China top suitor for share in port

State-owned Cosco has chance to consolidate its spot at Greek port as an an­chor for Belt and Road as­pi­ra­tions in Europe

China Daily (Canada) - - ANALYSIS - By MARIA PE­TRAKIS

For China Daily

Red, blue, or­ange and green con­tain­ers are stacked up on the road lead­ing to Pi­raeus Pier II like a gi­ant’s Lego bricks, so high they cast a shadow over the cars and trucks rum­bling into China Ocean Ship­ping Co’s Greek con­tainer port.

From the sea, the cobalt-blue gantry cranes and mo­saic of mul­ti­col­ored con­tain­ers are a mag­net for the mon­ster cargo ships steaming into the har­bor.

Since the Chi­nese ship­ping be­he­moth agreed to take over con­tainer oper­a­tions at two piers in Pi­raeus in 2008, traf­fic has surged at Greece’s big­gest har­bor, making Pi­raeus one of the fastest-grow­ing ports in the world.

For Cosco, the Chi­nese sta­te­owned com­pany listed in Hong Kong, Pi­raeus is the promised land, the point at which China nudges into Europe as part of its plan to cre­ate a mod­ern com­mer­cial em­pire pump­ing Chi­nese goods into the con­ti­nent. It is, Primier Li Ke­qiang said in June last year, China’s gate­way to Europe.

Now, Cosco may be poised to consolidate its po­si­tion in the Greek port. This month, Greece will seek bind­ing bids for a 67 per­cent stake in the Pi­raeus Port Author­ity, the state-run com­pany that op­er­ates the har­bor. Cosco is among three bid­ders and con­sid­ered a fron­trun­ner, given its in­vest­ments so far and prom­ise of more.

But as China pumps money into cre­at­ing Pres­i­dent Xi Jin­ping’s vi­sion of the Belt and Road Ini­tia­tive, a mod­ern-day Silk Road to Europe, it has bumped into a mod­ern fis­cal odyssey in Greece, the eu­ro­zone’s most trou­bled na­tion, where for­eign in­vest­ment has slumped amid po­lit­i­cal tur­moil and con­cerns of fi­nan­cial col­lapse.

The sale of the port has been de­layed twice in the past few months af­ter be­ing for­mally

China’s chang­ing global out­bound for­eign direct in­vest­ment foot­print presents a once-in-a-life­time op­por­tu­nity for at­tract­ing cap­i­tal to Europe.” A re­port by Rhodium Group and the Mer­ca­tor In­sti­tute for China Stud­ies

chair­man of the 4-year-old Hel­lenic Repub­lic As­set De­vel­op­ment Fund, the agency charged with sell­ing the Pi­raeus Port stake. “The is­sue has been pend­ing for years now. But what’s im­por­tant is that now, for the first time, we are close to com­ple­tion. We are very close.’’

For Greece, the stakes are higher now than they were six years ago, when the coun­try’s fis­cal mess sparked a cri­sis that led to bailouts for coun­tries in­clud­ing Ire­land and Por­tu­gal, and called the ex­is­tence of the com­mon cur­rency into ques­tion. Un­em­ploy­ment is still hov­er­ing at one-fourth of the work­force, the high­est in the Euro­pean Union; the econ­omy has shrunk by about a third since the first bailout, and cap­i­tal con­trols have been in place since late June on Greek banks to pre­vent their col­lapse, stran­gling busi­nesses and in­di­vid­u­als in need of liq­uid­ity.

Alexis Tsipras came to power in Jan­uary as the fire­brand young prime min­is­ter who op­posed state as­set sales and vowed to tear up the two bailout agree­ments that forced higher taxes and cuts in wages and pen­sions. He has tem­pered his tone since be­ing forced in July to ac­cept a new, $94 bil­lion bailout to keep the coun­try in the eu­ro­zone.

The Pi­raeus Port sale has taken on em­blem­atic sig­nif­i­cance. Win­ning could un­leash more Chi­nese in­vest­ment, Pit­sior­las said, cit­ing in­ter­est in a plan to build a ma­jor freight and lo­gis­tics cen­ter on the Thri­a­sio plain, an ex­panse that has been de­scribed as the in­dus­trial back­yard of Athens. A ma­jor new air­port planned for Crete, ten­dered in 2009 on the eve of a gen­eral elec­tion, then can­celed and now dusted off again, would give the Chi­nese an ad­di­tional foothold in the Mediter­ranean.

