EurActiv.com

EU news and policy debates across languages

31/08/2016

Eurozone crisis threatens Southern Europe’s public goods

Med & South

Eurozone crisis threatens Southern Europe’s public goods

mediterranean_sea_03.jpg

Crisis-hit southern countries are selling state-owned goods to reduce their budget deficits, with Spain mulling the privatisation of national heritage sites and Greece is under pressure to have historical buildings managed by a foreign holding company.

A unique natural reserve, buildings, fields, altogether about a quarter of Spain’s national heritage, will be sold in order to fill in the country's €70 billion public deficit gap for 2012, reports French newspaper Le Monde.  

One of the public goods on sale is a domain that belongs to a unique natural park, Los Alcornocales, a spectacular Mediterranean natural park home to the largest cork-oak formation in the Iberian Peninsula and an immense amount of animal and plant life. 

To speed up the sale of the site, whose market price is estimated at around €180 million, the government authorised the construction of a five-star hotel, a golf course and an aerodrome.

While Minister of Agriculture Miguel Arias Cañete assured that the authorities will be very careful as to the profile of the buyer to make sure the unique site will be preserved, Green and far-left parties as well as local authorities and trade unions raise serious concerns. They also called to launch a study that would look at alternatives.

They ask for a different economic model: developing the cork industry, promoting biological agriculture and rural tourism, they suggest installing a biomass power-plant that would create around 50 jobs.

Greek real estate to be managed by foreign holding

The daily Financial Times unveiled today (29 August) a plan contained in a report by the European Stability Mechanism (ESM) that would allow a foreign-based holding company to manage the country's real-estate portfolio, without interference from the Greek government, although the final decision on when to sell would still be up to the government.

The plan aims at cutting red tape and speeding up the privatisation process, which is well behind what the Troika officials had projected last year, after the second bailout.  

Currently, up to 80,000 state-owned buildings and facilities are covered by the real-estate sales program, with only a few deals completed due to administrative problems such as clearances and ownership issues.

“The main point of the report is to maximize the value of state-owned real estate assets in Greece by making them more attractive for investors”, an spokesperson for the ESM said in an email, adding however that “the report is an internal document and has not been endorsed by the governing bodies”. It will be used to “feed the discussion at the next Troika visit to Greece in September”.

Background

Budget cuts have been at the centre of the eurozone's strategy to overcome its three-year-long public debt crisis. But they are also blamed for a damaging cycle whereby governments cut back, companies lay off staff, Europeans buy less and young people have little or no hope of finding a job.

Greece's international lenders agreed in November on a package of measures to reduce Greek debt by €40 billion, cutting it to 124% of gross domestic product by 2020.

Greece will receive up to €43.7 billion in stages as it fulfills the conditions imposed by the troika of international creditors - the European Commission, the European Central Bank and the International Monetary Fund.

Spain's economy came close to stabilising in the second quarter 2013. Prime Minister Mariano Rajoy said in July that the economy should exit its two-year recession as soon as the current quarter, as figures showed that Spanish unemployment fell by 225,000 in the second quarter of the year, the largest drop since the crisis began five years ago.

Further Reading