Greek Assets

Fool’s Gold

Protesters against the Greek government. Source: Reuters
Protesters against the Greek government.
  • Why it matters

    Why it matters

    Greece’s assets are

  • Facts


    • If the new left-wing government sides with the environmentalists, it risks damaging Greece’s efforts to lure more outside investment, but allowing the mining to proceed carries other risks.
    • Controversy has surrounded the mining project almost from the beginning with the E.U. Commission ordering the company to reimburse the Greek government for engaging in non-competitive  behavior.
    • Violence has broken out between those who favor the mine and the jobs it will create and those who fear the rubble produced by the  digging will poison the local environment.
  • Audio


  • Pdf

David Hume stands on a mountain near a 240-meter (787-foot) deep hole that is Greece’s largest goldmine. His company, Hellas Gold, is there to extract the precious metal after signing an agreement with the Greek government.

Instead, he watches in amazement as government workers fill the same hole with garbage from a nearby construction site. The new leftist national government, swept into power in the January, is refusing to let Mr. Hume’s miners store the garbage elsewhere.

Mr. Hume shakes his head in disbelief: “We will need to get rid of all this material one day before the mine goes back into business.”

But no one really knows if the mine, Greece’s largest and most controversial economic project to date, will ever begin operation.

Once, the construction site was a symbol of new jobs and future wealth. Now, the open pit is a gaping sore in the Greek landscape, a monument to political failure and violence.

What is occurring at the mine on the northern Greek island of Chalkidiki is a microcosm of what Greece is going through nationally, a nation in crisis torn by internal strife over a cloudy future. The danger is great that few Greeks in the end will ever profit from the gold mine, leaving nothing but a massive pile of garbage for society to clean up.

The new Greek government is torn by similar controversies over the tradeoff between economic development, a priority in Greece, and environmental and other regulations that in more prosperous days were tolerated, if not welcomed, as a sign of civil progress.

Eldorado, the parent company of Hellas Gold, promised to invest $1 billion (€899.5 million) in Chalkidiki to extract precious metals and has 600 employees working at the construction site. But since the far left-wing Syriza regime took control in Athens, everything is up in the air, including the mining project.

The Syriza-led government recently announced it was recalling the mine’s permit and would review the circumstances that led to its award by the predecessor middle-left government.

Questions raised by Syriza reflect the broader queries facing Greeks today. Should Greece exploit its natural resources and disregard environment concerns? Should the country protect its environment at the cost of losing jobs it desperately needs? The questions pit everyone against everyone else. Whatever decision the government eventually makes, Greece will be torn.

The gold mine was the pride of former prime ministers Giorgos Papandreou and Antonis Samaras, who sought to demonstrate the attractiveness of Greece to international investors and promised a brighter economic future. But since the election of Alexis Tsipras, the current Greek prime minister, the country appears to offer only political standstill and, increasingly, violence.

Greece as an investment destination looks less predictable than ever.

Video: Protesters in Athens.

Chalkidiki offers a glimpse of what’s at stake for companies seeking to mine resources and those who fear environmental degradation.

Ioannis Verginis stands at the edge of a beautiful abyss. Birds fly over a long, green valley defined by a slender blue river lined with trees. He wonders what will become of the honey, olive oil and clean water from his region if the mine is allowed to proceed.

“If the Greek government wins, this here will become a moonlike landscape,” he said, rejecting Mr. Hume’s assertion the mining rubble is not dangerous. “The stone here has a lot of asbestos minerals. And what happens when the rubble slides down somewhere, when we have an earthquake perhaps?”

It is true the gold mine has a checkered history and has raised many questions. The Greek government never publicly asked for bids and awarded the project to Hellas Gold, a company that had been created only three days before the award.

The circumstances of the sale remain obscure.

Greece’s deputy economics and finance minister, Christos Pachtas, a Social Democrat who later became mayor of Aristoteles, pushed for the sale.

The family of an oligarch profited most from the sale. The family owned a major portion of Hellas Gold’s parent company, which was sold to Eldorado Gold for €1.8 million in 2011.

The high price was the result of a political decision by the preceeding Social Democratic government, which had previously prohibited the mine from being exploited.

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.