Fo­sun, China’s largest pri­vate con­glom­er­ate, is one of the in­vestors in a group des­tined to de­velop the Hellinikon site, the Greek cap­i­tal’s for­mer air­port and Olympic Games venue, a project that could cre­ate 70,000 jobs and add 2 per­cent to the coun­try’s eco­nomic out­put.

Chi­nese com­pa­nies are pump­ing bil­lions into Europe. An­nual in­vest­ment by Chi­nese com­pa­nies in EU mem­ber states soared from vir­tu­ally zero in the mid-2000s to $15 bil­lion last year, ac­cord­ing to a re­port in June by Rhodium Group and the Mer­ca­tor In­sti­tute for China Stud­ies. “China’s chang­ing global out­bound for­eign direct in­vest­ment foot­print presents a once-in-a-life­time op­por­tu­nity for at­tract­ing cap­i­tal to Europe and help­ing restart in­vest­ment and eco­nomic growth,’’ the re­port said.

That is some­thing Greece ap­par­ently has come to re­al­ize, com­men­ta­tors say.

Pi­raeus’ rel­a­tively short dis­tance from the main Mediter­ranean mar­itime route al­lows it to act as both a trans-ship­ment hub and gate­way, ac­cord­ing to a re­port in 2012 by McKin­sey & Co, which said the coun­try could trans­form it­self into a re­gional cargo and lo­gis­tics cen­ter as part of a 10-year plan.

On the road to the head­quar­ters of Cosco’s Greek unit, Pi­raeus Con­tainer Ter­mi­nal SA, graf­fiti urges Cosco to leave and for Pi­raeus Port to re­main in work­ers’ hands. A ban­ner ex­hort­ing lo­cals to join a strike against the gov­ern­ment’s lat­est round of aus­ter­ity mea­sures — fore­clo­sures and pen­sion re­forms — on Nov 12 is still strung along the side of traf­fic lights.

In­side Pi­raeus Con­tainer Ter­mi­nal’s head­quar­ters, the tone is dif­fer­ent. China’s links with Greece are dis­played side by side on the walls of the cor­ri­dors, be­gin­ning with two large pho­tos of an Olympic sta­dium in Athens from 2004 when the coun­try hosted the Games next to Beijing’s Bird’s Nest sta­dium from the Olympic Games, four years later.

Cosco has seen five sep­a­rate Greek pre­miers, not in­clud­ing care­tak­ers, since it won the li­cense to op­er­ate Pier II in 2008 for 30 years for $535 mil­lion. The deal has be­come a reg­u­lar cam­paign is­sue as Greek politi­cians seek votes from work­ers, such as those in the Pi­raeus docks, un­happy about aus­ter­ity mea­sures.

For Tas­sos Vam­vakidis, who has been the com­mer­cial man­ager for the Cosco unit since it first got its Pi­raeus con­ces­sion, ac­tions speak louder than words. Cosco’s in­vest­ment in Pi­raeus, he said, has cre­ated 1,247 jobs.

“Greece has to play a cen­tral role,’’ he said. “Be­cause there are oth­ers who would like to also play that role.’’

Pier II is now Cosco’s big­gest con­tainer ter­mi­nal in Europe, slic­ing four to 10 days off routes to big­ger ports such as Rot­ter­dam and Ham­burg. It is the clos­est north­ern Mediter­ranean port to the Suez Canal. Elec­tron­ics goods from com­pa­nies such as Hewlett Packard and Sony are moved through Pi­raeus and then travel by rail to Cen­tral and East­ern Europe.

For China, said Lane of Con­tainer Trans­port In­ter­na­tional Con­sul­tancy, the Silk Road is less a sin­gle car­riage­way, with a start and an end­point, than a web of solid in­fra­struc­ture that fa­cil­i­tates mul­ti­ple sup­ply chains to and from China, part of an over­all sup­ply chain jig­saw puz­zle. That now in­cludes a Turk­ish port, Kumport Con­tainer Ter­mi­nal, which Cosco bought jointly with China Merchant Hold­ings in Oc­to­ber. The Chi­nese are also eye­ing Li­mas­sol, in Cyprus.

With a mar­ket value of $396 mil­lion, Pi­raeus Port earned more from its con­ces­sion fee from Cosco than its own freight busi­ness, ac­cord­ing to last year’s fig­ures, rak­ing in $39 mil­lion com­pared with $25 mil­lion in rev­enue from the Pier I op­er­a­tion it runs it­self.

BLOOMBERG VIA GETTY IM­AGES

Con­tainer ships sit on the dock­side in the Cosco Pa­cific ter­mi­nal at Pi­raeus Port in Athens.

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