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Greece Says It May Sell Islands

by Ulrika Lomas,, Brussels

29 August 2012

Amid meetings with French and German leaders, Greek Prime Minister Antonis Samaras has said that his government is ready to sell uninhabited islands if necessary to raise revenues.

France and Germany have reiterated their pressure for further structural reforms in Greece, and called on the Government to accelerate the privatization process. German leaders have especially said Greece should sell islands to raise cash if necessary.

Mr Samaras has warned this would by all means not be a fire sale “for cheap”, but that the government is rather considering to sell or lease parcels of land to encourage investors into projects involving “transforming unused land into capital that can generate revenue”.

“As long as this doesn't pose problems to national security, some of these isles could have a commercial use”, Mr Samaras said.

Although the details are still undefined, the new Conservative-led government of Mr Samaras has pledged this would be part of a wider state asset sales process, which the government would accelerate over the coming months.

This renewed push to privatize state assets has been fuelled by intense pressure from international creditors, who require substantial progress to be made with structural reforms and the privatization process before Greece can ask for any bailout terms extension.

“The state asset sales process must be relaunched. I do not ignore that this privatization process is experiencing difficult times given the fact that the rumours of the Greek exit from the eurozone are spread around day after day,” said leading Eurozone Finance Minister Jean-Claude Juncker, alluding to the very weak demand.

Mr Samaras faces pressure from two sides. On the one hand, Greek public opinion has traditionally been opposed to the sale of islands and state-owned land, due to public resentment against the idea of widespread foreign ownership. On the other hand, Mr Samaras has long promised his government would do all it could to successfully get an extension of the bailout terms from Greece's international creditors, which would enable Greece to ease the ongoing fiscal tightening.

EU officials this week have already reiterated that Greece must proceed to further reforms by the end of September to regain the credibility it needs to seek any bailout extension.

TAGS: Finance | tax | investment | France | Germany | Greece

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