Employee of the Hellenic Postbank smokes a cigarette
Athens - AFP
It's an ambitious idea to say the least: Greece and its creditors want to raise 50 billion euros via privatisations, but previous attempts to sell off the country's assets have yielded meager results.
A key sticking point in the heated negotiations between Brussels and Athens, the assets deal proved one of the most controversial parts of the accord finally struck Monday with the country's European partners.
Athens commits to transferring "valuable assets" to an "independent fund" which will raise money either by selling them or squeezing fat profits out of them, raising 50 billion euros ($55 billion) over the length of Greece's eventual bailout deal.
Of that hypothetical 50 billion euros -- between a fifth and a quarter of the country's GDP -- 25 billion euros is intended to be used to recapitalise the banks, 12.5 billion euros to pay off debt and the remaining 12.5 billion euros is to be poured into investments.
Analysts were immediately sceptical that Greece could pull off such a feat.
"The privatisation target seems extremely ambitious for an economy that is still immersed in the worst depression of its modern history," said Diego Iscaro for analysis outfit IHS.
While Prime Minister Alexis Tsipras insisted the fund be based in Greece and not Luxembourg as originally planned, it will nonetheless be supervised by the European creditors.
And while several questions remain -- What will happen to Greece's existing privatisation agency? How soon must the country start handing over its treasures? -- what's clear is that the amount is ambitious and Greeks better brace for pain.
"We're going to have a fire sale of Greek assets," said Philippe Waechter, Natixis Asset Management head economist, "which is a way of telling Greeks 'sell your family heirlooms'."
Greece's creditors, who have been bailing the country out since 2010, had been calling for privatisations from the start, with the 50 billion euro figure first popping up in 2011.
The last bailout deal foresaw some 23 billion euros being raised between 2014 and 2022, or between two and three billion euros a year.
- 100 years to find 50 billion -
Privatisation agency Taiped has put out to tender assets with a nominal value of 7.7 billion euros since 2011, but has cashed in only just over 3.0 billion euros, according to 2014 figures.
On June 26 even the International Monetary Fund (IMF), one of Greece's creditors, raised eyebrows over the idea of raking in lots of money from privatisations.
It stressed that the sale of public banking assets was supposed to raise tens of billions of euros but it was "highly unlikely that these proceeds will materialise" considering the high levels of nonperforming loans in the banking system.
It said that realistically only 500 million euros of proceeds were likely to materialise each year -- at which rate it would take around 100 years to reach the 50 billion euro goal.
Charles Wyplosz, professor of international economics at the Graduate Institute of International and Development Studies in Geneva, told AFP that setting up the fund was an "extraordinarily intrusive" move.
"What are they going to do? Privatise the historic monuments?" he quipped.
While the country has already set off down the road to privatisations, so far it has taken the easy route by picking the least controversial targets, such as the national lottery or betting agencies.
Attempts to sell assets such as the country's ports and airports have seen tempers flare. The privatisation of the port of Piraeus was temporarily blocked by Tsipras's government when it came to power, and when the bidding reopened the stake had dropped to 51 percent.
Germany may be one of the driving forces behind the privatisation programme, but its own experiences of selling off state assets warn of the difficulties ahead.
The Treuhandanstalt agency, which oversaw the privatisation of thousands of state-owned enterprises in East Germany after the communist regime collapsed, left behind it mountains of debt and rivers of resentment.