Greece betrays principle of contract by halting port sale

By Liu Zhun Source:Global Times Published: 2015-1-29 0:03:29

As soon as he assumed office, new Greek Prime Minister Alexis Tsipras has announced he is about to halt a landmark deal to privatize the country's biggest port of Piraeus. China's Cosco Group, a State-owned global shipping giant, had submitted a bid, but now, according to the new government, the sale will be reviewed.

After winning a snap general election on Sunday, Tsipras, leader of the far-left Syriza party, has named an anti-austerity cabinet. The suspension of the deal with China indicates that Tsipras is sticking to his election pledges by halting the ongoing privatization of state assets, which was carried forward by his predecessor to save a nearly bankrupt Greece from going under.

Since China's investments are mainly focused on emerging markets in Asia, Africa and Latin America, the inconsistent changes to their political landscapes have meant that Chinese enterprises faced more risks in taking a share in the global market. China's large-scale projects, which usually involve billions in investment, are easily targets of their political infighting. Earlier this month, after a presidential election, the new Sri Lanka government said it might renegotiate a $1.5 billion port city project backed by China.

Without a robust system to guarantee political stability, administrative management in these countries is easily jeopardized by leadership changes. When haunted by economic crises, these governments would probably resort to unreasonable solutions, such as political interference, to address their difficulties regardless of the legalities.

What's more, investments China has made overseas have also been defamed by many Western media outlets, which claim that China-backed projects always have political strings attached and are aimed at resource exploitation instead of benefiting local communities. In their minds, China has replaced their former position as a new global colonist in the 21st century.

Despite the obstacles they have to endure now, Chinese enterprises, which are working hard to engage in global competition, have been exploring various patterns to make their investments efficient and mutually profitable. The expanding presence of Chinese investments keeps creating jobs for local communities and raising the revenues of governments, a great relief for countries which have been suffering a lot from economic recessions.

Greece is in dire need of relief as its creditors in Europe have refused to renegotiate debt with it. Even when China delivered what it needs, it has turned down its promise so quickly, having totally forgotten that it is the birthplace of Western civilization, which values the spirit of a contract the most.

China should get wise to these potential problems and take more precautions to ensure the safety of its investments, such as giving more attention to assessing political risks. Meanwhile, China should not flinch and retreat because of the current setbacks.

Posted in: Observer

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