Greek sell-off Any Port in a Storm

Greek dockworkers have gone on strike after Prime Minister Alexis Tsipras reversed his opposition to privatizing ports and airports in a bid to raise much needed cash. Germany's biggest airport operator stands to benefit if Mr. Tsipras can hold the line.
Piraeus port near Athens came to a standstill after dockworkers walked out over proposed privatization plans.

Nobody said privatization was going to be easy in Greece.

Greek dockworkers held a 24-hour strike on Thursday to protest the government's plans to privatize ports. The protesters accuse the government of retreating from promises that it wouldn’t sell off Greece's state-owned assets. Last week's strike could only be the beginning.

The strikes come as the cash-strapped nation is being put under increasing pressure from international creditors to reform its economy and raise money in order to remain solvent – and to stay in the 19-nation euro currency zone.

Controversy also surrounds plans by the government of Prime Minister Alexis Tsipras to privatize Greek airports, a deal that could benefit German airport operator Fraport.

Before he was elected in January, Mr. Tsipras had pledged to his followers that no privatizations would occur if he and his radical-left Syriza party gained power. Now, he is encountering stiff opposition as it appears he can’t make good on that and other promises. After weeks of negotiations with Brussels, Athens' government last week relented and said it would allow privatizations of ports and airports to go forward as planned.

This is good news for Germany in particular. In November, the previous government agreed to a deal to lease 14 regional airports to a joint venture between Fraport, which operates the Frankfurt Airport, and the Greek Copelouzos Group. The airports include those at the second-largest Greek city, Thessaloniki, and the popular vacation islands of Rhodes, Mykonos and Santorini.

The consortium wants to invest €1.4 billion, or $1.57 billion, in modernizing the airports and pay another €1.2 billion for a 40-year concession — money that the government could very well use at the moment.

With the acceleration of the airport privatization, Mr. Tsipras hopes to make progress in the negotiations with Greece's creditors and free up additional financial aid.

As the leader of the opposition, Mr. Tsipras had vigorously opposed the project. But the country's chronic shortage of cash may have led to his change of heart. The contracts were originally set to be signed in autumn 2015, but the current expectation in Athens is that the deal could be sealed already this month.

The head of Fraport, Stefan Schulte, and the Greek economics minister, Giorgios Stathakis, are said to have discussed the matter in late April.

With the acceleration of the airport privatization, Mr. Tsipras hopes to make progress in the negotiations with Greece's creditors and free up additional financial aid. However, it remains to be seen just how he intends to sell this abrupt about-face to his own party, which must vote on the privatization in parliament.

In order to save face, the government wants to modify the airport contract. The state, as well as communities whose airports are affected, would receive shares in the consortium and participate in the management of the airports. Details remain unclear.

But the government doesn't have much wiggle room. If it changes the terms of the bid request after the fact, it risks legal challenges by other applicants who lost out in last year's bidding competition for the airports.

The other applicants were: A consortium of the French construction company Vinci with the Greek building firm Aktor; a group of bidders from the Argentine holding company Corporation America; and the Greek plant manufacturer Metka. These groups could insist on a new tendering process and set in motion a protracted legal dispute.

Meanwhile, the striking dockers are unlikely to be easily won over by the proposed privatization of Athens’ Piraeus harbor, which Mr. Tsipras has finally agreed to after long opposition.

The favored candidate is Chinese logistics company Cosco, which already has a concession for operating a container terminal in Piraeus. Cosco hopes to turn Piraeus into a hub for freight transport between the Far East and Central Europe.

In February, after Syriza came to power, Mr. Stathakis announced that the harbor privatization would be canceled. Last month he, too, had changed his mind and had to explain in parliament that the government is now negotiating with Cosco about finalizing the agreement. That stirred up the ire of the four other “favored bidders" for the port

Greece’s privatization board intends to call for binding offers from the interested parties by July. Instead of the originally planned 67 percent of shares in the port authority, the government now wants to sell only 51 percent in a first phase — in deference to its own party.


Gerd Höhler is Handelsblatt's Athens correspondent. To contact the author: [email protected]