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Greece: A Nation for Sale and the Death of Democracy

The savage methods of alleged “economic efficiency” and privatization increase neither efficiency nor competition, but do lead to price increases for consumers, higher costs for government, corruption, embezzlement and the destruction of democracy.

(Image: Dalibor Tomic / Flickr, Sean MacEntee / Flickr; Edited: EL / TO)

The savage methods of alleged “economic efficiency” and privatization increase neither efficiency nor competition, but do lead to price increases for consumers, higher costs for government, corruption, embezzlement and the destruction of democracy.

When the European Union (EU) and the International Monetary Fund (IMF) came to Greece’s rescue in May 2010 with a 110 billion euro bailout loan in order to avoid the default of a eurozone member state (a second bailout loan worth 130 billion euros was activated in March 2012), the intentions of the rescue plan were multifold. First, the EU-IMF duo (with the IMF in the role of junior partner) wanted to protect the interests of the foreign banks and the financial institutions that had loaned Greece billions of euros. Greece’s gross foreign debt amounted to over 410 billion euros by the end of 2009, so a default would have led to substantial losses for foreign banks and bondholders, but also to the collapse of the Greek banking system itself as the European Central Bank (ECB) would be obliged in such an event to refuse to fund Greek banks.

To read more articles by C.J. Polychroniou and other authors in the Public Intellectual Project, click here.

Second, by bailing out Greece, the EU wanted to avoid the risk of negative contagion effects spreading across the euro area. A Greek default would have led to a financial meltdown across the euro area and perhaps to the end of the euro altogether.

Third, with Germany as Europe’s hegemonic power, there was a clear intention to punish Greece for its allegedly “profligate” ways (although it was large inflows of capital from the core countries that financed consumption and rising government spending), and by extension, send out a message to the other “peripheral” nations of the eurozone of the fate awaiting them if they did not put their fiscal house in order.

The coastal and forestry bills drafted recently by the Finance and Tourism Ministries have been described by World Wild Fund Greece as being “ecologically criminal.”

Fourth, the EU wanted to take the opportunity presented by the debt crisis to turn Greece into a “guinea pig” for the policy prescriptions of a neoliberal Europe. Berlin and Brussels had long ago embraced the main pillars of the Washington Consensus – fiscal austerity, privatization, deregulation and destatization – and the debt crisis offered a golden opportunity to cut down the Greek public sector to the bare bones and radicalize the domestic labor market with policies that slash wages and benefits and enhance flexibilization and insecurity.

The first three goals of the Greek bailout plan (bailout programs were later extended to Ireland, Portugal, Spain and Cyprus as well) have been achieved, while the fourth one is an ongoing and permanent process since Greece has now been turned into a neo-colony, where the primary and virtually exclusive obligation of the puppet government is repaying the bail-out loans in full.(1) This involves enforcing draconian austerity measures and carrying out a blanket privatization program, spanning from rail and road transport to airports and seaports, from water utilities to electricity distribution, from gaming to mining, and from land to pristine seashores. The coastal and forestry bills drafted recently by the Finance and Tourism Ministries have been described by WWW (World Wild Fund) Greece as being “ecologically criminal.”

In July 2011, the Greek government established a privatization fund, the Hellenic Republic Asset Development Fund, or TAIPED, for “the divestment of the private assets of the public sector.” Hardly surprising, TAIPED was an idea pushed forward by the EU chiefs and modeled after Germany’s Treuhandanstalt, the agency which, as formal owner of all former assets of the German Democratic Republic (GDR), oversaw the privatization of thousands of state-owned enterprises in East Germany after the collapse of the communist regime.

For those who may not know of the economic history of Germany unification, Treuhand’s essential role was to organize the looting of East German industry and public wealth.

“After unification, the Federal Minister of Finances became the controller of the largest ever holding company in the world, with no parliamentary commission to control him,” according to Hanna Behrend. She continues:

Within less than three years, Treuhand destroyed or handed over to West German big business for next to nothing national property to the value of at least several hundred billion Deutschmarks. . . .

