Greece's Hellinikon faces big problems from small groups

Hellinikon Athens, problems

After having its mandate extended by the Greek government for another three years earlier this week, the country's privatisation agency, HDRAF, is facing its toughest challenge in its six year history: pushing through the Hellinikon project.

The agency, tasked with selling state assets in accordance with demands from Greece's international creditors, is overseeing the transformation of Athens' old international airport in the area of Hellinikon into a major urban development, covering twice the size of New York's Central Park.

Lamda Development has taken on this eight billion euro project, along with China's Fosun group and Eagle Hills from United Arabic Emirates, but has run into a series of new obstacles after signing the deal in 2014.

Greece's forestry services threw a spanner in the works last week deciding that a significant chunk of land on the site cannot be built on. This comes despite the fact that the Greek government's legal counsel has a different opinion, effectively ruling that there is no problem with forest land on the site.

The contradictory nature of Greece's public services is a concern for any investor and an embarrassment for Prime Minister Alexis Tsipras, who has publicly backed the deal.

What is also a worry is that small pockets of opposition – mainly from left wing groups and a minor factions of the ruling Syriza party – to the deal could be having a far reaching impact in Greek government services, pulling the brakes on the project.

When Tsipras called and won snap elections in September 2015, he managed to largely do away with his party's Left Platform – a hardline Leftist faction within the party – but 18 months later and they appear to be still calling the shots in the left wing government.

This has prompted some parts of the Greek press to describe the government clashes over Hellenikon as a “civil war”.

The majority of Greeks want the project to go ahead.

Tired of the seven year economic crisis that has sent jobless rates soaring and bankruptcies to record highs, nearly two thirds of Greeks want the project, according to polls. The site will contribute some 2.5% to the country's gross domestic product and bring in an additional one million tourists per year, Lamda says.

Obstacles to the project are nothing new for Lamda and can be expected with any project of this magnitude. It will appeal the forestry service's decision in court as it also waits for a delayed decision from Greece's archaeological services on Hellenikon. Delays from both of these state services will probably throw out Lamda's construction schedule and are leading to a sense that the project is now in the air.

Talking to lawmakers last week, Finance Minister Euclid Tsakalotos said that progress has been made on Hellinikon but he stopped short on saying when construction could start.

"There cannot be a strict timeframe when some things are out of the government's hands", said the minister, referring to Greece's archaeological and forestry services.

" We are trying to find the best solution."