The discussion about the privatisation of Greek water hasn’t dried up

It has just kicked off.

By Elvira Krithari
Photos: A. Christofilopoulos / FOS PHOTOS


ATHENS, 2016 — On September 26th, the Greek Parliament is keeping up with its memorandum routine. It votes for the multi-bill that contains the “pre-requisite” measures in order to secure the next tranche of 2.8 billion euros. One of the measures is the transfer of public property (including the state’s shares in the public water companies) to the “Hellenic Company of Assets and Participations”, better known in Greece as the “Super Fund”.

Now imagine an almost Marvel-like anti-hero (or maybe a villain) with a white collar–like costume and very abstract intentions. If we’d wish to make some assumptions about the future of the privatisation of Greek water , we’d need to find out what exact superpowers this “Super-fund” holds; and most importantly against whom it is going to turn them.

Despite the Council of State’s verdict that called the attempted privatisation of the Athens Water Company (EYDAP) unconstitutional in 2014, activists, unions and organizations that deal with the matter think that the possibility of privatisation is back for good. Different approaches underline the complexity of the matter, but it seems it will be the “Super Fund” that will determine whether the era of an extreme selling off of Greek public property begins now. An era when neoliberalism is having super fun(d).

Legal and Ethical Obstacles on the Road to Privatising Water

“I am happy for you, that you write an article about the privatisation of water in Greece, but practically this will be the last thing to be privatised.”

The quote, uttered by Mr. Antonis Papayiannidis, a Greek lawyer, journalist and political analyst, summarizes unintentionally the sentiments of Greek public opinion about how Greeks want to access water: and that is through public, state-owned structures, apparently.

Exactly because of these views, people are highly concerned each time something changes in Greek water policy. Many would appear skeptical, if not completely in disagreement, with Papayiannidis’ saying. But what the analyst wanted to note, based on a review of recent moves against water’s privitisation, is that there would be no ethical legitimacy for anyone to privatise water. It would be considered politically suicidal for any party that attempted to implement it. And probably this is why the “Super Fund” is needed, as we will soon see.

In brief, the discussion on the privatisation of the Greek water supply officially began in mid-2012. Back then, leading water companies such as France’s Suez and Israel’s Mekorot applied to buy the second biggest Greek water company, the “Thessaloniki Water Supply and Sewerage S.A.” or EYATH.

In 2014, after loud campaigns by various organizations and individuals against the attempted privatisation, an unofficial referendum was organized by civil movements, that would let the citizens of Thessaloniki decide whether they were in favor of privatisation of the public EYATH.

Almost 218.000 people voted. The outcome was met with applause by the opponents of privatisation, since more than 98% of the participants voted against it. The sense of victory was multiplied when on the very same day, the Council of State, published its decision (1906/2014) on the matter, considering the attempted privatisation of the other public water company (ΕYDAP) unconstitutional.

“Water is a public good, absolutely needed for societal development and prosperity. Therefore water companies should be under state control, which is also in accordance with the Council of State’s decision”, says the Alternate Minister of Environment and Energy, Yiannis Tsironis.

So if everything has been settled in the most official way, then why were people on the streets again the day that public water companies were passed onto the “Super-Fund”? At the same time that the demonstration was taking place, the Minister of Finance Euclid Tsakalotos was explaining Super Fund’s role to the Parliament. Among other things he said: “It is not unlikely that the privatisation of water will take place in the future. We, as a government, will never sign such a decision. Now, if New Democracy comes to power and decides to privatise, they will (be the only one to) take the responsibility”.

Is, then, the “Super Fund” the Trojan horse of its time, hiding the possibility of privatization within, or maybe this is the EU’s Water Directive?

In the Bubble of the EU Water Directive

In the middle of August, the Ministry of Environment and Energy published the final draft of a Ministerial Decision that sets new rules on water pricing for citizen’s consultation on its website.

The action was met with indignation for two reasons. First, and less importantly, because the middle of August and the Ministry’s website is a time and a place unsuitable for any kind of deliberation between policy makers and civil society, given that most of Greece is on holiday, fleeing the unbearable heat of Athens in August. The citizens that consistently follow the news on water management think that it might even have been intentional. Later, the Ministry published, as it was required to, the draft on the website “opengov.gr” and the electronic deliberation closed on September 12.

The main reason why this Ministerial Decision provoked outrage, though, is because it leads to the commercialization of water, according to organizations that deal with the matter; and implicitly to a potential privatisation. The Decision titled: “Adoption of general pricing rules and pricing of water services. Method and procedures for the cost recovery of water services of all uses” is related to the EU’s Water Framework Directive and therefore its utilization is mandatory.

Mr Yorgos Amaxidis, the Alternate Minister’s consultant on water.

