Greek Union Opposes Premier Over Sale of Power Company

By RACHEL DONADIO Published: July 18, 2011

A banner in Athens opposing the sale of Greece's state-owned Public Power Corporation. Lefteris Pitarakis/Associated Press

ATHENS — Sitting in his office on a recent morning beneath photographs of Marx, Lenin and Che Guevara, Nikos Fotopoulos, the leader of Greece’s most powerful labor union, took a freshly printed flier from a stack. “We are ready for new battles,” it read.

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“And we are,” Mr. Fotopoulos said, sipping an energy drink and then chasing it with an espresso. “We will continue with street protests because we still have unfinished business with the government and the troika,” he said, referring to Greece’s three foreign lenders: the International Monetary Fund, the European Central Bank and the European Commission.

Last month, amid violent protests, Prime Minister George A. Papandreou narrowly managed to push a new package of austerity measures through Parliament, including plans for selling $71 billion in state assets, a step that economists and the troika say is crucial to overhauling Greece’s bloated public sector.

But whether Mr. Papandreou will be able to carry out the plan will depend to a large extent on people like Mr. Fotopoulos. His union, Genop, represents workers at the Public Power Corporation, which is owned jointly by the government and by private investors.

The union vehemently opposes privatizing public entities and is known for its aggressive protests, including walkouts at the Public Power Corporation that have caused rolling power failures, costing Greece $42 million to $57 million in recent weeks, the company estimates.

Genop represents a particularly thorny problem for Mr. Papandreou. It is a creation of the governing Socialist Party, which over the years helped build up the labor-centric jobs-for-votes system that the prime minister is now forced to dismantle. To carry out the reforms, Mr. Papandreou will have to strike at the heart of his own party — and it remains to be seen whether he has the muscle, let alone the stomach, to do so.

“That’s a real war, and a very uncertain war,” said Takis Pappas, a political science professor at the University of Macedonia. “Is Papandreou’s army strong enough to withstand this storm? Let’s wait and see.”

The battle with the power company’s workers and their union is even more personal for Mr. Papandreou. In 2007, Mr. Fotopoulos endorsed Mr. Papandreou as Socialist Party leader.

Sitting at his desk, Mr. Fotopoulos pointed to photos showing Mr. Papandreou visiting the power corporation’s office with union workers. Next to them is a photo of George Papaconstantinou, now Greece’s energy and environment minister — responsible, among other things, for selling off more of the government’s stake in the power company.

Above Mr. Papaconstantinou’s head, someone had written a cartoon bubble that read, “O.K., Mr. Fotopoulos, if you don’t agree, then I’d better leave.”

The government owns 51 percent of the power corporation and controls its board. The state sold the other 49 percent in a partial privatization in 2000.

Mr. Fotopoulos, 49, a compact, bearded man with an iron handshake, said the union endorsed Mr. Papandreou as Socialist Party leader in 2007 because he seemed “more approachable, warmer, closer and more concerned about our problems.”

“We still respect him as a politician and a person,” he said, “but we believe these are barbaric policies that go against the interests of the Greek people.”

To many analysts, the coziness between the Socialist Party and the union is a sign of the difficulties the government is likely to encounter in selling off more of the power corporation, as it is scheduled to do in 2012.

This month, Mr. Papaconstantinou said that rather than selling more of the Public Power Corporation at the current lower market rates, the government might explore alternatives, including selling off some of its hydroelectric or lignite-powered plants while looking for a strategic investor.

Arthouros Zervos, the power corporation’s chief executive, said in a telephone interview that there was some wiggle room in the agreement between Greece and its lenders that was approved by Parliament. Under the accord, the government has agreed to sell $71 billion in state assets by 2015.

“I think there is a possibility of a negotiation there,” Mr. Zervos said. “This commitment is mainly in terms of bringing a certain amount of money from the privatization to pay down the debt. So my reading is if you have some alternative ways of bringing that money, that could be discussed with the troika.”

Unlike other public sector companies in Greece, the power corporation is profitable, producing a return of $790 million in 2010 from $8.2 billion in sales. But analysts are worried that its future profit picture is clouded by regulatory uncertainties and, most crucially, the sway of its unions.

To many people, the issue is not simply about selling a stake in state-run companies, but about how to transform Greece’s public sector. “It’s not about making money; it’s about changing a culture,” said Panagis Vourloumis, who was chief executive of the Greek telecommunications monopoly OTE under the previous center-right government and oversaw the sale of a 30 percent stake in the company to Deutsche Telekom in 2008.

The culture of formerly public companies is proving resistant to change. “Irrespective of price, it is really about, ‘Do you have the leverage to run a company that has never been private before?’ ” said Jens Bastian, an economist at the Hellenic Foundation for European and Foreign Policy in Athens.

Analysts say the government has not convinced voters that privatization is a long-term remedy for the Greek economy. Selling off public corporations is deeply unpopular among Greeks, who fear a fire sale of state assets and applaud Genop and other unions for protesting.

But in the growing divide in Greece between public-sector and private-sector workers, an increasing number of Greeks regard the power company workers in particular as an overpaid, overprotected caste. According to Mr. Fotopoulos, Genop’s 21,000 members are paid an average net salary of $1,980 a month and its 35,000 retirees an average net pension of $2,122 a month — much higher than the Greek average.

“The unions are even worse than the politicians,” said Theodoros Yiannopoulos, as he sold bread rolls from a street cart in downtown Athens. “They were going to five-star hotels in Europe and sending the bill here.”

He was referring to a recent report by Greece’s public administration inspector, which found that since the 1980s, the power corporation had paid Genop more than $32 million, largely for “social tourism,” or vacation subsidies — but also to pay for protest demonstrations against the company itself, a surreal twist that captures the complex vested interests that are proving so hard for Mr. Papandreou to untangle.

Mr. Fotopoulos called the report “a smear campaign” and said the subsidies were part of the contract negotiated by the company and the union.

Others say the battle is as much political as economic. “The biggest challenge is for the politicians to believe that there’s still a future without unions,” said Takis Athanasopoulos, who clashed bitterly with Genop as chief executive officer of the Public Power Corporation under the previous government.

The telephone interview was interrupted at one point when his line went dead — from a power failure caused by a Genop protest.

Niki Kitsantonis contributed reporting from Athens, and Landon Thomas Jr. from London

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