A 1950 law discourages investments in Greece

Sources from the Greek ministry of justice said that the discussion about the law is at the “final reform stage” without elaborating further on the next steps. [Shutterstock]

An old-fashioned law of the Greek penal code dated back to 1950 prevents private actors from investing in projects where the public sector also has a share, thus blocking a potential investment boom the country badly needs.

Following eight years of austerity-driven policies and economic stagnation, Greece exited the bailout in August. Based on the bailout terms, the leftist government vowed to improve the business environment to attract much-awaited investments and follow a pro-growth path.

However, investors are faced with the lack of a modernised investment framework. An example is a 1950 law whose provisions stipulate even life sentences on the ground of causing damage to public property.

Under the privatisation programme, a number of public assets are about to be sold. The problems arise when a private investor enters a company that is being privatised but the state also has a share.

The Greek state is often the majority owner or shareholder in all big projects in the country.

In case of a “wrong decision” on a management level, a simple complaint by competitors or anyone could trigger the 1608/1950 law on the ground of damage to public property and could even result in lifelong sentences for private investors.

Industry sources explained to EURACTIV that this obviously hinders investments in the country, considering that no private actor would risk investing in such a fragile regime.

Contacted by EURACTIV.com, a European Commission spokesperson said the executive wa closely monitoring developments related to the privatisation programme, which was an important element of the stability support programme.

But the EU official insisted that there was a general need for measures to improve the business environment in the country.

“More broadly, measures to improve the business and investment environment are critical to supporting a sustainable economic recovery in Greece and reducing unemployment. That is why the stability support programme for Greece included a wide variety of measures to this end,” the spokesperson emphasised.

Sources from the Greek ministry of justice said the discussion about the law is at the “final reform stage”, without elaborating further on the next steps.

Subscribe to our newsletters