By George N. Tzogopoulos
Approximately three months after the Greek Privatisation Fund accepted the offer of COSCO for the sale of the Piraeus Port Authority, final details of the deal have started to be agreed. The recent visit of President of the newly established China COSCO Shipping Group, Xu Lirong, in Athens and his meeting with Greek Prime Minister Alexis Tsipras and Greek President Prokopis Pavlopoulos confirm the will of both sides to expand their smooth co-operation started first in 2009. As President Pavlopoulos said, ‘the new Piraeus investment is highly interesting not only in terms of its economic impact but also concerning relations between Greece and China […] which become even closer’.
The success of COSCO in Piraeus is widely admitted. Numbers do often speak for themselves. 3.030.000 TEUs were transhipped in piers controlled by the Chinese company in the port of Piraeus in 2015 as opposed to 2.984.000 TEUs in 2014 and 2.520.000 in 2013. Surprisingly, this 1,54 percent increase from 2014 to 2015 happened in a year during which container transportation in the Mediterranean decreased and the number Greek exports fell due to the political crisis in the country. A comparison with TEUs managed by the Piraeus Port Authority in previous years is also indicative and marks a slowdown. 293.353 TEUs were transshipped in the Greek part of the Piraeus port in 2015, 598.255 in 2014 and 644.055 in 2013.
The Greek Privatisation Fund has announced that COSCO will offer 368,5 million euros to buy the Piraeus Port Authority and assesses that the total value of the agreement could amount to 1,5 billion euros, including future investments to be made by the Chinese company in Piraeus. A recent study of the Foundation of Economic and Industrial Research in Greece attempts to quantify specific benefits. In particular, this study goes beyond the concession deal itself and fiscal revenues and examines positives results for other areas of the economy. It expects multinational companies to invest in the port and around Piraeus and considers the construction of logistic hubs and repair zones as well as the development of the cruise sector as natural parallel activities. In that regard, the privatization of the Piraeus Port Authority could be an engine for growth leading to an economic output of 4 billion euros in 2025.
More importantly, COSCO’s involvement in Piraeus has a critical geopolitical impact because it turns Greece’s biggest port to a transhippment hub which is a gateway to Europe due to its geographical location. In period of economic calamity the Greek government should continuously looking for similar opportunities that can make the country a point of reference in international relations and business. It is not a coincidence that Piraeus constitutes one of the fastest growing container ports in the world having possibly the capacity to challenge European supply chains.
The Chinese side reiterates that COSCO’s investment in Piraeus is a ‘win win’ situation. This argumentation is reasonable. On the one hand, the implementation of ‘One Belt One Road’ passes through Greece’s biggest port, especially if the China-Europe Land-Sea Express Route will be constructed. The privatisation of the Greek Railway will be important in that regard. And on the other hand, the Chinese shipping giant can rely on Piraeus to boost its profitability. In recent years COSCO annual results have tended to highlight the importance of the Greek port for its economic performance.
The recent acquisition of the Piraeus Port Authority is not a Sino-Greek affair itself. Its importance goes beyond the bilateral context and affects the evolution of Sino-European relations. In a period during which Beijing has accepted to participate in Juncker’s Investment Initiative and more Chinese investments in Europe are taking place, the Piraeus deal could be a model for both sides generating new Sino-European interest for partnerships. From a European perspective it is also important that Xu Lirong publicly focuses on the importance of working conditions and environmental guidelines for his company.
Optimism, however, should not hide existing problems. The ongoing refugee crisis occasionally hinders the smooth operation of the Greek railway causing serious delays in the transportation of goods from and to the Piraeus port. In addition, some details of the concession agreement are still pending along with its ratification in the Greek Parliament. But experience from previous years suggests that small obstacles can be overcome and little differences can be balanced when appropriate patience is shown.