“Beware of Greeks bearing gifts.” As China appears set to acquire the Greek port of Piraeus, this timeless adage seems to be making its way from the Balkan peninsula to the gates of Beijing. Barely a week has passed since Athens accepted COSCO’s €370 million offer to acquire 67 percent of the Piraeus Port Authority that a new dispute that threatens the completion of the sale has raised its head. Shipping minister Theodoros Dritsas publicly clashed with the president of Greece’s privatization fund, Stergios Pitsiorla, arguing that privatizing the port was a mistake. Dristas also argued that COSCO “still has some way to go,” suggesting that the deal could potentially fall through. China’s European leg of the famed Silk Road might not pan out after all.
In an ever-wavering display of political fragility, Athens has frequently shifted on its position over privatization. As part of the bailout arrangement, Greece is supposed to sell airports, utilities, and other assets, boosting its finances and relieving the government from investing in assets it can’t afford. When Dristas took office, one of the first public statements he made was to announce that the privatization of Piraeus “stops right here” and that the port should remain in public hands. The country was expected to gain €3.5 billion in 2015 from sales of state owned assets, but everything was frozen after Syriza swept to power.
As a consequence, due to the hijacking of policy-making by ineffective governance mechanisms, foreign investors have, time-and-again, been scared away to more friendly and robust business environments.
In addition to operating one of the port’s existing terminals, most of the funding that has been pumped into developing Piraeus came from this single Chinese concern. It appears somewhat churlish then that Athens chose to throw the bid back in the face of the goose that laid the golden egg. The success of Chinese investment in developing the Greek port of Piraeus has been heralded as a shining example of how well ties between the eastern and western economies could potentially work.
To put into perspective exactly how much Chinese investment has been worth to Piraeus, from a mere 400,000 containers moved in 2008 prior to COSCO’s input, it handled a bit more than 3 million in 2015. This is an increase of goods moved into Europe that Beijing is keen to see maintained and developed even further. Indeed, such is the position of importance that Piraeus holds in Beijing’s European plans, that Premier Li Keqiang recently described it as the “gateway of China to Europe.” But if Dristas is to have his way, those gates will remain shut.
While alternative narratives exist, overall, China’s reception in Europe has not been warm. Under current plans, three potential corridors from Beijing to Western Europe need Central and Eastern European countries on board. As the Chinese premier spelled out so clearly, Greece is the most important access point, enabling the passage of goods via the Balkans to the European heartland. The second route involves Poland, while the third one would pass through the Baltic states.
The issues of dealing with China go beyond the minutiae of international trade to the very essence of its nature as a political entity. A
recent rumoured bid by Chemchina to take over Syngenta in Switzerland, prompted the shareholders to rise in defiance and ensure the company stayed out of Chinese hands; the perception remaining within Europe’s business community is that a state-owned entity operating under the auspices of a communist government will never be allowed to operate entirely according to Western liberal principles.
China sees Europe, and especially the continent’s eastern and central parts, as the key to its plans to extend the Silk Road westward. But this desire to commit to a fully bilateral economic relationship has not yet been reciprocated by the majority of European countries, nor its governing bodies. Whether the issue is with China’s political and cultural practices, concerns over the possibility of its government’s intervention at both micro and macro economic levels, or simply an inability (as in Greece’s case) to effectively consolidate international interest with domestic practice, Beijing is finding it difficult to find a strong enough foothold in Europe.
And there are alternatives. COSCO, for instance, has already made known its interest in the neighbouring Turkish Kumport Terminal. Although Piraeus is three times larger than Kumport, an investment by COSCO of $940 million is a clear reflection of its much publicized belief that Kumport could be developed along the same lines as its Greek counterpart, and to equal effect.
While Beijing has thus far showed great patience and resilience in attempting to reach its arm out beyond the Bosphorus and prove itself unworthy of such suspicions, it is evident that it has thus far been largely unsuccessful.
— Andrew Witthoeft is an EU affairs advisor
for an international consulting firm