While the West German purchasers of these forms at such generous prices were able to improve their position in international competition, the ordinary taxpayer will in the end have to pay for the nearly DM300 billion debt the institution heaped up. By the end of 1992 industrial production in East Germany sank to less than one-third of the 1989 figure, and, of the 4.1 million industrial jobs there had been, every second one was lost. By that date every fourth employable person in East Germany was out of a job, supplemented by those coerced into early retirement, or (particularly women) into accepting lower qualified employment. Mecklenburg-West Pomerania’s former status as an investment site moved down to rank 240 after Sicily according to one EC statistic. Crime rose to 300 per cent of its previous level, and the suicide rate to 180 per cent; the birth rate sank to 55 per cent, the rate of marriages to 50 per cent. Women were particularly seriously affected, with their rate of unemployment at 65 per cent, only a little 40 per cent being involved in temporary job-creation schemes. . . .

. . . the system promoted fraudulent deals, encouraging embezzlement, bribery and corruption. . . . Numerous Treuhand managers were indicted for corruption, the biggest fish among them being probably Herr [Ludwig M.] Trankner, the man in charge of the liquidation department . . .

By March 1994, their assignment nearly concluded, Treuhand had privatized 13,800 industrial enterprises; a further 3,354 had been closed down. Treuhand admitted that the transactions had produced no assets but only liabilities to the tune of 230 billion Deutschmark, to which some 45 billion would have to be added to deal with what would be left by the end of 1994. These liabilities meant that a national debt of nearly 2,000 billion Deutschmark being placed on the German taxpayer. Nobody later mentioned the pious plans of 1990, which foresaw the allocation of bonds on GDR national property to be distributed to each East German citizen as their share of the expected eventual residue from that property.(2)

All of TAIPED’s members have close links with the financial sector, raising serious questions about conflict of interest.

Like Treuhand, TAIPED’s sole purpose is to sell state-owned assets. However, unlike Treuhand, which was governed by public law and was technically subject to control by parliament, TAIPED is governed by private law and is unaccountable to the Greek parliament, with parliament members even being denied access to minutes of TAIPED’s board meetings.

TAIPED is the creation of Greece’s foreign masters. Its board of directors is chosen by the lackey government in Athens but the so-called troika of international lenders – made up of the European Commission, the ECB and the IMF – can always replace board members if it has doubts about their effectiveness. This is why it has appointed two observers to the board.

All of TAIPED’s members have close links with the financial sector, raising serious questions about conflict of interest.

TAIPED has been rendered the right to assess and evaluate the board members and the directors of the public companies that have fallen under its jurisdiction for privatization purposes and to remove those individuals who do not collaborate effectively with the agency. By the same token, TAIPED’s board of directors has been granted immunity from criminal prosecution. Politicians in Greece, mind you, may also not be subjected to criminal prosecution while they hold office. This is but one of the means with which the Greek political establishment protects itself from its corruption practices and the promotion of private interests at the expense of public interests. Another one is through its undue influence on the justice system. It’s little wonder therefore that Greek judges are receiving retroactive wage increases, bringing their salary to pre-crisis levels, when average working citizens have seen their wages and salaries decrease by as much as 40 percent in the course of the past four years and pensioners have experienced significant income reductions, with the average basic pension being less than 700 euros.

Actually, TAIPED’s existence, as Alexis Tsipras, leader of Greece’s opposition Coalition of the Radical Left party (Syriza) pointed out sometime ago in a damning critique of the role of the agency, is in violation of constitutional laws and even of its own charter.(3) The nation’s High Court ruled recently that the transfer of 34 percent of the shares of the Athens Water Supply and Sewerage Company (EYDAP) to TAIPED violates articles 5 and 21 of the Greek constitution.

Both the troika and their Athens lackeys are bent on embarking on a sweeping fire sale of state-owned assets following Treuhand’s example in East Germany.

