Greek Privatization Plan Faces Massive Domestic Resistance

Spiegel
June 7, 2011

Greece is scrimping and saving, but still failing to get its debt crisis under control. The government plans to raise 50 billion euros through a privatization program, but faces massive resistance from Greeks worried about selling off the nation's assets. Experts also doubt whether the strategy will work.

Good news still sometimes emerges in Greece these days. Take Hellenic Petroleum (Helpe), which owns a number of refineries and some 1,200 gas stations in the country and made a net profit of €150 million last year. It earned €43 million in the first quarter of 2011 despite of the crisis. Helpe is "an example of efficiency and stable management," company chairman Anastasios Giannitsis said. "We're constantly trying to increase productivity."

The model company, barricaded behind mirrored windows in its futuristic Athens headquarters, is among the few economic pearls of the crisis-ridden country. But paradoxically, Hellenic Petroleum is also a prominent example of the Greek disease -- excessive generosity to the few, at the expense of the many.

It is a worker's paradise. The company's 2,500 employees receive the equivalent of 17.8 monthly salary payments in a year, 3.4 of which count as "productivity bonuses." The average yearly salary is between €65,000 and €70,000, according to official figures. Drivers and doormen make an impressive €90,000, a fact that left one of Helpe's top managers "a bit surprised" when he took his own post at the company, he said. Meanwhile chairman Giannitsis said the high wages are justifiable because of "very specific business and the major dependency on international price and profit margins" in the oil industry. Besides, personnel costs account for "less than three percent" of turnover, he said.

Hope and madness are close together in Prime Minister Georgios Papandreou's battle against his country's crisis -- and his room for maneuver is shrinking. Despite drastic savings programs and structural reforms in public services, and despite tough tax increases and pension cuts, public revenue is shrinking. In late March, Greece's public debt increased to some €354 billion, and the budget deficit is currently at 9.5 percent of GDP, above the government's target of 7.5 percent.

Now the government wants to stave off bankruptcy with an ambitious privatization program aimed at raising some €50 billion by 2015.

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