Tourism-re­lated in­vest­ments hit trou­ble in Greece

Con­cerns for the en­vi­ron­ment and an­tiq­ui­ties, com­bined with labyrinthine laws and zeal­ous of­fi­cial­dom, cre­ate big hur­dles for in­vestors

Kathimerini English - - Focus - BY AN­GE­LIKI KOUTANTOU

New York prop­erty de­vel­oper Mike An­geli­ades has wanted to cre­ate a golf re­sort in his na­tive Greece for a quar­ter of a cen­tury. But just when the plan seemed within reach, the past caught up with him. Three years ago An­geli­ades won a state­sanc­tioned com­pe­ti­tion to de­velop a beach­front prop­erty on Rhodes, the Aegean is­land he left as a teenager. Then last year the au­thor­i­ties dropped a bomb­shell.

“The then cul­ture min­is­ter... de­clared the whole area an ar­chae­o­log­i­cal site,” he told Reuters. Now the project to in­vest up to 400 mil­lion eu­ros ($470 mil­lion) is stalled. “We are still wait­ing for an an­swer from the min­istry on what they plan to do.”

An­geli­ades, who em­i­grated to the United States in 1960, is among a number of for­eign in­vestors ready to plow large sums into a coun­try just emerg­ing from eco­nomic de­pres­sion, only to won­der if they’re re­ally wel­come.

Con­flicts be­tween de­vel­op­ment and con­ser­va­tion af­fect many coun­tries. But in Greece con­cerns for the en­vi­ron­ment and an­tiq­ui­ties are com­bin­ing with labyrinthine laws, zeal­ous of­fi­cial­dom and hos­tile po­lit­i­cal ide­ol­ogy to cre­ate hur­dles that even in­vestors fa­mil­iar with the coun­try can­not un­der­stand. Greece’s re­cov­ery de­pends largely on for­eign in­vest­ment. Seven years ago it em­barked on a pri­va­ti­za­tion pro­gram to raise 50 bil­lion eu­ros for the near-bank­rupt state. To date it has brought in just 4.4 bil­lion, and gov­ern­ment crit­ics say ex­ces­sive red-tape is a ma­jor rea­son for the dis­mal per­for­mance.

For frus­trated de­vel­op­ers, the sus­pi­cion is that Greece is bit­ing the hand that feeds it. But many Greeks feel bound to pro­tect their coun­try’s 3,500-year-old cul­tural her­itage and some of Europe’s most beau­ti­ful coast­line from ex­cess de­vel­op­ment, how­ever press­ing the need to raise cash. “There are some peo­ple who think that an­tiq­ui­ties are a pile of rocks and they say, ‘Oh well, we al­ready have enough of them,’” said Thodoris Drit­sas, an MP for the rul­ing left­ist SYRIZA party. “SYRIZA law­mak­ers don’t share that view,” he told Reuters.


Pub­licly, the Greek state says it is ac­tively pur­su­ing in­vest­ments. But the track record seems to tell a dif­fer­ent story some­times, es­pe­cially in the case of a wa­ter­front prop­erty that was once the site of Athens air­port. For the past 16 years the old Elliniko ter­mi­nals have stood aban­doned on a sprawl­ing waste­land three times the size of Monaco, along with derelict wa­ter­sport venues used for the Athens 2004 Olympics. Backed by Chinese and Gulf in­vestors, Greek de­vel­oper Lamda came up with an 8-bil­lion-euro plan to build one of Europe’s big­gest coastal resorts, cov­er­ing 620 hectares (1,532 acres).

The project was to be a game-changer for Greece, bring­ing in hun­dreds of thou­sands of tourists and cre­at­ing 75,000 jobs in a coun­try where un­em­ploy­ment is still over 20 per­cent.

SYRIZA strongly ob­jected to grant­ing a 99-year lease on the state-owned site while it was in op­po­si­tion, keen to turn the area into a public park. Then, af­ter win­ning power in 2015, it was forced to re­lent on its ide­o­log­i­cal re­jec­tion of pri­va­ti­za­tion and ac­cepted the de­vel­op­ment un­der a third in­ter­na­tional bailout deal for Greece.

But the prob­lems weren’t over. Greek au­thor­i­ties de­layed de­ci­sions on whether part of the old air­port build­ings should be clas­si­fied as his­toric, and on the course of ac­tion should an­tiq­ui­ties be found. Then the forestry depart­ment de­clared 3.7 hectares of eu­ca­lyp­tus, cy­press and olive trees on the es­tate as pro­tected wood­land.

The Lamda con­sor­tium, which in­cludes Chinese con­glom­er­ate Fo­sun and Abu Dhabi-based de­vel­oper Ea­gle Hills, had hoped to start work by June. How­ever, the ar­chae­o­log­i­cal and forestry is­sues have de­layed the sub­mis­sion of the plan and the start of a li­cens­ing process, a spokesman for Lamda told Reuters. The process is es­ti­mated to take about nine months, Lamda CEO Odis­seas Athanas­siou said, so now the firm can­not set foot on the plot be­fore April next year.

The trees stand in an awk­ward spot. “It’s the tourist and en­ter­tain­ment heart of Elliniko,” Athanas­siou told share­hold­ers in June. “Mil­lions of eu­ros have been spent to de­ter­mine where to put what and it’s like a puz­zle. You can’t take one piece of the puz­zle from one place and place it else­where.” The con­sor­tium spent three months last year try­ing to per­suade au­thor­i­ties the air­port run­way used for 60 years was not a listed mon­u­ment. It also plans to plant a park cov­er­ing about a third of the site, but still the project is lan­guish­ing.

