Monday, July 13

Bingo! Greece "may" have to sell islands to help finance its bailout deal

From Simon Shuster's report from Athens for TIME, published today at 5:07 PM EDT (Greece May Have To Sell Islands And Ruins Under Its Bailout Deal):
Of all the aspects of Monday’s bailout deal that Greeks found humiliating, nothing drilled into their sense of pride quite like their government’s promise to sell off “valuable Greek assets” to the tune of 50 billion euros. The seven-page agreement, which European leaders thrashed out over the weekend, made no mention of where Greece is supposed to find that much property to sell. But as they scrambled for options, officials in Athens saw no way around the blood-curdling prospect of auctioning off Greek islands, nature preserves or even ancient ruins.
“It’s an affront,” says Georgios Daremas, a strategist and adviser to the Greek Ministry of Labor, Social Security and Social Solidarity. “It’s basically saying sell the memory of your ancestors, sell your history just so we can get something commercial for it,” he tells TIME on Monday. “This is an idea to humiliate Greeks.”
No, it's just a kind of land grab fairly typical of the 21st Century. First make loans they can't possibly pay back, then take land in payment.  To return to Shuster's report:
In order to guarantee repayment on loans to Greece, the German Finance Ministry even suggested moving the titles to Greek assets to an “external fund” in Luxembourg so that Athens could not renege on their sale. On this point, Greek Prime Minister Alexis Tsipras managed to fight off the Germans on Sunday, though it was one of the very few concessions he managed to get during the marathon talks.
“The deal is difficult, but we averted the pursuit to move state assets abroad,”Tsipras said in trying to put a positive spin on the bailout, which would see Greece take more than 80 billion euros in additional loans in order to stave off bankruptcy over the next three years.
Greek payments on its two previous bailouts were also meant come in part from the sale of state assets. Under the terms of its first bailout in 2010, Greece agreed to privatize around 50 billion euros in property and infrastructure as a way of raising money for its creditors.
But only 3.2 billion euros have come from these sales to date. So Germany and other creditors have good reason to doubt the Greek commitment to privatization.
Going forward, Greece will have to stash its assets in a specially created fund and prepare them for sale “under the supervision of the relevant European Institutions,” according to the text of the bailout agreement published on Monday.
Asked what kinds of assets the fund would include, Dutch Finance Minister Jeroen Dijsselbloem, one of the key European negotiators in the bailout talks, said “experts” would be brought in to settle this question. “I won’t give you any examples, because it’s not my specialty,” he told reporters in Brussels on Monday.
Most of the examples would have to come from the government’s land and real estate holdings, says Daremas, the government official in Athens. “That may include buildings, possible areas of land, and even islands,” he says.
So the Greek government has known from the start what the bailouts boil down to:  land. Government-owned land would just be the beginning of what's needed, however.  

Back to TIME:
To protect the natural, historical and archaeological value of such real estate, Greece would need to pass laws and empower oversight bodies to make sure that “the new owner does not abuse or damage the property,” says Daremas.
Since Greek islands and plots of land often house ruins from ancient civilizations, some of these may also have to be sold, he added. “Maybe some archeological sites that are not developed,” Daremas says. “But if you have this as a private investment you also have to assume responsibility for developing the site, of course being monitored by [Greek] authorities.”
There are, of course, limits to the privatization of ancient artifacts. The treasures of Greek antiquity, such as the Acropolis in Athens, would never be sold, Daremas says. “That’s impossible. Their value is immeasurable.”
Greece has at least been willing to discuss the sale of its islands, however, as many of them are uninhabited and underdeveloped. Joseph Stiglitz, the Nobel-prize winning economist who has spoken out in favor of debt relief for Greece, says the sale of islands could be an important part of the broader privatization campaign. 
“You could sell them,” he says. “But not a fire sale, because that would be like giving away your patrimony for nothing.”
That would mean waiting until the property market in Greece recovers. “Of course real estate prices are depressed right now,” says Daremas. “It’s very important to have time, and to wait for change in the economic climate to be able to sell them at a fair price.”
The Greek promise to sell state assets came with no time limit in the text of the agreement published Monday. But in their hunger for guarantees on this latest package of loans to Greece, creditors in Germany will not be happy to wait much longer.
The question is how many fire sales have already happened in Greece.  But there's no question that there are plenty of uninhabited and undeveloped Greek islands. Now what would the creditors want with such property?  Why would they consider it valuable enough to use for repaying loans in the billions of euros?

But even that won't be enough.  As I pointed out in Greece Fire Sale"The problem for Greece is that many elderly Greeks own very valuable underdeveloped land. It's the same for other European Mediterranean countries."

What other countries would those be?  The same ones that along with Greece couldn't believe their luck in wringing loans out of the Troika that they knew they had no way of repaying.  

As to where the buyers are going to get the water to develop those uninhabited islands -- that's not going to be easy, as I went to some pains to explain in Greece: Water, water everywhere but how much to spare?

Part of the solution could entail fallowing land presently used on the Greek mainland by Mom and Pop farmers. That seems to have been the ploy used by Mexico's government to clear large tracts of land near Mexico City. And it's been standard operating procedure in China and India for many years.

As to what happens to the people displaced from their land -- shunt them into the cities.

[shrugging] It's a dog-eat-dog world, and no more so than in this century, which is seeing land grabs engineered by people who make the European colonialists look like amateurs. Which is to say that just because people call themselves Leftists or democracy advocates or terrorists doesn't necessarily mean they are anything more than land-clearing agents.


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