This is how China contributes to ‘Grecovery’

Source: China Daily

Source: China Daily

By George N. Tzogopoulos

Since the outbreak of the Greek economic crisis in October 2009 China has been perceived by some Greek politicians and a significant part of the public opinion as a potential savior. The alleged ability of Beijing to grant a bilateral loan to Athens generated the illusion – especially in the first six months of 2015 – that the rescue package provided by the European Commission, the European Central Bank and the International Monetary Fund was not the only alternative. Vice-President Ioannis Dragasakis has said that his SY.RIZ.A government unsuccessfully attempted to find a loan in third countries like China before the so-called ‘Agreekment’ of 12 July 2015. Former Finance Minister Yanis Varoufakis goes even further suggesting that a phone call from Berlin blocked a hypothetical Sino-Greek financing deal.

As a matter of principle the Chinese government would hardly be prepared to unilaterally intervene in the Greek crisis and jeopardise the good status of its relations with the European Union and countries such as Germany. In that regard, it never commented on bilateral loan scenarios at the communication level but focused on the need for Greece to stay in the eurozone and emphasized its will to continue investments, started in piers II and III of Piraeus Port in 2009. When Greece decided to sell the remaining part of the port, the Piraeus Port Authority, COSCO – now China COSCO Shipping – expressed its interest from the very first beginning. Showing patience for more than two years it finally submitted its offer in January 2016 and will buy a 51 percent at a first stage and a 16 percent at a later one. The content of the concession agreement has not yet been finalized. The privatization, however, has entered its final stage in spite of reactions from port trade unions and ideological opposition by some SY.RIZ.A members.

The amount of 368,5 million euros to be given by the Chinese company only seems sufficient taking the ongoing financial crisis and the Greek stock market continuous fall into account. It is certainly much lower than the real value of the Piraeus Port Authority under normal circumstances. If this privatisation had taken place earlier, economic benefits for the Greek state would have been much higher. This is an important lesson to be learned by Greek politicians in order to avoid similar delays while proceeding with new privatisations such as the one the National Railway which will facilitate trade connections between the Piraeus port, Greece’s borders, the Balkan Peninsula and Central and Eastern Europe.

With this context, the recent Sino-Greek goes beyond the price of a typical business transaction for three main reasons. First, COSCO has agreed to invest more in the Piraeus port and around it in the coming years. Second, the agreement will transform Piraeus into a bigger transshipment hub, boosting trade, attracting new domestic and foreign investors and strengthening the geopolitical and strategic importance of Greece. And third, this deal can pave the way for a critical improvement of Sino-Greek and Sino-European relations should labor conditions are respected and relevant terms are applied. An official visit of Greek Premier Alexis Tsipras to Beijing is expected to take place soon on the invitation of his Chinese counterpart Li Keqiang.

The development of close relations between Greece and China creates some skepticism in Western circles regarding potential geopolitical implications. That is because the latter has the opportunity to access Europe via the former by obtaining control in critical infrastructures and implementing its ‘One Belt One Road’ strategy in rather straightforward way.  Nevertheless, even when it comes to the geopolitical consequences of having close relations with China, Greece does not consider its position as fundamentally different from that of other European Union states

Perspectives for the future are positive. China might not be a savior of Greece but it can certainly contribute to the country’s growth via its new Silk Road. The ongoing crisis cannot be overcome with easy solutions. By contrast, it can create new, unprecedented opportunities paving the way for a ‘Grecovery’.

This article was published in China Daily.