The Politics of Privatisation: Redrawing the Public–Private Boundary

Abstract

Privatisation in Greece represented a reversal of the entire post-war and post-authoritarian interventionist policy paradigm. The privatisation decision resulted from pressures associated with the EC/EU and globalisation in general. The Simitis governments reactivated a privatisation programme comparable to that of ND in the early 1990s, but distinctly pragmatic in its reasoning, gradualist in its pace, and non-conflictual though unilateralist in its policy implementation. A central feature of the ‘Simitis privatisations’ was the flotation of successive minority stakes in public enterprises leading to retention of public control even though the government kept only a minority stake in the privatised enterprises. Privatisation was most far-reaching in the banking sector, with important broader implications for the entire economy. Despite the remarkably more favourable overall conditions under which the Simitis governments implemented privatisation as compared to the ND government in the early 1990s, privatisation policies continued to provide ad hoc opportunities for considerable socio-political opposition.

Notes

This rationale was also acknowledged by the government (e.g. Ministry of Economics, Annual Budget Introductory Report 1997: 18).

These percentage restrictions were the Greek distant substitute of an explicit ‘golden share’ policy. The 2003 privatisation law established the so-called ‘special share’, mandating a process of due announcement by the state of the exact public interests that needed to be safeguarded and the way in which this would be implemented. This process was never applied in practice, being substituted by the specifically legislated percentage restrictions mentioned above.

See de Frutos and Pechlivanos (2004) for an economic argument of why even a government interested in minimising job losses in privatised firms should optimally downplay such concerns to attract more robust interested investors.

In 2003 the ten largest Greek construction companies together had a total turnover equal to just over 20% of the entire sector. The ten largest Greek construction companies added together amounted to only one-sixth of the largest European construction company or half the largest Spanish company, etc. (Papayannides 2004).

In other ways, the organisation of the 2004 Olympic Games added a new momentum to private investment, as part of a broader policy of inviting FDI (Foreign Direct Investment) to contribute to the build-up of infrastructure. In that context, for instance, the embargo on new hotel construction in Athens and Thessaloniki was removed. In 2002, in view of the Olympic Games, a large part of public tourist property was transferred to the Hellenic Tourist Property (

, ETA), a company established with the objective of a more efficient management and the prospective privatisation of some of its holdings, and an eventual listing in the ASE (Ministry of Economy and Finance, 2002).

Amendments included the obligatory appointment of financial advisors in all privatisation transactions in order to raise transparency and effectiveness, a broadening and greater flexibility of privatisation methods, all changes aimed to facilitate privatisations and strengthen private sector interest.