Prior to 2010, the value of Greek state-owned assets was estimated to be worth 280 billion euros. The first bailout plan estimated the value of Greek state-owned assets to be worth 50 billion euros, hence the demands of the troika that the Greek government should proceed quickly on privatization. Three years later, the Greek government seems to have found the troika’s estimates extremely high and expects that the revenues generated through the privatization efforts of TAIPED will reach about 20 billion euros by 2020.

Who’s kidding whom? Both the troika and their Athens lackeys are bent on embarking on a sweeping fire sale of state-owned assets following Treuhand’s example in East Germany. Consider, for example, last year’s sale of a 33 percent stake in the betting firm OPAP, the most profitable state-owned company in Greece, a monopoly for that matter, with a net income over 500 million euros in 2012. The sale was for 652 million euros plus management rights when the market value of the 33 percent share was 750 million euros at the time of the offer. But the real question is this: Why privatize an extremely profitable state-owned company and deprive the state of future dividends? More importantly, perhaps, with the Greek debt having risen to 175 percent and being unquestionably at unsustainable levels, privatization proceeds will be just a drop in the ocean. But then, again, perhaps the swelling of the Greek debt as a result of the brutal austerity policies enforced as part of the international bailout agreements is actually a convenient way to justify the transfer of public assets to private entities.

Does anyone really think that imperialism is over? The case of the peripheral eurozone countries provides plenty of food for thought on this matter.

Make no mistake about the intentions of those who enact savage methods of alleged “economic efficiency” and privatization. In the ideological worldview of fanatical neoliberals, which is the political crowd that dominates today’s European integration project, privatization is not a means, but an end in itself. While the experience with privatization varies between countries, and certain privatization projects can have positive results, scores of empirical studies show that privatization increases neither efficiency nor competition, but does lead to price increases for consumers and to higher costs for the government (4) while corruption and embezzlement have been perceived as being closely linked to privatization.(5)

The efforts of the Greek government to privatize the nation’s water utilities and a good share of the electricity distribution networks upon the insistence of the troika is a case in point. Treating these utilities not as essential services but rather as profitable commodities, the Greek government has essentially declared war on the people’s rights to public goods and services, with the public, however, responding so far to the challenge. In Thessaloniki, Greece’s second biggest city, the privatization of the water and sanitation company, a company free of debt, has been massively opposed by citizen groups. In addition, the plan for the privatization of the electricity distribution networks has led to firm resistance by electricity workers who threatened to strike at the peak of the tourist season; a titanic clash has broken out between Syriza and the pro-troika government that can have direct repercussions for political stability as the declared intention of the radical left is to destabilize the current government and force new elections.

Political authoritarianism in today’s Greece is so pervasive that it makes sense to describe the current administration as a proto-fascist regime.

The strategy pursued by Syriza is justified and necessary. A minority government, as the current coalition government represents, should not have the right to make political decisions that will determine the nation’s economic future on critical issues such as the complete conversion of public goods into private goods and the sale of the national patrimony to private hands. The pro-troika governments that have ruled Greece since the start of the international bailouts are servicing the interests of the European masters and the domestic financial and corporate elite with complete indifference to the suffering of the weak and the poor, the accelerating decomposition of the country’s social fabric and the ensuing social and economic injustices. In past ages, history mercilessly punished such callous leaders. But this is the age of predatory capitalism, of the expansion of commodification into all aspects of political, economic and social life and of the onslaught on the social contract.For contemporary political leaders in Greece and the EU, democracy is just a catch phrase. Their actual role is to cater to the needs of an elite system, a plutocracy thriving on the impoverishment of a multitude, to the whims of financial vultures that accumulate massive amounts of wealth by subjecting entire nations to a regime of debt peonage.

