Yannis Ioannides, in a presentation at McGill University, Montreal, on April 4, 2013, discussed the issue of privatizations in Greece, as part of the stabilization program and Greece’s agreements with the Troika. Massive privatizations were put on the agenda of negotiations with the lenders, perhaps as a way to make assistance to Greece more palatable to voters in other eurozone countries, and were estimated originally as capable of generating 50 billion euros. The figure has been continuously revised downwards to less than 20 billion euros since first proposed. At the same time, political arguments over major privatizations reduce their projects’ values in the assessment of potential investors. This in turns feeds a vicious circle, a self-fulfilling prophecy, that has the Greek public being worried that Greece’s public wealth is being sold at “fire-sale” prices. Ioannides proposes that major privatizations can be seen as the proverbial “Big Push,” which the Greek economy desperately needs. Privatizations involve mainly undeveloped land throughout Greece. Furthermore, the capital inflows that the projects would likely generate over the purchase payments will cause increases in GDP for the same reason that the fiscal consolidation associated with the stabilization program has caused decreases in GDP.
Ioannides focuses on the proposed development of the site of the former Athens International Airport at Ellinikon. This site of 6 squ. kms at a distance of 8 kms from the center of Athens offers a rare opportunity, as vacant urban land on that scale so close to a metropolitan center is rarely available. Ioannides mentions that the public is in the dark about the assumptions made by the Hellenic Republic Assets Development Fund in evaluating the project for the purpose of soliciting bids by potential investors. He cites, in particular, the claim that “the full development of the Hellinikon site is expected to enhance Greek GDP by 0.3% per year and to create over 10,000 new jobs on a yearly basis for the next decade.” He argues that public review of the project via public hearings, a standard practice for large projects internationally, by involving the public and thus helping reduce social tensions, also stands to increase the value of the project to potential investors.
The text of the talk is available here and the slides here. The event, titled “How The Greek–Euro Crisis Is Transforming Europe … and Greece?” took place at McGill University on April 4, 2013, and was organized by Prof. Tassos Anastassiadis, Phrixos Papachristidis Chair in Modern Greek Studies at McGill, and by Prof. Stylianos Perrakis, RBC Professorship on Financial Derivatives, Molson School of Business at Concordia University. A video link for the entire event is here.