Tuesday, July 16, 2013

EU Commission's role in Greek privatizations.

We read a lot about the need for reforms in Greece, to privatize and modernize its economy in order to reach the same levels of economic growth with its European partners.

The country has come under huge pressure from the EU and IMF to proceed with these reforms and they use the loans dispense, in order to force Greece to comply.

Indeed the country has gone through massive reforms in its infrastructure, that very few nations have achieved in such a short time. Lots more need to be done, but during the reformation period the EU and the Greek government, must also take into consideration the ability of the Greek people to cope.

Such drastic reforms have certainly taken a huge toll on the citizens' ability to adapt to the ever increasing demands of the EU Commission, that overseers the procedures.

Privatization of all Greek national assets and companies, was among the most popular reforms that the bail-out deal dictated, together with the reduction of the Greek public sector and its salaries.

Last month certain events have put the EU Commission's proposals or involvement in Greece, under an interesting perspective. The Greek state, after huge pressure by the EU Commission and its European counterparts to privatize its public companies, started negotiations with the Russian oil and gas giant, Gazprom. The plan was to sell DEPA, the state controlled natural gas provider, to the Russian multinational.

The deal failed the last minute. Greece's PM Mr. Samaras, announced the outcome of the negotiations in a live television broadcast, stating that the reasons of the collapse of the talks were "outside of the Greek government's responsibility or powers."

There was speculation that Moscow's decision to pull out had been dictated by geopolitical pressure. The United States and the EU have both made clear their distaste for Russia further increasing its influence over the European energy market. Brussels has openly grumbled about Moscow's business practices.

"I think the message the Russians got, especially from the European commission, was that the deal was not going to be approved," said Thanos Dokos who heads Greece's leading think-tank Eliamep. "In those circumstances they felt, 'why bother?'". (The Guardian).

The EU Commission's involvement in national affairs is unavoidable, since all EU states have agreed to give up some of their sovereignty in order to become EU members. It is in some cases favorable, as they can keep in check any national government's actions, law making and policy implementation procedures.

But in this case the EU Commission, which is well-known to be influenced by various lobbies located around its base in Brussels, intervened to promote these European and American companies' interests. It is clear now that they do not only demand privatizations, but they dictate Greece to whom to sell their national resources.


This bid by the Russians would instantly offer Greece a €900m deal, a much needed cash injection to the country that suffers the most during this crisis. The EU Commission seems to be delaying solutions, while it is positioning itself openly to a wider clash of interests. 

Is their involvement for the benefit of the Greek people or Greece itself? Their actions seem to be more as a part of the great geopolitical struggles in the region and beyond, that Europe and America in one side, are playing against the Russians.

Tension between the two sides has already been heightened by disagreements over Syria, with Moscow warning Britain and France against exporting arms to rebels fighting Bashar Assad and Russia reportedly providing the Syrian President with S-300 missiles. (New Europe).

The scandal of the bail-out agreement in Cyprus involving mainly Russian deposits in the Cypriot banking system, was also another fiasco that had consequences for the citizens of the island nation.They too paid the price for Europe's drastic crack down on the growing Russian influence in the region.

Throwing oil on fire, ahead of an EU-Russia summit that was scheduled for 3-4 June, Gazprom’s Deputy Chief Executive Alexander Medvedev on 30 May accused the European Commission of a politically-motivated attempt to bring down EU gas prices.

The Commission opened an investigation last September into Russian gas monopoly Gazprom, concerned Russia was abusing its position in central and eastern Europe and imposing unfair prices. EU member states such as Lithuania, which are almost totally dependent on Russian gas supplies, complain that they pay much higher prices for it than other EU countries.

The cost of energy is an issue for the EU as a whole. On 21 May, EU leaders meeting in Brussels vowed to bring down energy prices. The Commission has also questioned Gazprom’s business model and its preferred method of pricing gas - via expensive oil-pegged contracts.

“We have doubts about the motivation,” Medvedev told industry and EU officials, asked if the Commission's move was an attempt to “depress gas prices by artificial means” as opposed to through commercial negotiation. (New Europe).

So because Europe, Russia and America are caught in a trade and geopolitical war, the EU Commission decided that it was in the whole Europe's interests to kick the Russians out of Greece. For compensation they no doubt agreed to accept the Trans-Adriatic pipeline (TAP) crossing Greece, (also Albania and Italy) as the route to transport natural gas from Azerbaijan.

They are trying to solve the energy issue of Europe and that is a valid cause. But either we like it or not we are dependent to Russia for our gas. So unless we find alternatives to Russian gas, compromise with the Russians or try to find a carrot deal that will make them lower their prices, then we can't keep engaging in a diplomatic war for ever.


The deal itself may or may not have been the best for Europe or Greece, but the escalation of deterioration of our diplomatic relations is worrying. Especially when small and vulnerable states are caught up in the middle.

It is good that Europe is standing up, seemingly united against the Russian monopolies. But this solution can not be a permanent one. If we want cheaper energy, then perhaps it is time to invest in exploiting our own natural resources under a common European energy policy, rather rely on foreign multinationals or third party countries.

There are plenty of energy resources that we haven't exploited yet, both "green" and renewable or more conventional ones. If we show the Russians that we are not desperately relying on them for our gas, then they will be the ones who will offer us cheaper prices to keep us as their customers. As things stand, they do have a monopoly and they are doing nothing wrong in asking whatever price they want.

They simply are playing the rules of the open market. When you have a monopoly on something, you are exploiting it. That is how it works not just with Russia, but with all multinational companies. The ones who should be blamed is us, that we are too dependent on their gas exposing ourselves to their interests.

We will have to invest collectively in untangling the former USSR democracies like Lithuania, from their dependency in Russian energy. These countries, because they were a part of the Soviet block, are still relying on Soviet infrastructure to cover their energy needs. And that exposes them to Russian interests.

So instead of arguing with Russia trying to corner them in a compromise, we should diversify our energy needs and help those EU members that where formerly under Soviet rule. But does the EU Commission has such plan, or it is limited by either the national governments, or the lobbies that influence the policies it pursues?

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