Piraeus Port deal can lay foundations for new era of Sino-European trade, cooperation

By George N. Tzogopoulos Source:Global Times Published: 2016-4-13 22:38:01

Approximately three months after the Greek Privatization Fund accepted the offer from COSCO for the sale of the Piraeus Port Authority, final details of the deal have started to be agreed. The recent visit to Athens of the president of the newly established China COSCO Shipping Group, Xu Lirong, and his meeting with Greek Prime Minister Alexis Tsipras and Greek President Prokopis Pavlopoulos confirmed the will of both sides to expand their smooth cooperation, which started 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."

The Greek Privatization Fund has announced that COSCO will offer 368.5 million euros ($418.65 million) 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 by the Foundation of Economic and Industrial Research in Greece attempted to quantify specific benefits.

In particular, this study goes beyond the concession deal itself and fiscal revenues and examines positive 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 transhipment hub which is a gateway to Europe due to its geographical location.

In a period of economic calamity the Greek government should be continuously looking for similar opportunities that can make the country a point of reference in international relations and business.

The Chinese side believes that COSCO's investment in Piraeus is a "win win" situation. This argumentation is reasonable. The implementation of the "One Belt, One Road" initiative will involve Greece's biggest port, especially if the China-Europe Land-Sea Express Route is constructed.

Also, the Chinese shipping giant can rely on Piraeus to boost its profitability.

The recent acquisition of the Piraeus Port Authority is not merely a Sino-Greek affair. Its importance goes beyond the bilateral context and affects the evolution of Sino-European relations.

In a period during which 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.

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.

The author is a lecturer at the European Institute in Nice, France. bizopinion@globaltimes.com.cn

Posted in: Expert assessment

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