What About the “Sovereign Wealth Fund”? Some Lessons From Greece
During my studies in Berlin between 2001 and 2006, a nurse told me that Germany’s reunification in 1989 brought the aggressive “take over” of a great public hospital in East Berlin, chasing away many magnificent doctors. Last year, in May 2022, I attended an exhibition within a Goethe Institut Athens symposium on property, which, 20 years later, added structural profanity to the nurse’s “takeover” claim. The exhibition, Pawns, Trustees and the Invisible Hand illustrated how public property in post-reunification East Germany was taken over only to be handed over to private profiteering.
The exhibition is made up of images in red depicting people, buildings, resources, and economic processes, all lined up on a Fordist-style factory line. The takeover is narrated as an automated, quasi unstoppable, sequence of events. East German public property and public wealth was transferred to oligarchs, corporations, and global funds through a policy instrument euphemistically called “trust fund” (Treuhandanstalt).
Housed in the building of the former Nazi Ministry of Aviation, now the Ministry of Finance, the trust fund privatized within four and a half years (March 1990 to December 1994) a total of 13,800 East German companies and assets. That is a staggering rate of 15 companies a day. All the workers would lose their employment contracts and only few were reemployed into their former jobs.
Thirty years later, East Germany is still traumatized by the trust fund’s treatment. Unemployment and poverty are sky-high, the hemorrhage of its youth to the West continues and many of those who remain gravitate towards neo-Nazis groups and violent gangs of immigrant-haters. These alignments must be understood against the background of aggressive impoverishment of which the trust fund was a major part.
During my time in Berlin, I could observe traces of the takeover almost everywhere — gentrification, inequality, growing poverty, skyrocketing rents and social services, shrinking universities, and the rise of the far-right alongside hopelessness.
A few years later, my own country of birth, Greece, was served a similar treatment. Under the dictates of the International Monetary Fund (IMF), the European Commission and the European Union (EU), Taiped – the Greek version of the trust fund – took possession and then sold off valuable public infrastructures.
Through the Greek “trust fund” called Taiped, the trains now belong to the Italian state corporation, central and regional airports to a German transport company, a strategic part of the national defense industry to Israeli weapons manufacturers, and Athens’ port to China’s COSCO.
Many of these, especially some of the most important infrastructures, like energy, were handed over to largely invisible and unaccountable private firms, some located as far as Australia.
Airports, railways, energy infrastructures, common-owned lands, islands and beaches, even mountains and natural parks were sold at humiliating prices to private foreign funds and powerful state companies. The trains now belong to the Italian state corporation, central and regional airports to a German transport company, a strategic part of the national defense industry to Israeli weapons manufacturers, and Athens’ port to China’s COSCO.
While a majority of the globally dominant merchant fleet is still controlled by Greeks, much of it is registered in neo-colonies and sails under such flags of convenience as Liberia, the Marshall Islands, and Panama where tax evasion goes hand-in-hand with lax labor laws, and threadbare health and safety regulations.
In mainland Greece, homes are now being sold off to rich foreigners (and as of late desperate Lebanese) in exchange for golden visas, and with that the right of residency. As a result, many neighborhoods on the mainland and islands have become Airbnb deserts, while rents for the locals are through the roof. Many professionals, such as teachers and doctors, can no longer afford houses to rent while serving the population. Energy has now become a plaything of the stock market, with no state protection and little oversight. As a result, electricity bills are eating up whatever income is left after the rent has been paid.
The police and the army are the only state institutions that continue to receive ample government funding, while the coast guard has been ramped up to push back refugees, with deadly force, from entering the European Union.
The police and the army are the only state institutions that continue to receive ample government funding, while the coast guard has been ramped up to push back refugees, with deadly force, from entering the European Union. Youth unemployment is the highest in the European Union, decimals short of 30 percent. Meanwhile, the press is heavily suppressed and the allocation process for Covid 19-related support by the government “has lacked transparency and seemingly favored pro-government outlets,” as Reporters Without Borders note. The result is that Greece has dropped to 108th in the World Press Freedom Index, ranking last among EU member states.
Some twelve years after the Taiped fund was established, Greece has become an excellent platform of opportunity for those with the means to invest in luxurious properties for a visa, and a dystopian nightmare for the rest, both citizens and refugees alike. Adding insult to this injury, the sky-high public debt has not fallen; in fact, it rose further. Eventually, the trust fund’s main achievement was further depriving the state of any real means to enhance its control and temper the effects of the crisis on the population, enabling instead an oligarchic system to expand and engorge itself.
Now it seems that the trust fund is about to make an appearance in Lebanon, under the Orwellian label of the “Sovereign Wealth Fund.” These sovereign funds, irrespective of what name they go under, wreak havoc on society and nature as they travel from one crisis ridden country to another. It is crucial to understand the history of these funds as an instrument for the privatization of public property and the deterioration of a country’s ability to decide about its monetary policy independently.
With imperialism, the growing power of European capital used credit as a means of enslaving its newfound global subjects into a system of debt bondage. Every loan created more debt, and new loans were issued to cover the old loans in a giant Ponzi scheme that saw western powers grow ever wealthier as the rest of the world sunk into poverty.
The privatization of common land has a long colonial European genealogy. The first enclosures go back to England in the mid 1600s, when the English aristocracy, alongside rich farmers, seized vast swathes of common lands (lands that were held in common by those who worked on them). It repeated the process in its first imperial conquests with the “clearances” of Scotland and Ireland in the mid-eighteenth century. Tens of thousands of people perished in these seizures, either from famine or at the hands of the hangman. This became a model for European, and subsequently colonial, power conquests, in India, Egypt, China, and elsewhere.
The seizure of land, and subsequent driving of peasants into city slums, had a twofold effect: bringing food production under the control of a growing class of mega-merchants and turning former peasants into city dwellers, factory workers, and ultimately consumers. The enclosures were quickly followed by the destruction of cottage and craft industries, as well as the abolition of guilds with their small specialized workshops.
This model followed on the heels of colonial expeditions that opened the globe to European elites. As colonialism gave way to imperialism, the growing power of European capital used credit as a means of enslaving its newfound global subjects into a system of debt bondage. Along the way, it seized common land, forests, and vast natural resources. Every loan created more debt, and new loans were issued to cover the old loans in a giant Ponzi scheme that saw western powers grow ever wealthier as the rest of the world sunk into poverty.
Others hid their face behind more civilized idioms, such as “developmentalism” and IMF “structural adjustment programs.” The results were always the same, a mass transfer of wealth, land and resources from the peripheries to the imperial core.
This “predatory lending,” writes Caribbean historian Kris Manjapra, “developed first in the American colonies, and was tied up with a radicalizing colonial project that subjected Native people to forced removal and dispossession so that settlers could secure their ‘life, liberty, and estates.’”
Colonial expansionism, alongside the racialized violence that enabled it, made available a repertoire of antisocial and dehumanizing instruments. Some of them were visible to the naked eye, such as genocides, enslavement and population transfers. Others hid their face behind more civilized idioms, such as “developmentalism” and IMF “structural adjustment programs.” The results were always the same, a mass transfer of wealth, land and resources from the peripheries to the imperial core.
The neoliberal storm that laid waste to the non-capitalist societies and a host of countries across the global south, that tore the economic heart out of the old “communist” East Europe in the 1990s, and practiced its brutal “disaster capitalism” on countries such as Greece, is now swirling around the shores of Lebanon. History teaches us to be wary of such arrivals and the “gifts” they bear.