Greece and China progressing slowly
Tsipras visit bodes well for future, but course of Cosco’s investment in Piraeus will test Greek credibility
ANALYSIS “Do not fear going forward slowly; fear only to stand still,” says a Chinese proverb, which if applied to Greece’s trade relations with China might provide some optimism for the future.
Prime Minister Alexis Tsipras’s visit to China last week was aimed at ensuring that the process of developing trade links with Beijing and attracting more Chinese investment progresses and does not risk stalling as was feared last year when Greece’s position in the eurozone was put in doubt by the government’s protracted negotiations with the country’s lenders.
Tsipras’s visit to Beijing and Shanghai, where he met Chinese President Xi Jinping, Premier Li Keqiang and the heads of several local firms, was the third such trip by a Greek prime minister in the last 10 years. Costas Karamanlis traveled to China in 2006 and Antonis Samaras visited for five days in 2013. Each time there has been great expectation in Greece about what the visits could bring, such as hopes for a sudden surge in olive oil exports or a splurge of investment by Chinese businessmen, but the results have tended to be modest. Steps in the right direction, but small steps.
The Cosco deal for Piraeus port has been a notable exception to this: It was set up by the Karamanlis government in 2008, when the Chinese giant secured a 35-year concession agreement for the container terminal, built upon during Samaras’s premiership, when Cosco expanded Pier III at the Piraeus Container Terminal, and now developed further under the Tsipras-led coalition, which has just awarded the shipping company a 67 percent stake in the Piraeus Port Authority (OLP). From the original deal in 2008, worth more than 4 billion euros over the course of the lease, to the latest agreement, which will see the Greek privatization fund take in almost 370 million euros, Cosco has been the most significant investor in the Greek economy in recent years.
The indications are that it will also continue to be a major player in Greece in the years to come. Economists expect that over the long term, Cosco’s investment in Piraeus could lead to additional annual revenues of some 5 billion euros and the creation of 125,000 jobs.
During Tsipras’s visit, Cosco chairman Xu Lirong announced that the company would invest more than half a billion euros in Piraeus over the next five years.
Building on this investment, though, requires further work from the Greek side. The embarrassment that the Greek government suffered when Cosco recently pointed out that the terms of its agreement for the purchase of a majority stake in OLP had been changed in the draft law submitted to Parliament highlighted how easily domestic political ills can undermine even such a major investment. Similarly, Xu made an appeal to Tsipras during his visit to Shanghai to help end the rolling strikes by Piraeus dockworkers who fear the latest privatization will lead to them losing their jobs.
George Tzogopoulos, the founder of the Chinaandgreece.com website, which focuses on relations between the two countries, believes that the way Greece handles developments at the port will be the most important factor in determining Cosco’s future investments in the country and how Beijing will regard Athens as a strategic partner.
“If investments proceed smoothly without many strikes, the message to be sent in Beijing will be encouraging,” he told Kathimerini English Edition.
“China is happy with SYRIZA as the party concluded the privatization of Piraeus Port Authority,” he added. “However, SYRIZA’s ideological opposition to foreign investments along with some unexpected gestures [such as Shipping Minister Theodoros Dritsas’s apparent attempt to modify the concession agreement] make China quite reserved in trusting the Greek government. Therefore, what is required is more credibility from the side of Athens.”
Cosco has shown it is serious about Piraeus through the financial investment it has already made but also in the plans that it has for the future. Xu told Tsipras last week that Cosco’s aim is to turn Piraeus, which it has so far mainly used as a hub to export Chinese goods to Europe, into the “biggest transit port in the Mediterranean.” The onus is now on the Greek government to show that it is equally serious.
“Greece, which is the first stop on China’s way to Europe, can become a bridge between China and the West, between Asia and Europe,” Tsipras said during his visit last week, appearing to tap into the spirit of Beijing’s “One Belt, One Road” strategy. Launched in 2013 by President Xi, the strategy is underpinned by a major investment program, mostly focused on infrastructure, which will recreate the famed Silk Road over land and sea in order to provide Chinese exporters with direct access to global markets. In 2015, Cosco transferred 3,030,000 twenty-foot equivalent units (teus) through Piraeus compared to 2,520,000 in 2013, underlining the port’s importance as a trade link.
Because of its location, Piraeus could prove a significant factor in Beijing’s efforts to create these trade routes. It could also establish the platform for further activity between Greece and China. Ahead of Tsipras’s trip, Chinese Ambassador to Greece Zou Xiaoli spoke of Piraeus acting as a bridge, or “dragon’s head,” for cooperation in other areas.
The potential is there for Greece to export to China the aforementioned olive oil but also minerals and pharmaceuticals, among others. Meanwhile, Athens can also look to China for investment in real estate, technology and infrastructure. For example, China’s largest private conglomerate Fosun, whose top representatives Tsipras met in Shanghai, will be involved in the development of the former Athens airport at Elliniko, while Chinese telecommunications manufacturer ZTE, whose executives also met with Tsipras, just signed an agreement with Greek firm Forthnet to work together on the development of faster broadband, or next-generation access (NGA) in Greece.
However, a trip to China by the Greek prime minister will on its own not be enough to ensure that the Sino-Greek relationship bears fruit. “China is highly interested in expanding its presence in Piraeus and from the moment this is happening, relations can improve at the political, economic, and cultural level,” said Tzogopoulos. “Prospects for the future are good but a single visit is not sufficient. Systematic work is now required. The economic cooperation with China is not as easy as it is often presented in the media discourse.”
In the wake of Tsipras’s five-day visit to China, it seems the goal for the Greek government must be to move forward, even slowly, in its relations with Beijing, but to avoid at all cost the possibility of the process coming to a standstill.
Xu Lirong (l) appealed to Alexis Tsipras (c) to help end the rolling strikes by Piraeus dockworkers who fear the latest privatization will threaten their jobs.