Tourism-related investments hit trouble in Greece

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 state-sanctioned 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.

Jigsaw

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 technocrat-led 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.

Invest in Greece

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. “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.”

[Reuters]