Privatize the Benefits, Socialize the Risk

The transformation of Aristotle’s birthplace started in 1996, when, during an earlier round of privatizations, a Canadian company called TVX Gold bought the rights to the mines. By 2003, despite generous subsidies from the European Union, TVX closed down its Greek subsidiary, leaving behind unpaid salaries, a damaged ecosystem, and overdue tax and social security payments. The PASOK government responded to the crisis by effectively nationalizing the damages left behind by TVX Gold, purchasing the mines for € 11m and assuming responsibility for the company’s overdue obligations and debts to workers. The company’s debts to the taxman and social security were forgiven, and the Greek citizens picked up the bill.

PASOK tasked one of its high-ranking ministers, Christos Pahtas, with finding a new buyer for the mines. He chose a consortium organized by the powerful Greek tycoon Georgios Bobolas — a prominent member of the country’s business oligarchy — and Frank Timis, a controversial billionaire banned for fraud from stock markets in the UK and Australia. Bobolas and Timis named the consortium “Hellas Gold” and, to the tune of €11m, became the mines’ owners.

The Greek state made zero profit on this resale, once all the damages and debt left behind by TVX were accounted for. What’s more, it agreed to protect Hellas Gold from any responsibility for environmental damages or negative externalities whose original causes “lay in the past.” This strange provision exempted the new investors from any responsibilities for environmental damages they caused, as long as they could claim they were actually caused by the previous investors. They would not, for instance, have to answer for pollution first kicked off by TVX but significantly aggravated by Hellas Gold.

The Greek parliament approved the handoff to Hellas Gold on January 28, 2004. Mere weeks later, on February 9, 2004, Bobolas and his partner sold 51 percent of their shares to the Canadian mining company Eldorado Gold, making a tidy  $25 million in profit. Timis held out, waiting until November 2004 to sell to Eldorado for $100 million, after which Bobolas sold his few remaining shares for $178 million. That wasn’t the end of the road for Bobolas, though; he went on to obtain a share at Eldorado Gold.

To summarize, the Greek government sold the mines for exactly the same price it bought them, while their buyers made off with hundreds of millions of dollars in just a few short months. Christos Pahtas wrapped up the saga by announcing his surprise candidacy for the inconsequential position of the Aristotle Municipality mayor. This looked like a significant demotion for a powerful minister in one of Greece’s most influential parties, but was less surprising to those who tracked the numbers behind the Aristotle deals.

A Price to Be Paid

After 2009 and the European sovereign debt crisis, the mines attracted the interest of Greece’s creditors. They viewed it as a positive example that could encourage private companies to purchase other national assets, making Greece “business friendly.” Greece’s creditors have put significant pressure on the country to give a favorable treatment to the mining investment. If a controversial project such as this, with so many negative externalities for public health and the environment, would still yield healthy profits for Eldorado, then investors to whom Greece’s infrastructure is being offered under privatization schemes have nothing to fear when buying the rights to public water companies, train lines, energy stations, and ports.

Greece’s creditors see it as very important that the government in Athens shows decisiveness when staring down social protest; even if a left party is elected in government investors can be reassured that the state will use its resources to protect their investments and profits. The Eldorado case sends a message of deep deregulation; gone are the days of environmental, security, and public benefit standards. Greece has changed and is now open for business.

The tangible benefits of the investment, however, are questionable. The raw materials extracted cannot find much use in Greece’s industrial sector, buckling as it is under the strains of austerity. It is not even clear whether the owners will end up paying much tax on their profits or whether the revenues will end up in a tax haven. The gold extracted in Greece will be used for speculative investment in commodity markets in the North. Meanwhile, the country’s most important economic sectors, such as tourism, fishing, and agriculture, will suffer from the side effects of aggressive resource extraction.

An environmental-impact report put together by a group of scientists and Skouries locals alleges that drinking water, biodiversity, and neighboring beaches have been significantly polluted. Local food production and tourism have equally taken a blow. The report found that the mining activities produced a worrying 4.324 tons per hour of dust exhibiting high concentrations of sulfur compounds. These atmospheric pollutants will be transported over long distances across Northern Greece and the Aegean, including the densely populated Thessaloniki. The company responded to accusations that their mining project is ruining the ancient Skouries Forest by insisting that the forest is not actually “ancient.” Hardly a reassuring answer; ancient or not the company failed to clarify whether the forest is being destroyed.

There is a human cost to be paid too. Residents’ water has been found to contain dangerously high levels of arsenic, a phenomenon tightly connected with mining activities. The Social Clinic of Solidarity, a volunteer-based clinic for the poor that has been visited by more and more people as the crisis advances, has warned of an increase in the cancer cases as a result of the environmental destruction caused by the mines. The poisoning of the earth and water with heavy metals and other by-products will not be reversible.

