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