not specifically regard the privatization of state companies.

Businesspeople point out that private companies have come to the rescue in the past. “The Olympic Games of 2004 were an example of the private sector doing a job for the state rather than the politicians,” says Constantinos Antonopoulos, head of Intralot, a lottery systems supplier. "It’ll be a large mistake if the government doesn’t call this country’s private sector."

Further unrest looms

Civilians and economists fall on both sides of the debate on privatization, with some saying the sale of national companies merely pours cash into the black hole of a corrupt government, while others argue that the government is incapable of efficiently operating national companies and should sell its assets.

“In Greece, there is a caste of civil servants who benefit from the waste of public funds and who, along with the wealthy, can be targeted by the silent majority,” says Theodoris Georgakopoulos, the editor of the Greek edition of Esquire magazine. “The retired Olympic Airways employees who received €3,500 a month pensions and retired at 50 are one example of this.”

But private companies and the government are struggling to calm the unease over privatization.

Amid Tuesday's 10,000-strong demonstration, protesters set fires to garbage bins and smashed metro station entrances, throwing the chunks of marble at riot police. The general strike shut down public services, disrupted transport, and reduced hospitals to emergency staff.

And some observers are concerned about a new popular explosion of violence come October, as the carefree summer months recede and Greeks are faced with a fresh round of layoffs, slimmer salaries, and value added tax (VAT) at 21 percent.

“We’ve remained unpaid for six months and now we can’t pay the debt on our credit cards,” says Tratras, the former Olympic Airways employee. “Once this anger spills over, it’ll be unstoppable.”

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