Mr Yorgos Amaxidis, the Alternate Minister’s consultant on water issues, told us: “We view this legislation as an environmental policy tool that will lead to a more proper management (of water). The Minister, who is a member of the ‘Ecologists-Greens’ Party, along with the government, do not aim at overpricing water, neither, of course, at privatizing the state water companies, an issue that the Council of State has already ruled on.” Why then are so many opposed to it? “It is due to insufficient information”, says Mr Amaxidis, adding that: “Under the current taxation system, we do not have a ‘user-waster pays’ situation, but instead everyone is paying for the one that wastes.”

However, scientists, officials of the Institute of Geology and Mineral Exploration (IGME), whose union organized a press conference on the matter, disagree both in principle and in practice. “The ‘user pays’ logic is unfair. It means that just because some have money, they are allowed to pollute. It is similar to the carbon market: not a principle that deals with the cause. It just legitimizes a bad situation in exchange for a fine,” says Mr Harris Smirniotis, a geologist of IGME.

All the representatives from the several organizations that took part in the press conference, agree that water should be regulated on an environmental basis, but they don’t see how this Ministerial Decision is environmentally effective. As Smirnios puts it: “All this money will not go to any “green” fund. It will end up being used to pay for the green or blue or pink debt”, with the colors indicating the Greek political parties.

And here lies the subject’s key point; since the “Super Fund” is now the only institution responsible for privatising and developing Greece’s public property, and the government doesn’t want to take any responsibility for privatizing the water companies, increasing water bills is the only possible way out. A compromise solution between the imposed need for extra profit and the avoidance of a straight-forward privatisation. The EU’s Water Directive has perfect timing.

By increasing the bills, two scenarios are possible. Either the water companies will make more profit, which due to memorandum agreements will go to the repayment of the debt, as the activists underline. Or, there will be no extra money because profit is determined not only by the price but also by the amount of the product that is consumed. If the water companies cease to be profitable as they are now, and start making a loss, privatisation will soon be considered a rational alternative. In both cases, water will have become a pricey product. Well played Super Fund.

The Era of Super Fund

The Super Fund was created as an obligation from the Third Memorandum that was signed in July 2015 and was meant to replace the “Hellenic Republic Asset Development Fund” (TAYPED), whose mission was “to maximize the proceeds of the Hellenic Republic from the development and/or sale of assets”.

The Government presented it as the lesser of two evils. 25% of its profits would go to investments in the Greek economy (50% would go to debt repayment and another 25% for the recapitalization of Greek banks), whereas, in the case of TAYPED the whole profit went to the repayment of the debt. Also, it had been said that the Super Fund’s supervisory council would be run solely by Greeks. However, whilst the first point remains unclear, regarding the supervisory council it has been decided that two out of the five members will be representatives of the lenders.

The fund’s validity period was set to 99 years. According to the Government, this is typical for big sovereign funds and gives time for the assets to gain more value. According to opponents, this just means a century under economic surveillance and a guarantee of the selling off of all public property.

A similar vagueness seems to follow every decision that concerns the Super Fund. It is known that the Fund is completely independent from the Greek State, yet all its property is listed in it. The Minister of Finance will have the power to confirm some of its decisions that refer to major privatisations but still the Fund is said to have the freedom not only to privatise but also to manage its property “in various ways”, according to the Minister of Finance, which until now remain uncertain.

Generally speaking, some could argue that privatisations are beneficial under certain circumstances, but it is another story if privatisation would be beneficial for Greece specifically. Mostly because, with a history of corruption and bad management, privatisation in Greece could create a greater mess than the one it tried to solve. Some members of TAYPED’s former administration for example, have been accused of damaging the Greek economy by up to 500 million euro.

Now Super Fund owns TAYPED as it does a plethora of other things. Privatisation seems to be the basic plan Greece’s lenders are implementing in order to get their money back. Greek society has been generally hostile towards the whole idea, especially when it feels that it is implemented by non-Greek others, who are serving their own interests.

Diving into Greek Perceptions of Privatisation

Being placed in the European southeast, Greece has formed a statist political attitude, yet in a very different way than its neighbouring former Communist countries. According to Antonis Papayiannidis, Greeks maintain a paternalistic relationship with their state. “It is not ideologically driven as in the countries with a socialist past” says the analyst. “This is because Greece’s modern history since 1821 until today, apart from short periods, has been characterized by not only free but also insanely intense electoral battles”, he adds.

Therefore, Greeks always had the feeling that they owned the State, since they were absolutely involved in its formation. At the same time, however, this sense of ownership came along with corruption. “Paternalism in terms of the state lies in the fact that public servants were appointed because they had personal relations with a politician or when farmers demanded completely free access to water, especially with farmers whose votes were always needed, providing water for free in some areas went without saying,” Papayiannidis adds.

