Greece needs privatization body: Eurogroup's Juncker

Greece should set up a trustee institution to help privatize state assets, similar to the body that privatised East German companies after the fall of communism, Eurogroup's Jean-Claude Juncker said.

Juncker, who chairs meetings of euro zone finance ministers, suggested setting up a Greek version of Germany's so-called Treuhandanstalt agency in an interview with news weekly Der Spiegel, excerpts of which were released Saturday.

"I would welcome it very much if our Greek friends found a privatization agency independent of the government and modeled after Germany's Treuhandanstalt," Juncker said, adding that such a body should be staffed by international experts.

"Henceforth, the European Union will escort Greece's privatization program as if we were conducting it ourselves," he said. Proceeds from the program should be considerably higher than the 50 billion euros Athens has proposed, he added.

Greece is under pressure from its creditors to take more fiscal measures and speed up privatisations, after disappointing budget figures for January-April suggested it will miss the deficit targets set under its bailout program for a second consecutive year in 2011.

Last week, Athens appointed advisers for 15 privatization projects including the sale of its 34 percent stake in Europe's biggest betting company OPAP.

Because the highly indebted country is not expected to be able to return to capital markets next year, as foreseen under its 2010 aid package, it faces a 27 billion euro funding gap in 2012.

In his interview with Der Spiegel, Juncker said Greek politicians needed to make a non-partisan effort to publicly back structural adjustment agreements with the EU.

"The government and opposition should declare conjointly their commitment to reform agreements with the EU," he said.

Juncker, from Luxembourg, last week raised the prospect of a "soft restructuring" of Greek debt, but European governments do not appear to be united behind the idea.

He told Der Spiegel that such a move should only be considered once Greece has consolidated its state budget.

"Only then could we consider extending the terms of public and private loans and lowering interest," he said.

Turning to Europe's future bailout fund, the European Stability Mechanism, Juncker said he did not see a problem with Germany's parliament taking part in individual decisions to grant aid to troubled countries.

"I fully appreciate that where parliament's budgetary sovereignty is affected, elected representatives want to take part in the decision," he said.

[Source: Reuters, Berlin, 21May11]

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