Greece Shouldn’t Get Respite After Failed Gas Company Sale

Greece should hasten efforts to privatize other companies rather than ask for even more time.

The port of Thessaloniki, Greece at dusk, September 3, 2012
The port of Thessaloniki, Greece at dusk, September 3, 2012 (Flickr/Ghagaz)

Russia’s Gazprom on Monday failed to post a bid to buy Greece’s national gas supply company, leaving the Southern European country without an interested party in what should have been one of its largest privatization schemes.

This is hardly a reason for Greece’s creditors to once again relax its privatization targets, however. There is plenty it has to sell.

Gazprom was expected to pay up to €900 million for Greece’s gas company whereas the government there is supposed to raise €2.6 billion through asset sales this year. The failed gas sale means it might not be able to.

European countries, which, with the International Monetary Fund, provided €110 billion in financial support to Greece in 2010 and another €130 billion bailout last year, may actually be relieved this particular deal didn’t go through. Russia provides a third of the natural gas European Union member states consume, most of it through Gazprom or ventures the company is involved in. 90 percent of Russia’s gas exports goes to Europe which seeks to wean itself off this dependency for political reasons. Russia’s dominant position in the European gas market gives it leverage over countries especially in Central and Eastern Europe that cannot independently import gas from overseas.

This all has little to do with Greece’s financial woes. It was originally expected to raise €50 billion through privatizations but that number was cut in half and the date by which it is supposed to reach the target postponed to 2020. Yet the government could technically pay off up to €300 billion of its €437 billion debt by selling shares it owns in publicly-traded companies and much of its real estate holdings. The Greek government owns, or partly owns, casinos, docks, hotels, resorts, railways and utility companies. If anything, Monday’s disappointing news should prompt it to hasten the privatization of other companies rather than ask for, let alone get, even more time.

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