Mixed sig­nals

Since 2011, pri­va­ti­za­tion gen­er­ally has made slow progress un­der a va­ri­ety of cen­ter-left, cen­ter-right and tech­nocra­tled gov­ern­ments. But the SYRIZA-led ad­min­is­tra­tion, which was dragged kick­ing and scream­ing into the 2015 bailout, has sent par­tic­u­larly mixed sig­nals about Elliniko. “The gov­ern­ment con­sid­ers Elliniko its ut­most pri­or­ity,” Deputy Econ­omy Min­is­ter Ster­gios Pit­sior­las told Reuters. “There are a last few prob­lems,” he said, but a de­cree al­low­ing the project to go ahead would be is­sued by the end of this year, as stip­u­lated by the lat­est bailout deal.

In­fra­struc­ture Min­is­ter Chris­tos Spirtzis like­wise told lo­cal SYRIZA ac­tivists in April that the gov­ern­ment would not put any ob­sta­cle in the project’s path. How­ever, a video of the meet­ing posted on YouTube shows him ap­par­ently ques­tion­ing its fea­si­bil­ity. “If you see Elliniko com­pleted, give me a ring!” he tells the laugh­ing au­di­ence. “I am con­vinced... no pri­vate in­vestor can pay out 8, 9 or 10 bil­lion from his pocket.”

Op­po­si­tion to the project re­mains strong. “We think it hurts the econ­omy, so­ci­ety, ur­ban plan­ning and the en­vi­ron­ment,” said ac­tivist Panos Tot­sikas. “It is a mon­stros­ity.”

Lamda un­veiled a de­tailed plan for Elliniko last month, set­ting off the start of a public con­sul­ta­tion and other ac­tions which are sup­posed to wrap up with the de­cree. Athanas­siou says progress is vi­tal in en­cour­ag­ing more in­vestors to join his project and oth­ers. “Ev­ery day there is a de­lay, the coun­try misses an op­por­tu­nity to be­come not only a tourist at­trac­tion but also an in­vest­ment and cul­tural one,” he said.

Ar­chae­ol­o­gists warn that de­vel­op­ment must not threaten the very sites that vis­i­tors wish to see. “If we fail to pro­tect our cul­tural en­vi­ron­ment as a crown jewel, tourism prod­ucts that po­ten­tial in­vestors want to sell will lose their value,” said Stathis Got­sis of the Greek Ar­chae­ol­o­gists’ As­so­ci­a­tion.

“Declar­ing and de­mar­cat­ing an area as an ar­chae­o­log­i­cal site doesn’t mean that you can­not have an in­vest­ment there. It can go ahead and be well pro­tected and su­per­vised by the ar­chae­o­log­i­cal depart­ment,” he told Reuters. For in­stance, con­struc­tion of the Athens metro since the 1990s has un­earthed im­por­tant an­tiq­ui­ties which are now on dis­play for vis­i­tors and lo­cal peo­ple alike.

Pri­va­ti­za­tion is han­dled by a gov­ern­ment agency, the Hel­lenic Re­pub­lic As­set De­vel­op­ment Fund (TAIPED). This is re­spon­si­ble for sell-offs rang­ing from the rail­way net­work to sea­ports and air­ports. TAIPED and the state en­tity which owns Elliniko filed an ap­peal in May against the forestry author­ity’s de­ci­sion. A de­ci­sion is still pend­ing.

New TAIPED chief Lila Tsit­so­giannopoulou said her agency has tried to “clean up” state as­sets be­fore putting them up for sale but un­fore­see­able events ham­pered its ef­forts. “The agency’s duty is to bring the two worlds to the same ta­ble and re­solve the prob­lems,” she told Reuters.

For­eign di­rect in­vest­ment stood at 2.8 bil­lion eu­ros last year, an 11-fold rise since 2010 when Greece took its first bailout, with Ger­many the main con­trib­u­tor. But that re­mained 35 per­cent lower than be­fore the cri­sis in 2006. Do­ing busi­ness in Greece has not been easy. The coun­try ranked 61 out of 190 coun­tries, be­hind Mexico and Rwanda as well as most of its Euro­pean Union peers, in a World Bank re­port. In terms of en­forc­ing con­tracts, Greece ranked 133rd.

Costas Mitropou­los, a for­mer TAIPED chief, blamed con­flict­ing laws and in­con­sis­tent min­is­te­rial de­ci­sions for the gen­eral malaise.

Po­lit­i­cal in­ter­fer­ence

“That in­evitably leads to de­lays, com­pli­cates de­ci­sion-mak­ing and re­sults in po­lit­i­cal in­ter­fer­ence,” said Mitropou­los, who is now an ex­ec­u­tive di­rec­tor at PwC.

Tsit­so­giannopoulou in­sists the golf project on Rhodes will go ahead like Elliniko. TAIPED will fund ar­chae­ol­o­gists to de­fine which parts of the plot could re­veal an­tiq­ui­ties.

An­geli­ades said his fi­nal de­ci­sion whether to go ahead with the in­vest­ment de­pended on how sig­nif­i­cant the find­ings are. “It’s not easy, as you un­der­stand, to build the whole project with ar­chae­ol­o­gists over our heads. It’s a very big project and we can­not stop ev­ery time there is a find­ing.” Like many mem­bers of the Greek di­as­pora, he has strong ties with his home­land. But he said, “How can any in­vestor come and make an in­vest­ment with­out liv­ing in fear that with any given law he stands to lose money?” Now aged 76, An­geli­ades fears his am­bi­tions are slip­ping away. “This is a project from my soul... and I am not get­ting any younger.”

Scrapped air­craft are seen on the tar­mac of the for­mer in­ter­na­tional air­port at Elliniko in south­ern Athens last month.

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