German firm to run Greek airports as sell-off begins
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A German firm was this week chosen to take over 14 Greek airports as Athens begins selling off its assets to meet the terms of its bailout deal. It is not the first time Greece’s economic crisis has boosted the coffers of its biggest creditor.
The Greek government has agreed to give Fraport, which runs Frankfurt airport among others, along with Greek partner Copelouzos Group the right to run the airports for the next 40 years, according to details of the deal published in the government gazette overnight on August 17.
Fraport had won the bidding process for the concession last November for €1.234 billion, but Syriza, firmly against privatisation, put it on hold when it won power in January.
But after the Greek government was forced to agree to selling off public assets as part of its latest, €86bn, bailout, the airport deal was revived.
It could be a fruitful one for Fraport: several of the airports are located in the country’s prime tourism hotspots, including Rhodes, Kos, Mykonos, Santorini and Skiathos, as well as Greece’s second-largest city Thessaloniki.
The airports served 19 million passengers in 2013, and will generate revenues of more than €180 million a year, according to Fraport.
The regional governor for the Ionian Islands, where many of the airports are located, is less enthusiastic.
“This deal would seriously impact the economy of our region,” Theodoros Galiatsatos told Greek newspaper Kathimerini. “The possible increase in landing fees will put off low-cost and charter flights and have negative effects on tourism in this region.”
It will, however, not be the last time Greece sells a valuable public asset to an overseas company and probably not the last time that the company will be German.
In fact, German firms have been buying up Greek companies for some time. Since 2005, Germany has been the sole biggest investor in Greece, with German companies spending some $8.7 billion (€7.8 billion) in the country. The second biggest investor is Italy, at $5.6 billion (€ 5 billion).
One of the biggest deals was the sale of a 10 percent stake in Greek state-owned telecoms company Hellenic Telecommunications Organisation (OTE), bought by Deutsche Telekom in 2011 for $585 million as part of another privatisation programme also tied to a bailout.
And with Greece set to sell off many more public assets in the coming years, there is no reason to expect that trend will not continue.
The terms of Greece’s latest bailout – which was overwhelmingly approved by Germany’s parliament Wednesday – require Athens to raise €50 billion euros by selling state assets.
The funds from the privatisation programme will be overseen by the “troika” of Greece’s creditors, the International Monetary Fund, the European Central Bank and the European Commission.
Other Greek assets likely to be sold off to the highest bidder include banks, energy companies, ports, transport infrastructure and tourist resorts, as well as further shares in OTE.
In a July post on his blog, Former Greek finance minister Yanis Varoufakis compared it to “a fire-sale vehicle similar to the one used after the fall of the Berlin Wall to privatise quickly, at great financial loss and with devastating effects on employment, all of the vanishing East German state’s public property”.
Germany’s €100 billion windfall
Greece’s economic turmoil has proven to be Germany’s financial gain in other ways, too.
Greece’s financial debt to Berlin is believed to stand at around €90 billion. But, according to a study released earlier this month by Germany’s Halle Institute for Economic Research, the country has saved more than this sum as a direct consequence of the Greek economic crisis.
With the Greece’s economic woes creating financial instability across Europe, investors have flocked to the relative “safe haven” of German bonds, said the institute, pushing down interest rates and leading to savings of at least €100 billion for the German government.
Even if “Greece indeed does not repay any of its loans, Germany comes out ahead”, it said. "If Greece does pay or pays at least in part, the savings are substantial.
Meanwhile, the Fraport deal risks further widening the already significant rifts within Syriza that emerged after Prime Minister Alexis Tsipras agreed to the bailout terms.
Unsurprisingly for the left-wing Syriza, the privatisation programme was one of the terms of the bailout deal it found most distasteful.
The fact that the first asset in the sell-off has gone to a German company will make that an even more bitter pill to swallow.
Iskra, a website affiliated with Syriza’s radical Left Platform faction, described the airport deal as “a large present to [Angela] Merkel” and accused the government of handing over the airports for a “measly sum as a prize to German interests”.
According to the Athens-Macedonian News Agency (AMNA), Tsipras is expected to resign late Thursday to make way for a snap election on September 20, in a move seen as an attempt to head off an anti-bailout rebellion from within his own party.