Greece pushed to sell assets

GREECE could be forced to sell up to €50bn (£44bn) in state-owned assets by European officials, as the nation tries to mend its battered finances.

European leaders want to push for measures to ensure the Greek government completes its promised €50bn privatisation drive, but believe a state asset sale programme could ultimately net it between €250bn and €300bn – almost all of Greece’s outstanding debt.

But there are fears over Greece’s resolve to carry out the privatisation plan – which EU officials see as the only way for the beleaguered country to avoid insolvency.

Yesterday the biggest opposition party in the country rejected Prime Minister George Papandreou’s bid to build support for €78bn of budget measures and asset sales – a key condition for extra European Union financial assistance.

Underlining public hostility to further austerity, Greece’s public sector union called another 24-hour strike for June.

One solution for officials could be to place the Greek asset sale in the hands of a specially formed independent international body, possibly led by the International Monetary Fund (IMF). Dutch finance minister Jan Kees de Jager said that Greece should set up a privatisation authority along the lines of the “Treuhand” agency that sold off state companies in the former East Germany after unification in 1990. “We could package their state companies into a fund, with independent advisers or IMF oversight,” he said, adding that state assets could be used as collateral for loans.

Delays in the state asset sell-off will jeopardise both payment of the rescue package’s next instalment, of €12bn due in June, as well as ongoing talks over a second bailout, of as much as €60bn. The European Central Bank has already made it clear that it is against a fresh restructuring of greek debt.

Moody’s became the latest agency yesterday to warn of a chain reaction of severe consequences for the 17-nation euro area if Greece were allowed to default next month, when it faces a €13.4bn funding crunch.

The political wrangling came as Vince Cable, business secretary, became the first UK politician to admit openly that Greece has no option but to restructure its €330bn of public debt.

“What they are going to have to do is to have a rescheduling of their debt and it can be done in a soft way or a hard way, and that’s what the current debate is about,” he said.