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Friday, January 27, 2012

EURECA - worth another look?

In October 2011, Roland Berger presented their EURECA-project. At first, I ruled it out as a solution for the following reasons:

(a) any Greek government which would recommend selling 125 BN EUR of state assets to foreigners might have to arrange foreign asylum before it does that. Particularly if that idea does not come from the Greek government but from - good grief! - a German firm!
(b) it is not clear to me who should receive the privatization gains in these assets (between 40-60 BN EUR according to Roland Berger). If they are for Greece, ok. If not, big problem.
(c) finally, are there really 125 BN EUR of state assets in Greece?

As regards the last point: if there are indeed 125 BN EUR of state assets in Greece, the Greek state - seemingly bankrupt - must be one of the wealthier states in the EU. But that's a moot point.

I have now looked at the Roland Berger paper again with one principal question in mind, namely: what - except the above - really speaks against pursuing this idea? I cannot come up with anything significant.

On the contrary, this sounds like a game where everyone could win. Overnight, Greece would increase direct foreign investment by 125 BN EUR and very quickly former state inefficiencies will be replaced by private sector efficiencies. This is not just about the mathematics of debt vs. equity Euros. It is about corporate and business culture and about the transfer to Greece of foreign know-how.

I have searched the internet for critiques of EURECA but have not found any. Has there been discussion about this in Greece? Is something being done about it?

This reminds my of another project where the Athens office of McKinsey proposed a "Greece 10 years ahead report" which would create 500.000 new jobs during the next 10 years and 50 BN EUR in new GDP. One competent observer of Greece commented to me that this report "got about 2 minutes worth of fame". Should one perhaps take another look at that report as well?

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