Democracy in contemporary Greece has suffered massive blows. Indeed, by rephrasing Rosa Luxemburg’s famous quip on social democracy, one can say that since the international bailout of 2010, Greek democracy “has been a stinking corpse.” Public demonstrations against austerity and the presence of the troika are met consistently with brutal force by special police squads; activists are being hunted down as if they are terrorists; coalition government parliament members (the current government represents a coalition of conservatives and socialists, both of whom are pro-bailout and defend austerity and neoliberalism) sign bills nearly blindfolded (6) while the government is methodically shredding the constitution and the principles associated with dignity, justice and the common good. Without a doubt, political authoritarianism in today’s Greece is so pervasive that it makes sense to describe the current administration as a proto-fascist regime and the country as a neo-colony of a German-dominated Europe.

Greece, the land that gave birth to democracy and whose ancient culture laid the foundation for Western civilization, is now a nation for sale. Having fought heroically in World War II against both Mussolini’s and Hitler’s armies (inspiring Winston Churchill to say that “until now, we knew that Greeks were fighting like heroes; from now on we shall say that the heroes fight like Greeks”), contemporary Greece has lost its sovereignty under peacetime conditions, courtesy of a German-led EU and its own obsequious, servile, cowardly and oleaginous political leaders.

Any hope for recovery from the austerity-caused depression and the reclaiming of national sovereignty and dignity lies squarely with the left’s rise to power. Whether this materializes or not will depend on the strategic skills of Syriza to keep the momentum going and on the critical skills of the Greek masses to comprehend what is really at stake. Democracy has already been laid to rest and the nation’s entire patrimony is now on sale.


1. For a discussion of the failure of the bailout policy in Greece, see C.J. Polychroniou, “A Failure by Any Other Name: The International Bailouts of Greece.” Policy Note 2013/6. Annandale-on-Hudson, N.Y.: Levy Economics Institute of Bard College. July 2013 at

2. Hanna Behrend, “Inglorious Unification.” In Hanna Behrend, ed., German Unification: The Destruction of an Economy. London: Pluto Press, 1995: 9-15.

3. «Tsipras: TAIPED Violates Constitutional Laws” (in Greek), Kathimerini (April 2, 2013).

4. For a concise summary of the myths surrounding privatization, see In the Public Interest, “Privatization Myths Debunked” at; fora thorough study that shows that only profitability is improved by privatization, without necessarily positive effects for society, see Sunita Kikeri and John Nellis, “Privatization in competitive sectors: the record so far.” The World Bank Research Observer Vol. 19, No. 1 (Spring 2014): 87–118; for a highly thorough and balanced look on the experience of privatization in the United States, see Elliott D. Sclar, You Don’t Always Get What You Pay For: The Economics of Privatization. Ithaca, NY: Cornell University Press 2001; for a solid account of the pitfalls of the privatization program in UK, see Massimo Florio, The Great Divestiture: Evaluating the Welfare Impact of the British Privatisations 1979-97; for a penetrating analysis of the disaster of rail privatization, in particular, in UK, see Andrew Bowman, et, al., The Great Train Robbery: Rail Privatisation and After. Centre for Research on Socio-Cultural Change. The University of Manchester/Open University. June 2013. For a review of the experience of water privatization in developing countries, see Naren Prasad, “Privatization of Water; A Historical Perspective,” Law Environment and Development Journal, Vol. 3/2 (2007) at

5. According to Joseph Stiglitz, “Perhaps the most serious concern with privatization, as it has so often been practiced, is corruption.” Joseph Stiglitz, Globalization and Its Discontents. London: Allen Lane 2002: 58; cited in Kjetil Bjorvatn and Tina Søreide,”Corruption and Privatization.” European Journal of Political Economy Vol. 21 (2005): 903–914, a study which underscores the point that “privatization in a highly corrupt system is likely to lead to a less efficient resource allocation than privatization in a less corrupt system” (p. 913). For a highly corrupt political system like that of Greece, which also has a long history of elevating into high level government positions highly incompetent public officials, it is more than certain that the privatization scheme will feature “memorable” cases of corruption, involving both domestic and foreign actors.

6. At least one government minister admitted signing the first Memorandum of Agreement with the troika, back in 2010, without ever having read the document. For his good dog obedience display, the given official is still serving as cabinet minister today – three administrations later!