As public health services in Greece collapse, many patients have to pay for their own medication and treatment and face long periods of being in the waiting list. Many cannot afford a treatment and others don’t even qualify for the modest public support for their expenses.

These indignities have inspired local resistance, on the one hand, and violent state and private repression, on the other. The Aristotle Municipality has the sad privilege of having one of the highest riot-police-per-inhabitant ratio in Greece. A sizeable force of riot policemen and special forces paramilitary police are stationed in the forest around the mine, deploying a permanent force and barbed wire fences to police a small population of local villagers (3,455 in total in 2011.)

In October 2012 the Association of Police Officers of Thessaloniki filed a report claiming that they had been given “extrajudicial assignments” in order to protect Eldorado Gold. Though they didn’t specify the content of these assignments, the report contributed to the impression that the Greek government is deploying police as the company’s private security force.

In the last local council elections in May of 2014, Christos Pahtas, despised for his role in the mining project, was set for a crushing defeat. Increasingly desperate about his political future, he threatened that if he was not elected and the mining project did not continue, “houses could be burnt” — presumably by mine workers pitted against the locals. Pahtas turned out to be something of a fortune teller; locals soon reported numerous cases of arson targeting the houses and shops of villagers known to oppose the mining activity. The brutal beating of seventy-seven-year-old handicapped “Uncle Theodoros” and his later conviction in court sent a clear message to locals resisting the mining project.

“Oxi” Forgotten

This toxic combination of environmental destruction and corporate thuggery has not inspired the level of opposition one would expect from Greece’s left-wing Syriza government or its prime minister Alexis Tsipras. Before his ascent to power, Tsipras often campaigned in the area, making appearances in anti-mining gatherings and promising to stop the investment. He even pledged that his cabinet would “put an end to the destruction” at an Aristotle county council meeting in 2014.

His overtures to Aristotle villagers fit into his larger campaign, in which he promised to confront the “troika” to secure an exit from the Greek debt crisis and end the austerity under which Greeks were suffering. Thus commenced five months of high-drama negotiations that culminated in a national referendum in which the Greek people said a resounding “no” — “Oxi” — to the deal offered by the troika.

Yet in the face of this historic response, Tsipras pivoted towards the creditors, signing a third memorandum resigning the country to ever deeper austerity and mounting privatizations.

Tsipras’s unprecedented capitulation was followed by another: his decision to stay in power to implement the terms of the memorandum. Skouries soon became another victim of his promise to faithfully administer austerity.

One of the first acts of Syriza’s minister of environment and energy, Giorgos Stathakis, was to approve the Eldorado mining project. Even the previous, conservative New Democracy government had hesitated to sign the project’s permits in the face of the destructive environmental impact that the project could have. But fast privatization of key infrastructure and natural resources is too central to international creditors’ vision of Greece’s economy to ignore.

Syriza’s reversal became permanent this fall. Eldorado had been seeking to expand its mining activities, but the government was slow in approving the required permits. In response, the company issued an ultimatum: approve the permits by September 21, or it would withdraw its investment. The ultimatum was later silently recalled; an agreement had been reached with the Syriza government in Athens. The content of the agreement has not been made public yet, but it’s likely favorable to Eldorado.

The timing couldn’t have been better as the Syriza government in Athens is hoping that Greece will be given access to ECB’s Quantitative Easing program or some form of debt restructuring — their last chance to re-election. Appearing “business friendly” might help in this endeavor.

What is happening in the Aristotle county is anything but unique; communities in the Global South have often been victims of the violence and greed of mining and resource-extraction companies. The assaults against local residents are eerily reminiscent of the case of Berta Caceres, the indigenous rights and feminist activist in Honduras, who was targeted and assassinated for her opposition to a hydroelectric dam project.

Berta Caceres’s case, like Aristotle county’s, shows the vulnerability of poor and marginalized communities when faced with powerful foreign nations and influential corporations, as well as the excesses of the mining sector.

As Uncle Theodoros stepped out of court, he addressed the small handful of journalists who decided to cover his harsh punishment. “The worse thing,” he said, “is that we got dispersed.” Greece’s biggest media outlets didn’t report on the story.

After years of fighting against the mines local citizens have been persecuted legally, threatened, and attacked at their homes. Syriza’s politicians-by-profession once were trying to gain the votes of the Aristotle county inhabitants. Now that they have changed sides, they’ve learned very “useful” lessons from the resistance against mining. As new grassroots movements are created to protect the houses of the poorest Greeks — currently repossessed en masse for any bank loan in arrears or delay in paying extortionate housing taxes — new draconian laws are being voted by Syriza. They will impose harsh punishments on anyone who obstructs such repossessions. But the vicious persecution of grassroots movements serves as a reminder that Greeks taking to the streets anew is a source of permanent anxiety for austerity politicians and creditors. This grassroots potential was only partially expressed in the Greek referendum of 2015 and the victory of Oxi, but it may yet be fulfilled.