Germany leads on Greek privatisation

By Alex Davidson

The first sale of Greek public assets, to meet the terms of the bail-out programme, is about to go ahead with a German company set to take control of Greece’s 14 regional airports.

The German company, Fraport, won the bid to buy the rights to operate the 14 regional airports, currently owned by the Greek state, in a deal worth 1.2 billion euros for a period of 40 years with an option of a further 10 years.

This is the first sale of Greek state assets which will go towards the privatisation fund of 50 billion euros, half of which will go to the recapitalisation of the Greek banks. The funds from the privatisation programme will be overseen by the Troika (the European Union, the European Central Bank and the International Monetary Fund).

Fraport is among the world’s leading groups of companies in the international airport business. The company operates Frankfurt airport, one of the world’s most important air transportation hubs. Frankfurt airport is Germany’s largest employment complex at a single location with more than 500 companies employing over 80,000 workers.

Fraport has a turnover of 2.4 billion euros and had a profit of 252 million euros in 2014. It is active in four continents including operating airports in China, India and Russia

Stefan Schulte, the Chief Executive Officer of Fraport, is a Board member of the Christian Democratic Union’s (CDU) associated Economic Council. The CDU is led by Angela Merkel, the German Chancellor, and Wolfgang Schauble, the German Finance Minister and the architect of Greece’s draconian bail-out terms including the drive to privatisation of Greece’s public assets.

14 Greek airports sold on the cheap

The fourteen Greek regional airports to be taken over by Fraport are: Aktio, Chania (Crete), Corfu, Kavala, Kefalonia, Kos, Mitilion, Mykonos, Rhodes, Samos, Santorini, Skiathos, Thessaloniki, Zakynthos. Thessaloniki is Greece’s second largest city.

These airports have a very high tourist traffic serving some 19 million passengers per annum. In 2014 there were, for example, 1.9 million arrivals in Rhodes, 1.4 million at Thessaloniki and 1 million at Corfu.

The Greek state currently earns 450million euros from these airports every year so Fraport is getting ownership on the cheap.

The Governor of the Ionian Islands, Theodoros Galiatsartos, who was elected on a Syriza ticket, and whose area of responsibility includes Corfu, Kephalonia, and Zakynthos, described the sale of the airports as “contrary to local and national interests” and a “scandal”.

Former Greek Finance Minister, Yanis Varoufakis wrote that “Eurozone leaders demanded that Greek public assets be transferred to a Treuhand-like fund - 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”. [i]

Varoufakis was referring to the Treuhandanstalt (or Treuhand), which oversaw the restructuring and selling of about 8,500 state-owned companies in the German Democratic Republic at the time of the annexation of East Germany by West Germany. Profitable businesses were closed and 2.5 million employees (out of 4 million in total) in state-owned enterprises were laid off in the early 1990s.  

Germany buys up Greece

German based companies have led the field in buying up Greek companies for some time. Since 2005 Germany has been the sole biggest investor in Greece as the table [ii] right shows:

One of the biggest deals was the sale of a 10% stake in the Greek state-owned telecoms company Hellenic Telecommunications Organisation (OTE), which was bought by Deutsche Telekom in 2011 for $585 million as part of an earlier privatisation programme also tied to a bail-out.

Greece’s loss, Germany’s gain

Greece’s economic turmoil has proven to be Germany’s financial gain. Greece’s financial debt to Germany is estimated to stand at around 90 billion euros. But according to a study, released by the Halle Institute for Economic Research, Germany has saved more than this sum as a direct consequence of the Greek economic crisis.

With Greece’s economic woes creating financial instability across Europe, investors flocked to the relative “safe haven” of German bonds, pushing down interest rates and leading to savings of at least 100 billion euros for the German government, according to the Institute[iii].  

The next privatisations planned are those of the ports of Piraeus and Thessaloniki. On the shortlist to buy a 51% stake in the port of Piraeus are China’s Cosco Group; the Danish container terminal operator, MAERSK; and the Phillipines-based International Container Terminal Services (ICT.PS).

Workers at the port of Piraeus went on strike in October in protest at the proposed sale of the port.

The port of Thessaloniki is due to be sold in March 2016.

Other Greek assets likely to be sold off include banks, energy companies, transport infrastructure and tourist resorts as well as further shares in the Hellenic Telecommunications Organisation.

The Troika are overseeing the harsh bail-out terms and conditions including the privatisation of Greek state assets.

There have been differences within the Troika over how to deal with Greece. There are reports of the Washington-based International Monetary Fund (IMF) pushing for a restructuring of Greece’s debt pile by extending maturities and reducing interest payments. However, this approach is rejected by the European partners.

The IMF has been criticised by its own watchdog, the Independent Evaluation Office (IEO), “for failing in its duty of care towards Greece by pushing self-defeating austerity measures on its battered economy.” [iv] The IEO has said that the IMF should have eased up on the spending cuts and tax rises, pushed for an earlier debt restructuring, and paid more attention to the political costs of its punishing policies during its five-year involvement in Greece.

However, German capitalism’s strong economic position has given it economic hegemony over Europe and political dominance of the EU. Following the defeat of the Soviet Union and the other socialist countries in Eastern Europe, the EU extended its borders into Central and Eastern Europe.    

Led by the German Finance Minister, Wolfgang Schauble, the EU has been intransigent in its approach to Greece.  In an interview with Der Spiegel [v], Schauble stated “Debt relief is not possible within the currency union. European treaties do not allow it.” His argument cannot be faulted. The problem lies in the constitution and treaties of the European Union and the Greek people are paying a heavy price.



[ii] http://


[iv] “Watchdog says IMF ‘failed in duty of care’ towards Greece”, Daily Telegraph, 2 October 2015

[v] Der Spiegel, 18 July 2015