Smelling a rat in the Greek Deal

One of the strings attached to the Greek Deal is the establishament of a fund or a trust based in Athens and managed by Greece which will consist of Greek public assets that are to be privatized through this fund (also called privatization fund). %50 of the proceeds of privatizations will be used for the repayment of the recapitalization of banks. For me, this seems to be an outright redistribution of wealth from the public to the shareholders and perhaps the creditors of Greek recapitalized banks.

Of course one might argue that the Greek government will be the owner or shareholder of those banks. In this case, again we will have at least two problems. First, it is self-defeating to have a “privatization fund” and again craft a mechanism that enables the Greek government to become a (perhaps majority) shareholder or owner of Greek banks, unless we believe that the public ownership of banks is different from public ownership of other industries!!! Second, even in the case that the Greek government would benefit from owning those banks or being their shareholder, at least in the short run, other existing shareholders and creditors of Greek banks will benefit disproportionately from this deal compared to the alleged benefits to the public. Let’s hope that in the process of sketching the nitty-gritties of the Deal, this redistributive aspect of the deal will be addressed.