By Lefteris Papadimas and Angeliki Koutantou

IDOMENI, Greece (Reuters) – Greece has sent in police and bulldozers to clear out Europe’s biggest refugee camp because of the deteriorating humanitarian conditions there, but the operation should also unblock a vital artery for the ailing economy.

Greece lies at the epicenter of two of the biggest challenges facing Europe – a migration influx and a debt crisis.

The Idomeni camp, recently home to as many as 8,000 migrants and refugees, had spread out across a railway track on the Macedonian border, choking off Greece’s main rail route to the rest of Europe. It has also complicated the privatization of the country’s rail freight business, a condition of its international bailout.

Greek authorities said 2,031 refugees were removed from the makeshift camp on Tuesday and the rail tracks were fully cleared on Wednesday. But they have not said when the train link, which is vital to the freight firm TRAINOSE, will reopen.

“This should have happened a long time ago,” said Anastasios Sachpelidis, a local transporters’ association representative. The closure was “a big loss,” he said. “We lost clients, we lost money, time and our credibility.”

Heavily indebted Greece clinched a deal with international lenders in the early hours of Wednesday to unlock desperately needed new bailout loans on the condition it fulfils certain terms, including speeding up privatizations.

Athens has agreed to sell off an array of assets, including TRAINOSE and its maintenance company ROSCO. The deadline for potential investors to submit final bids was originally in April, but has been pushed back twice, and is now set for June 22.

The privatization agency has said investors needed more time to prepare their bids.

“The camp has been blocking a route of the Greek supply chain which has taken several decades to be established,” said a senior executive at an Athens-based rail freight company, who declined to be named, citing political sensitivities.

“As long as Greece’s main cargo rail conduit to Europe is closed, it is obvious that TRAINOSE’s value is falling and the company is less attractive to investors,” the executive said.

The government has not publicly said what it hopes to raise from the sale but sources close to the process said the figure was expected to be in the region of about 50 million euros ($55.7 million) for TRAINOSE and ROSCO together.

WASTELAND

More than a million people escaping poverty and war in the Middle East and beyond have entered the European Union via Greece since the beginning of last year, many of them heading north en route to Germany.

But Europe’s borders have slammed shut in a concerted effort to halt the influx and some of those left in limbo have pitched tents on muddy wasteland outside the town of Idomeni.

The makeshift camp, home mostly to Syrians, Iraqis and Afghans, sprang up four months ago. Human rights groups have raised alarm about the deteriorating conditions there, including overcrowding, poor sanitation and the risk of infection.

Many children slept in the open, scuffles broke out over food, and Macedonian forces tear-gassed migrants trying to storm past the razor-wire border fence.

“No one came here on purpose to close the railway,” said Farshad, 43, from Syria. “We are not demonstrating here. We just live on the tracks because the conditions are better.”

The rail line at the border was shut down in March due to the refugee camp. This followed a previous closure in November, when a separate group of Moroccan, Iranian and Pakistani migrants blocked traffic, demanding passage to Western Europe.

TRAINOSE is the sole provider of passenger and freight services in Greece and made a net profit of 1.47 million euros in 2014, according to its latest financial results.

Greece last month received expressions of interest in the firm from Italy’s state railways, Russian Railways (RZD) and Greek construction group GEK-Terna.

DELAYS, COSTS

When the Idomeni border was open, roughly eight freight trains ran daily back and forwards to central Europe, in total. At present, just four trains run a longer route through neighboring Bulgaria, meaning higher transport costs for Greek importers and exporters.

A train pulling 34 cars would normally cost up to 50,000 euros ($55,700) to transport a cargo into central Europe in two to three days. But the longer route is causing delays of up to 12 days, which is lifting the cost by almost 20 percent, said the executive of the Athens-based freight company.

An exporters association in northern Greece, representing some 500 businesses, said the situation at Idomeni had stunted efforts to kickstart the economy after six years of recession.

“The direct extra cost for our members have totaled about 5 million euros so far,” said the association head, Kyriakos Loufakis.

TRAINOSE’s biggest client in Greece, Chinese shipping giant China COSCO, took over the operation of two of Greece’s Piraeus port container terminals in 2009 via its Greek unit Piraeus Container Terminal (PCT).

It uses Piraeus to transport Asian products to central Europe, such as the Czech Republic, Austria and Slovakia, by sea and rail.

“Anything that obstructs this process is a problem for us,” said Tassos Vamvakidis, the commercial manager of PCT.

Greece’s state railways company OSE threw up a barbed wire fence parallel to the railway tracks at Idomeni on Tuesday to prevent people moving onto the line.

But the executive of the Athens-based rail freight company said that once the camp was fully evacuated it would still take up to 10 days to fully restore rail traffic.

“We had the route closed in November, reopened and then closed again four months later. Who can assure potential suitors that this won’t happen again in July?”

($1 = 0.8976 euros)

(Reporting by Angeliki Koutantou and Lefteris Papadimas; Editing by Crispian Balmer and Pravin Char)