Greece to stop privatisations as Syriza faces backlash on deal
The Syriza leadership risks falling between two stools as it tries chip away at the austerity regime without triggering Greece's ejection from the euro
http://www.telegraph.co.uk/finance/economics/11435649/Greece-to-stop-privatisations-as-Syriza-faces-backlash-on-deal.html
7:52PM GMT 25 Feb 2015
Greece's Left-wing Syriza government has vowed to block plans to privatise strategic assets and called for sweeping changes to past deals, risking a fresh clash with the eurozone's creditor powers just days after a tense deal in Brussels.
"We will cancel the privatisation of the Piraeus Port," said George Stathakis, the economy minister. "It will remain permanently under state majority holding. There is no good reason to turn it into a private monopoly, as we made clear from the first day.
"The deal for the sale of the Greek airports will have to be drastically revised. It all goes to one company. There is no way it will get through the Greek parliament."
The new energy minister, Panagiotis Lafazanis, warned that Syriza will not sell the Greek state's 51pc holding of the electricity utility PPC, power grid ADMIE or state gas company DEPA. "There will be no energy privatisations," he said.
It is already becoming clear that Syriza's leadership does not accept a strict, minimalist reading of the Eurogroup text, and is relying on quiet assurances from Brussels and Paris that it has friends in the EU.
The defiant signals are making it harder for the German government to dampen criticism over the deal in the Bundestag before it votes on Friday. "Greece will not get a single penny until it complies with its obligations," said Germany's finance minister, Wolfgang Schauble.
Both the International Monetary Fund and the European Central Bank say the deal is too loose to pin down Syriza, allowing it to unpick elements of the EU-IMF Troika Memorandum. Mr Stathakis gave strong hints that this is indeed Syriza's intention. "The Eurogroup meetings went very well," he said, with a conspiratorial smile.
Yet the Syriza leadership risks falling between two stools as it tries chip away at the austerity regime without triggering Greece's ejection from the euro. A closed-door crisis meeting of the party at the Greek parliament erupted in an emotional storm, running for 12 hours as the group's Left Platform voiced their anger over the retreat in Brussels.
"A lot of Syriza MPs are very troubled by the deal and they are being pretty open about it. The fault lines are clear," said one MP, emerging for a shot of caffeine.
"We're in uncharted territory and we don't know how this is going to end. But there is a very strong sense that we should hold together come what may. We are not going to split," he told The Telegraph.
Premier Alexis Tsipras sought to rally the troops, assuring them that Syriza had not abandoned its "Thessaloniki Programme" for radical change or capitulated to EMU demands under threat of bankruptcy. Insisting that the document signed in Brussels gives Syriza scope to carry out its democratic revolution, he demanded that rebels stand up and "be counted" if they really mean to vote against the deal.
Syriza has already caused the Eurogroup to drop its demands for a bigger primary budget surplus, opening the way for its anti-poverty programmes. "The original 3pc goal for this year was catastrophic. It cannot be higher than 1.5pc of GDP," said finance minister Yanis Varoufakis after the meeting.
Mr Stathakis, a Marxist economist with a PhD from Newcastle University, denied claims by London banks that the Greek government could run out of cash within 15 days, saying the "institutions" - the euphemism for the defunct Troika - will let Greece tap some forms of funding long before any crunch.
"We have various buffers, including €3bn or €4bn at the Bank of Greece. We expect to be able to issue €2bn to €3bn in T-bills soon," he said. The ECB's support for Greek banks - curtailed two weeks ago - should be "back to normal" by mid-March.
Choosing his words carefully, he said that the airport privatisation deal could be reopened because it was "not completed", making it clear that Syriza may rewrite the terms of any state sale in the pipeline. An existing investment deal with the Chinese shipping group Cosco in Piraeus will be protected.
Diplomats in Athens have some sympathy for the Syriza view, confirming that many of the past deals were corrupt or tailored to the interests of powerful oligarchs. "These people 'own' the energy industry. The property sales and airports are a stitch-up, all going to the same small circle," said one veteran.
"We know exactly who the biggest smuggler of shipping fuel is, and why nothing has been done. He is very close to the previous government. Syriza are not part of this system and don't have 'cheques to pay back'."
Critics say there is no necessary reason why privatisation should boost the Greek economy or help to balance the budget, deeming it Troika ideology. The Pireaus Port, the lottery and other state holdings generate an income stream for the government.
It is clear that Syriza aims to test how much freedom of action it has. This guarantees a fresh fight at the end of April, when EMU inspectors will demand proof that reform legislation is being enacted and enforced, and an almost certain showdown in June when Syriza's four-month reprieve expires. It must then negotiate a third bail-out or face hostile markets alone.
"We're going to have four months of constant bickering and fighting with the EU institutions, and when we get to June we're going to face exactly the same blackmail over liquidity support, if not worse," said Costas Lapavitsas, a Syriza MP and an economist at London University.
"The deal was a partial victory, in that it bought time. Any other outcome last Friday would have been catastrophic. But there is no doubt in my mind that the Troika is setting the parameters, even if most of the party is still reluctant to learn this harsh lesson. We're wet behind the ears," he said.
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