Can a game of craps save a nation swamped by debt? Not entirely. But selling the gaming tables of Greece's state-owned casinos, along with ports, trains, airports and other assets, is the latest bet the country has thrown down as it tries to climb out of a hole that also threatens to engulf the rest of Europe.
The Greek government is privatising many of the country's public assets in an attempt to generate income for its beleaguered economy. George Papaconstantinou, the minister of finance, has said the sale would restructure and develop sectors of the national economy by raising more than ?3 billion (Dh13.19bn) by 2013, a criterion set by the IMF and EU as a condition of the country's ?110bn bailout. The announcement comes as little surprise to those who have been following the country's downward trajectory. "Greece is in immediate need of cash mobilisation," says Nicolas Veron, a senior fellow specialising in financial regulation at Bruegel, an economic think tank in Brussels. "It needs to get rid of government enterprises that no longer make sense."
Indeed, entities such as TrainOSE, the country's rail system, have leeched off the nation's coffers, with ?1bn lost each year and ?10bn of accumulated debt. Athens hopes to sell 49 per cent of this albatross and partially privatise other companies such as the post office and water utilities. So what does this mean for the rest of Europe and the euro? Certainly, rising to answer the critics' call for accountability is a positive step, as privatisation demonstrates Athens's effort to implement long-promised reforms. It also suggests that the current administration is attempting to stay true to the IMF and EU's guidelines by meeting its ?1bn a year revenue requirement. Selling shares from its vast array of holdings is certainly one way to meet this obligation.
But Greece is also late. While other European economies undertook successful privatisation programmes in the 1980s and 1990s, Greece's assets have always been problematic, and the latest push to privatise comes after years of failed policy in that arena. Such delays in reforms have led to an entrenched bureaucracy that has supported a bloated public sector, discouraged a robust marketplace and ossified entrepreneurship.
The country's entrenched and serpentine red tape was never clearer than in a stunning case last year when it emerged that the Costa Navarino project in the southern Peloponnese needed 3,000 signatures to move forward. Each signature pertained to a different law hatched in a different government department. With this latest development, though, it is hoped Athens can begin to rid itself of such inefficiencies and the large overheads found in its socialist-style economy. Yannis Papantoniou, a former Greek finance minister, said of his country in April: "The Greek economy is the last Soviet economy in Europe. There is too much state intervention, too much state ownership. We should liberate the economy from all these obstacles, remove barriers to competition, remove barriers to entrepreneurship."
Such measures would be aimed at boosting growth - a critical effort not just for Greece, but all of ailing Europe. According to the IMF, the EU's GDP will creep along at between 1 and 2 per cent for the next five years. Meanwhile, the European Commission estimates Germany will grow at 1.2 per cent this year, while Greece will continue to contract next year. But some think Greece's privatisation programme is too little, too late. The government's desire to retain stakes in all these enterprises could create further corruption in an already broken system. "The programme is too modest and not aggressive enough," says Steven Hanke, a professor of applied economics at Johns Hopkins University who has worked extensively on privatisation in countries such as the US, Argentina and Bulgaria. "We are talking about a Balkan country with a tremendous amount of corruption. If they don't privatise 100 per cent of their holdings, you will end up with mixed enterprises that are even more corrupt and more inefficient, because private investors will seek protection and subsidies from the government."
Such entanglement could prove deadly for a country whose growth prospects seem dim, says Mr Hanke. "The fatal mistake that the IMF and the EU are making is to not realistically look at the situation and say that Greece cannot grow fast enough to finance its debt." The economist Nouriel Roubini, who is credited with predicting the last global financial crisis, also issued a dire prognosis this week, saying he doubted countries such as Greece, Spain and Portugal possessed the political will to adjust quickly enough to boost market confidence.
Greece has had more luck economically beyond the confines of the EU of late. Last month, Turkey and Greece signed a slew of bilateral agreements to boost investment and strategic co-operation; Qatar signed an LNG gas deal with Greece last month; and the UAE has also been vocal in its support of its long-time ally, pledging investment projects in energy, tourism and culture. But it remains to be seen how a string of fairly minor foreign investments can prop up sluggish growth and burdensome debt. For many, the question is not whether the Greek bailout will succeed, but whether it allows the country to stave of default and limp towards a viable restructuring.
The odds on whether Greece has the political will to take on this mammoth task with the expediency required are still far too long to determine. mmetallidis@thenational.ae