Bloomberg News

Greece May Sell Islands as Juncker Urges Asset Sales Drive

August 23, 2012

Greece May Sell Islands as Juncker Urges Asset Sales Drive

“The state asset sales process must be re-launched,” Luxembourg Prime Minister Jean-Claude Juncker told reporters. “I do not ignore that this privatization process is swimming in difficult waters given the fact that the rumors of the exit of Greece from the euro area are spread around day after day.” Photographer: Sean Gallup/Getty Images

Prime Minister Antonis Samaras, who will take his plea for more time for the Greek economy to Paris and Berlin this week, suggested his government could sell or lease some of the country’s islands to help revive a state-asset sales plan central to receiving international funds.

He told Le Monde newspaper in an interview published today that uninhabited Greek islands could be used to generate revenue, responding to a question on whether Greece would sell some of its islands.

“On condition that it doesn’t pose a national security problem, some of the isles could be used commercially,” Samaras said as quoted by the newspaper. “It would not be a case of getting rid of the isles, but of transforming unused terrain into capital that can generate revenue, for a fair price.”

Samaras vowed to speed up asset sales and structural revamping such as changes to labor markets after meeting yesterday with Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro-area finance ministers. Greece is behind on money-raising targets tied to 240 billion euros ($301 billion) of rescue packages in the past two years. Samaras will meet with German Chancellor Angela Merkel tomorrow in Berlin and French President Francois Hollande a day later in Paris.

Samaras yesterday told Germany’s Bild newspaper that his nation needs more time -- “a little more air to breathe” -- to carry out policy changes to address its debt woes.

Asset Sales

“The state asset sales process must be re-launched,” Juncker told reporters. “I do not ignore that this privatization process is swimming in difficult waters given the fact that the rumors of the exit of Greece from the euro area are spread around day after day.”

Selling public land is a politically sensitive issue in Greece. A proposal by members of the troika, who represent the European Commission, the European Central Bank and the International Monetary Fund, to increase revenue from asset sales including property drew opposition from then-premier George Papandreou, who said in 2011 he’d legislate to prohibit such sales. In 1996, Greece and Turkey almost went to war over who owned the uninhabited islet of Imia in the Aegean.

The Greek state is seeking 50 billion euros from state- asset sales by 2020 to meet the conditions of its bailout, half from company-stakes sales and half from real estate. So far it has only brought in about 1.8 billion euros.

To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net

To contact the editor responsible for this story: Stephen Foxwell at sfoxwell@bloomberg.net.


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