‘Commission did not influence DEPA sale’

Competition chief Joaquin Almunia talks about state aid, privatizations, and the mistakes of the Costas Karamanlis administration

The European Commission had repeatedly warned the administration of Costas Karamanlis, including the prime minister himself, that Greece faced the risk of fiscal derailment, Commission Vice President Joaquin Almunia told Kathimerini, adding that the Eurogroup was also aware of the situation.

The Greek administration however remained “completely passive,” according to the Spanish politician.

Almunia, who is the EC’s competition commissioner, denies allegations that the Commission was in any way involved in Gazprom’s pullout from the sale of Greek state gas distributor DEPA. At the same time, he confirms that four state enterprises slated for privatization – OSE-TrainOSE, the Larco mining company, Hellenic Defense Systems (EAS) and DEPA-DESFA – are being scrutinized over possible violation of European Union rules on state aid. Europe to repair the banking system and to rescue or restructure banks since the beginning of the crisis. Why has this happened in the banking system and not in other sectors?

The only answer is because of financial stability concerns. Because if one industrial company disappears because of economic difficulties, they will certainly face serious employment problems, social problems and regional development problems, but their competitors will occupy this gap in the market.

Systemic risk factor

In the case of the financial system, however, there is the concept of systemic risk. If one bank fails, all the other banks suffer because of financial instability. As a result, everybody is interested in not creating additional problems on top of the problems created by the crisis itself. Hence, the use of money to support the restructuring of banks was necessary at that time.

Particularly from the Cyprus case onward – and although the discussion had started earlier with the Spanish memorandum – taxpayers have been forced to take too much of the burden. Let’s see how we can organize a different burden-sharing, how shareholders should contribute – as happened in Greece for example – how junior bondholders should contribute, how senior bondholders and even uncovered depositors should contribute. This is a discussion that has already started. Nobody wants a repeat of the Cyprus bail-in. This was not a benchmark. This was a way to avoid adopting decisions. Before the taxpayers’ money or risks come to the fore to rescue or restructure a bank, let’s ask how much the shareholders and bondholders should contribute and let’s distribute the risk. If we can restructure a bank without taxpayers’ money, that would be better. And of course we shall never cross the line of covered depositors. Guaranteed deposits are guaranteed. It is not possible to discuss whether guaranteed depositors should contribute.