The recently privatised Piraeus port, 2015, in Athens. Jeffrey/Flickr. Some rights reserved.When the leftist party Syriza came to power in Greece in 2015, it promised to revise the crisis-hit country’s unpopular privatisation programme. Yet this month, the same party found itself in fierce confrontations with its own electoral base, unionised workers, protesting the government’s sale of its major ports in Athens and Thessaloniki. Reactivatating Greece's privatisation programme was made a central condition of the humiliating memorandum that Syriza signed in July 2015, after capitulating to its creditors. Since July, Syriza has moved forward with the privatisation of Piraeus port in Athens, 14 regional airports and is currently preparing to privatise its rail network.
So why have the European Commission’s policy makers made privatisation such a central tenet for agreeing to loans to Europe’s indebted countries? The European Commission (EC) in correspondence in 2012 explained it this way: “... privatisation of public companies contributes to the reduction of public debt, as well as to the reduction of subsidies, other transfers or state guarantees to state- owned enterprises. It also has the potential of increasing the efficiency of companies and, by extension, the competitiveness of the economy as a whole, while attracting foreign direct investment.” In other words, privatisation would help countries pay back their debt, would improve the state-owned companies’ efficiency and effectiveness, and therefore would boost economic growth.
But do those arguments stand up in practice? Five years into the economic programmes imposed by the EC, Transnational Institute in its report The Privatisation Industry in Europe decided to examine the evidence. Its conclusions cast serious doubt on the EC’s rationale. It found that the sales of state-owned assets during recession have consistently failed to raise expected revenues. Greece for example was predicted to raise €50 billion but has so far raised a paltry €3.5 billion. This may be partly down to popular and Syriza resistance, but it is also what happens when profitable companies are sold at a time of recession. Greece’s sale of 14 regional airports is typical of how privatisation short-changes taxpayers, as only the profitable ones were sold, leaving the unprofitable ones still subsidised by Greek citizens.
