Wall Street Journal
May 19, 2011
Could Greece's tragedy yet have a happy ending?
Many investors think the country has little chance of avoiding a default at some point. Its slim hopes of avoiding that depend on an ambitious €50 billion ($71 billion) privatization and real-estate development program by 2015, with €12 billion to €17 billion of receipts now promised by 2013. Wednesday's announcement of a raft of advisers for privatizations ranging from gambling companies to motorways suggests it may finally be serious. Still, execution risk remains high.
Greece has no shortage of assets. It has state-owned enterprises alone valued at €44 billion, according to the Organization for Economic Cooperation and Development. These include ports, power, transport, water and gambling companies. In addition, the government owns real estate with an estimated value of €200 billion to €300 billion, including 2004 Olympics facilities, military property and land used for uncontrolled private development.
But despite commitments given to the International Monetary Fund and European Commission, Greece has been dragging its feet, partly for fear of sparking further domestic protests. Unlike the U.K. privatizations in the 1980s, Greece seems likely to have to sell mostly to foreign investors rather than to its own public, heightening the sensitivities. But attitudes are changing: A recent poll showed more than seven out of 10 Greeks support privatization, and the Socialist government can count on support from the right-wing opposition for asset sales.
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