State keeps sub­si­dized mori­bund cor­po­ra­tions for po­lit­i­cal rea­sons

Kathimerini English - - Focus - BY ANESTIS DOKAS

Com­pa­nies such as the Hel­lenic Sugar In­dus­try (EBZ) and the Larco Gen­eral Min­ing & Me­tal­lur­gi­cal Com­pany are on the verge of bank­ruptcy and clo­sure. Their com­mon de­nom­i­na­tor is that for years they were man­aged by the state and by po­lit­i­cal party ap­pointees, not be­ing op­er­ated as en­ter­prises but rather as in­stru­ments to serve po­lit­i­cal clien­tele.

For three years, the cur­rent gov­ern­ment has been seek­ing ways to ex­tend the lives of those com­pa­nies by re­tain­ing the same op­er­a­tion model that brought them to the cur­rent im­passe.

In any nor­mal coun­try, when the cost of a com­pany’s prod­uct is con­sis­tently higher than the sale price (as is the case with EBZ and Larco), the com­pany is ei­ther pro­foundly re­struc­tured or put into res­o­lu­tion. In Greece, a third way is sought, one where tax­pay­ers’ money is used to keep such overindebted and un­sus­tain­able en­ter­prises alive in the name of the so-called na­tional in­ter­est, i.e. for party po­lit­i­cal pur­poses. That would ac­tu­ally have gone on for even longer had the coun­try not been un­der strict sur­veil­lance by the Euro­pean Com­mis­sion and its cred­i­tors, which pre­vent state sub­si­dies go­ing to­ward cov­er­ing holes cre­ated by mis­man­age­ment and low com­pet­i­tive­ness.

Again, in any nor­mal coun­try, a ship­yard kept alive only through or­ders from the state – and in some cases not just ships but train car­riages for an­other overindebted state cor­po­ra­tion – would have been shut down. In Greece, it would have sur­vived for decades were it not for the Euro­pean Union’s Court of Jus­tice.

A nor­mal gov­ern­ment in a nor­mal coun­try would pres­sure a state com­pany to pay its bills to the Pub­lic Power Cor­po­ra­tion in­stead of run­ning up debts of some 5 mil­lion eu­ros per month, lead­ing to se­ri­ous prob­lems for the power util­ity. In Greece, gov­ern­ments in­stead pres­sure PPC to sup­ply Larco with elec­tric­ity, even though its un­paid power bills amount to 250 mil­lion eu­ros.

The para­dox is that Larco re­mains one of the global mar­ket’s main nickel sup­pli­ers, and EBZ has a strong brand name, with con­sumers dis­play­ing a pref­er­ence for its prod­ucts. How­ever, this does not suf­fice for th­ese com­pa­nies to cover their deep struc­tural prob­lems that have gone un­re­solved for decades.

The Hel­lenic Sugar In­dus­try (EBZ) has suf­fered from mis­man­age­ment for years but con­sumers still dis­play a pref­er­ence for its prod­ucts.

Newspapers in English

Newspapers from Greece

© PressReader. All rights reserved.