By Seraphim Constantinidis
The price of oil is now approaching $80 a barrel but its repercussions on the economy have not been as serious as during the oil crisis of 1973, when it topped just $46 a barrel. The world has changed and so has the importance of oil in the economy.
This truth often escapes the media, which overblow the situation. Not everyone is affected to the same degree and, rather curiously, some of those least impacted (such as ferry operators who now price their services freely, or taxi drivers) are the loudest. But the real problem belongs to others. The state-run Hellenic Railways Organization (OSE), for instance, paid 26.9 million euros for fuel in 2003 and 41.5 million in 2004. Even though the price of oil has since risen 50 percent, OSE has kept its fares unchanged - at least for the same services.
Private sector firms whose prices are not fully liberalized always tend to push harder for the approval of hikes. In contrast, the public sector has a tendency of holding back rate increases in order to avoid fueling inflation. This, however, hampers the job of covering deficits and promoting the further growth of public enterprises.
OSE, for instance, is now putting emphasis on freight, which had been neglected. This is certain to boost revenue that has been flagging for a long time, resulting in even greater deficits.
Greece’s entire development effort has for decades been based on road haulage. For this reason, there are industrial areas for which no provision for railway access was made. And OSE has a lack of freight carriages. Road haulage, in contrast, enjoys many incentives for growth, whereas rail freight could cover the transport requirements of enterprises at a lower cost.
The neglect of the railway also has an impact on the country’s strategic position. The Egnatia Highway, which spans the length of northern Greece for 680 kilometers, could have been coupled with a railway line for the transportation of goods to and from the rest of Europe.
But this point conceals an even more substantial difference between the private and public sectors.
Even the self-evident options in the public sector require preparations and studies lasting many years, provided there are the right people who understand obvious things. Because this is not a given either.
(Kathimerini, 19/7/06)