Is Greece Still A Country If Someone Else Owns Its Assets?
This story isn't actually about Greece, but it begins there.
After the country went functionally bankrupt a few years ago, the solutions proposed by its creditors (mostly European banks and governments) included the impoverishment of its current citizens through cutbacks in wages and pensions, the impoverishment of its future citizens through the borrowing of even more money from the IMF and European Central Bank, and the sale of major state-owned assets to foreign companies to raise cash with which to make upcoming loan payments.
Greek voters, not surprisingly, responded by electing socialists who promised not to do any of those things. But apparently this didn't work. Newsweek reports that the privatization program, after a brief pause, is back in high gear:
Foreign corporations from countries including Germany, China and Russia are lining up to buy Greek state assets as the country struggles to pay its European creditors.
The sell-off includes major parts of Greece's infrastructure such as airports, ports, motorways and utilities., The website of the agency leading the government's privatisation drive details a host of real estate ready to be sold off, with deals listed as either 'in progress', 'rolling ahead' or 'completed'.
The move marks a U-turn from the ruling Left-wing Syriza party, who had previously resisted the privatisation programme imposed as part of the conditions attached to Greece's €245bn bailout from the so-called troika of the IMF, European Central Bank (ECB) and European Commission.
Notable deals on the table as part of the privatisation drive include the purchase of 51% of Greece's largest port to the China Ocean Shipping Company (COSCO) and a slew of airports popular with tourists to German transport company Fraport AG.
Other assets listed include the 670km Egnatia Motorway which crosses over Northern Greece, million dollar properties in New York, Washington and Belgrade, thermal springs, and and a former US Air Force base in Heraklion, Crete.
Another major sale which is pushing ahead is that 14 of Greece's 37 regional airports which include those on popular holiday islands Kos, Mykonos and Corfu. Fraport AG, a German transport company have offered €1.2 billion for the airports' lease and a sale is expected to go through by the end of this month. Fraport made the offer with Greek energy firm Copelouzos owned by entrepreneur Christos Copelouzos.
Another German company, Deutsche Invest Equity Partners, is in the final eight companies who have qualified for the next phase of the tender process for the acquisition of a 67% stake of Thessaloniki Port, the second largest in Greece. Taiped says that Germany, who are currently leading discussions with Greece for a new deal, are key investors. "With the airports, the most important thing after the price was having experience and Fraport had it," she said.
Among the other seven companies also bidding for the Thessaloniki Port is the billion-dollar British P&O Steam Navigation Company, Russian train operator Russian Railways, and International Container Terminal Services, a port management company established by Filipino businessman Enrique K Razon who has a personal wealth of $5.2 billion.
Foreign investment is of course common around the world and is generally seen as a good thing. Americans mostly like it, for instance, when Japanese investors bid up shares of US companies or Chinese expats pay above asking price for Manhattan apartments. With only a few exceptions we take the money and don't look back.
But there must be a limit, a point where foreign interests own so much of a country that they call the shots and the locals become in effect their serfs. Greece might be the test case that shows us where that point is, while helping to answer three other questions:
- How much of what's happening today is part of a larger process in which less-developed countries are in effect tricked into borrowing unmanageable amounts of money and then looted by their creditors?
- Will Italy, Spain and Portugal suffer the same fate after Greece is fully looted?
- Are middle-class US families becoming Greece in microcosm, tricked into borrowing for college tuition, cars and houses and then forever obligated to send huge chunks of future earnings to their creditors? That the same dynamic is operating on both national and individual scales -- and that the beneficiaries in each case are the same big banks -- is curious indeed.