Greece has never experienced groundbreaking reforms, let alone the privatisation processes embedded in these reforms, as happened with its neighbouring countries. On the contrary, privatisation has been considered by many as a cheap sale of public property. “We are afraid or embarrassed to even say the word “privatisation”; we call it denationalization instead. Greeks feel like they are selling the family silverware,” says Mr Andreas Andrianopoulos, former Minister of Industry, Energy, Technology and Trade, among others.

As both Andrianopoulos and Papayiannidis underline, this hostile attitude towards privatisation comes from a feeling that it is enforced by non-Greek others, combined with a lack of information about its necessity for sustainability. Indeed, these hostile sentiments have grown since the first austerity measures were imposed as a result of the memoranda with the lenders, increasing unemployment and cutting wages.

The former Minister recalls a time between 1991 and 1992, when American investors visited him in his office. They had previously met in Poland with its then president Lech Wałęsa. “The president (Walesa) told the investors “whatever you see is for sale.” He was not interested in how high the price would be, just to make sure that the new owners would keep 50% of the job positions (after the privatisation). When they told me about this I thought that we are running out of time. What would we have to sell in the future that foreign investors would be interested in buying at high prices?” says Mr Andrianopoulos and continues: “Nowadays, even the neo-liberals don’t talk about privatisation anymore, but about competitiveness and deregulation. Privatisation is not a cure for every disease. It has time limitations and a perfect timing. And I am afraid that now that we have started thinking about privatising it is already too late.”

A Dystopian yet Possible Future

In Greece, even for the supporters of privatisation, when it comes to water, inhibiting factors arise. For the former Minister Andrianopoulos this would be the conversion of a state monopoly to a private monopoly, which he thinks would be unprofitable, if not pointless. “And that’s why the privatisation of water in Greece is the only one I don’t agree with,” he concludes. For analyst Papayiannidis, the privatisation of water should come only with clear and specific conditions: a regulatory context is needed. “This means water shouldn’t be cut off to poor households, by any means. But it should be in the hotels, most certainly, that refuse to pay their bills while over consuming.”

On a very warm day of July, Maria Kanellopoulou is sitting in her yard with a glass of water in her hand, saying “is iyian” (cheers) and describing how this basic human good has been turned into an inaccessible commodity in places where the privatisation of the water supply went wrong. She is a journalist and spokesperson for the initiative “Save Greek Water”, which undoubtedly has acted as a catalyst against privatisation plans. “Privatisation is imposed in cases where supranational organisations, such as the IMF, have an interest in seizing public property,” she highlights.

Ms Kanellopoulou also notes the unsatisfactory way that EYDAP and EYATH, the public water companies, function; not only in favor of the public. The companies have been listed in the stock market, which in a symbolic but also a practical way, turns a basic human good into a commodity. Even if privatisation plans had never been in place, this is a serious concern to deal with.

On the other hand, “the agreement between the government and the international institutions is clear and doesn’t contain any obligation to privatise the two water companies. Different opinions that probably some members of the institutions have individually, will not have any impact. The privatisation was given a try by former governments but due to civil movements was avoided. Furthermore, we don’t agree that the selling of minority shares has anything to do with privatisation, since the companies are already listed in the market, meaning they are already raising funds from the private sector,” says the Alternate Minister Yiannis Tsironis.

With the government insisting that there will be no water privatisation any time soon and the activists underlining that sooner or later makes no difference, if we go back to the initial Marvel comic where the Super Fund is about to show its powers, we won’t find many civilians to shout: “Phew, that was close.” On the contrary.

In a dystopian future, a crowd of people that seem literally thirsty demonstrates in the streets. They gather in the Greek capital to protest against the extreme costs, the regular interruption of flow and/or the poor quality of the water supply that is now regulated by a private company. (These are the first consequences that water privatisation has had in several cases). Police forces interfere and dissolve the crowds by blowing water under pressure. The police water cannons, known as “Auras” (which used to be common in demonstrations in Greece some decades ago) return to regular use again, after the Greek State signs a mutually beneficial agreement with company “X” for buying water at a discount if it is to be used for “social interest”. Oh the irony.

For some, that would be a dystopian but yet a possible future; it remains to be seen. Activists across the world stress the social implications that water privatisation can have, and recall the disastrous outcomes that have occurred in several places around the globe, such as in Bolivia.

For Maria Kanellopoulou of the initiative “Save Greek Water” ethical and legal aspects emerge. “In the countries of the European North, where privatisation occurred in the past, there is now an intention to nationalize the water services, as is, for example, the situation in Paris or Berlin. But once it‘s privatised, it’s hard to take it back.”

The initiative, as well as others, declare their intention to fight any effort to privatise water in Greece, by any means possible.

By hell or high water, to be accurate.


Read the article in Dutch here: https://goo.gl/xy0h0r

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