Friday, September 5, 2014

Privatizing Greek Beaches

It's only a few years ago that I first got to know Paliouri Beach in Chalkidiki. Arguably the nicest beach I have gotton to know in Chalkidiki.

At first, this looked like a rather underdeveloped beach/bay. A touch of 'raw nature'. True to form, there was an abandoned hotel ('Xenia') covered by trees and bushes. Everything looked really down-trodden. Except for the beach, of course, because that was of the finest.

I remember telling my wife that this was just a phenomenal example of Greek waste of resources. What a beautiful touristic development one could build up in the bay if one only put money and know-how behind it.

We visited Paliouri Beach again last week. It seems that my dream has come true. The Hellenic Asset Development Fund had put Paliouri up for sale and the Russian investor Iwan Sassidis, of distant Greek origin, acquired the object for 14 MEUR. He got 320 acres of land for it which he is now going to develop. Presumably a kind of resort like Sani Beach on the other side of the Kassandra peninsula.

While I should have been happy that my dream had come true, I felt the opposite. I pictured a Sani-type of resort in the bay and that, of course, would be the end of a 'raw-nature'-type of a bay. Not to mention the fact that 14 MEUR strikes me like a very low price for that kind of prime real estate. Immediately, thoughts about back-room deals between power brokers came to mind.

It is always easier to criticize than to propose solutions. I criticized Paliouri as an abandoned area and now I feel critical about some Russian investor crowding the beautiful bay with a huge resort. Something tells me, though, that there have got to be solutions between abandonement and luxury resorts; something which is better suited for the Greek coastline than abandonement or luxury resorts.


  1. Of course there was a better solution. That solution was sitting there staring you in the face: the Xenia Hotel. The Xenia and Astir chains were created in 1951 by the greek government under development minister Karamanlis, in which creating an infrastructure for tourism was wisely piggybacked onto Truman Doctrine funds. Unlike Spain and its Paradors (medeival castles and great houses turned into high quality hotels to attract tourism) Greece had to create a hotel infrastructure with international standards from scratch. As required by their mandate, the Xenias (4 star) and Astirs (5 star) were located in important tourist destinations, and each site was selected to give the best views. The best modern greek architects were commissioned, and thus began the golden age of greek modern architecture.

    Thus, rehabilitation and modernisation of the existing Xenia would have struck the perfect balance, as was originally planned: a site of beautiful nature, complimented by top class facilities with a beautiful view. This was the magic of the greek coast. Now we will be 'blessed' with vulgar 'resorts' as found elsewhere in the Mediterranean.

    As for the low cost, why act surprised? The largest site in Europe - Hellinikon airport - went to a greek oligarch Latsis for a paltry 900,000 million payable over 10 years. Not a penny has been received yet. Work will not proceed until he gets the casino he demands, against greek law. Furthermore he plans to build a 45 story tower on the beach, breaking the laws: 1) that no building in Athens is higher than the Acropolis and 2) that no coastal structure is higher than 9m. As a final 'sweetener' for Latsis, he asked and was given, that all investment he makes in the site and all businesses he establishes there are tax-free in perpetuity.

    You have been criticising us for 5 years for our unwillingness to receive "investment". This is the reason why. We know that all 'investment" will only enrich the "investors" and the politicians & bureaucrats involved. It will also destroy what is left of our country.

    Anyway, be happy. This is what you wished for and prosed about.

    1. Thank you for this information which was new to me. Yes, I have been arguing forever in favor of foreign investment and I still am. But if you are only a bit fair to me, you will admit that from the start I have always argued that it is to be the 'right' kind of foreign investment, the 'right' kind of foreign investor and for the 'right purpose'. The way you describe how foreign investment in the tourism sector was approached in the 1950s strikes me like the way it should be approached today. The question to which I do not have an inswer is why does the Greek government not approach it that way today?

      You are right: if the right solution was staring in my face, I didn't see it. What I saw at Paliouri Beach were the abandoned left-overs of a time long gone by. My only caveat is that I didn't look at it closely; just passing by on the outside of it (not the side facing the sea). That seemed to me irreparable. But even if it was irreparable, no reason why one could not develop a new project along the philosophies you described.

      I share your views regarding Lamda/Latsis and Hellenikon. In fact, I have read what Wikipedai reports about Lamda/Latsis and the Athens Mall. I know the Cosmos Mediterranean (Thessalonoiki) of Lamda/Latsis very well. That is simply a superb mall. They seem to know what they are doing. Notwithstanding all of this, one also has to do it the right way. Any investor who acts like Lamda/Latsis apparently acted with the Athens Mall and possibly with Hellenikon should be elimininated from any future dealings. Period. Otherwise, the government makes itself the slave of shrewd investors. I repeat: the 'right' kind of investor for the 'right' kind of project in the 'right' kind of way.

      Incidentally, Cosco has always struck me as a foreign investor and foreign investment which meets the standards I outlined and so far no one has been able to convince me that I am wrong about that.

  2. What a coincidence that Latsis was one of the bidders, it's a small world. The advisors for TAIPED on the deal were Eurobank Equities Investment Firm and Eurobank Property Services. These two companies participated in writing the tender condition and evaluate the biddders

  3. Greece has not been lucky with private direct investments. Mind you, the investors have mainly been Greek, and I hold it that the public investments have not fared better. What happened with the megalo idea of Xenia and Astir hotels?
    Let's make an experiment with private foreign direct investment.
    BMW decide that they will build a 5000 man car assembly factory in Greece (that's import substitution for you, they even build Range Rovers). They hold the opinion that the business climate and work ethics have now improved so much that it is time. Who will welcome them?
    No government official or employee from central to local. No political party from KKE to Golden Dawn. They do not want private foreign direct investment, they loose power (and money) if hey are not distributing all wealth.
    No union or workers representative, they hold the opinion that business units (private or public) shoud be run by the employees, for the employees (there was an article in Kathimerini recently where an official from one of the pension funds stated that even if the pensions were reduced to zero (0) the fund would not be sustainable without more outside funding). They will defend it with the usual slogans about not working for Chinese sweat shops or German concentration camps.
    No academics, they don't see many jobs for the well educated innovative young Greeks in a production plant. They will most likely suggest that BMW move their research and developement facilities to Greece and keep their production plant.
    That leaves BMW with the foreign Albanian workers. In spite of the above BMW decide to build the plant, albeit, in order to improve odds it will be build in Albania.