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No alarm in Greece's port U-turn

Updated: 2015-02-02 07:49
By Mei Xinyu (China Daily)

On Jan 27, hours after taking office, the new Greek government halted the privatization of the country's largest port in Piraeus. Since China's COSCO Group was likely to win part of the privatization bid for the port, which is also the starting point of a planned China-Europe land-sea "express line", many observers say China's investment in Greece now faces an uncertain future.

Such concern is unnecessary. Widely acknowledged as the "anti-bailout" government, the new dispensation in Greece is opposed to a series of deals the previous governments signed with the European Union and the International Monetary Fund, of which selling 67 percent of Piraeus Port's shares is only one. And the new Greek government's move is not aimed against COSCO, which is rather a powerful competitor in the open tender than an actual winner.

Some people believe the Greek government's decision could result in a huge loss for COSCO, which had invested 800 million ($905.8 million) in the port's construction. The fact, however, is that COSCO spent the money on No. 2 and No. 3 piers at the port, for which it got a 35-year management lease way back in 2008. And since the Greek government's move will not nullify the existing deal, there is no need to worry about its political or economic consequences.

Besides, the Greek government is mainly opposed to certain measures of the bailout programs that are aimed at reducing the country's expenditure and adjusting the economic structure and thus could make life in Greece painful. And given that selling the shares of the port to private bidders will generate additional revenue, the Greek government may not be averse to it.

Every government has to find the best way to balance its sheet. The more the new Greek leaders oppose cutting financial expenditure, the more revenue they will need. The only reason they oppose privatization of ports is that the move is part of a series of bailout programs linked with the tightening measures which they so intensely hate. But with the increase in financial pressure with the passage of time, they will have to change their mind.

Moreover, since the EU bailout program expires on Feb 28, Greece has to repay the debt on or before that date and cannot afford to default. In this context, selling the shares of Piraeus Port will not only bring Greece billions of euros, but also large sums of new fixed asset investments, which mean more than money, for they can create jobs. A National Bank of Greece study shows that the Piraeus Port ventures could increase Greece's GDP by 2.5 percent and create about 125,000 jobs.

COSCO does not have to worry about the Greek government's decision, especially because it has a good performance record. From 2008 to 2014, the flow of goods through Piraeus Port increased from 430,000 standard containers to 3.16 million standard containers, 80 percent of which came from COSCO itself. With the support of the Chinese government, COSCO is likely to continue benefiting the port, and the Greek economy and people.

That the new Greek government will not halt the privatization of the port for long was borne out by Theodoros Dritsas, alternate minister of shipping and the Aegean, when he said: "The COSCO deal will be reviewed to the benefit of the Greek people." And the review will prove that continuing the deal is in the best interest of the Greek people.

Therefore, there is no need to raise bids to get the port's shares. Instead, there is need to promote interaction with Greece, let its people know how sincere China is about its commitments, and give the new Greek government enough reason to persuade its nationals that the deal with China benefits them all.

When the civil war broke out in Libya in 2011, Greece offered China full help to evacuate its citizens from the North African country through the Mediterranean. And because Sino-Greek political, economic and cultural ties have strengthened over the years, Chinese leaders and entrepreneurs should be confident that the Greek government's move on ports will have a good ending.

The author is a researcher at the International Trade and Economic Cooperation Institute, affiliated to the Ministry of Commerce.

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