ATHENS – Ambitious plans by the Chinese shipping operations company COSCO which operates the port of Piraeus – the 8th busiest in the Europe – aim to make it number one across the region and an entryway for Chinese goods especially as part of a New Silk Road plan.
China is looking to transform Greece’s Piraeus port into the biggest harbor in Europe — making it the most crucial transit hub for trade between Asia and Europe.
“The objective is to transform it into the biggest transit hub between Europe and Asia and, potentially, the biggest port in Europe,” Deputy Minister for Foreign Affairs Kostas Fragogiannis told CNBC.
COSCO bought a majority stake in the port in 2016 under the former ruling Radical Left SYRIZA which stymied plans for a 600-million euro ($663.08 million) overhaul of the port, the party having hard-core elements who don't want foreign businesses in the country.
With Piraeus at a strategic location between the Asian and European continents, Chinese President Xi Jinping and Greece’s Prime Minister Kyriakos Mitsotakis announced the renovation of the port, with some modifications to mollify local businesses fearing competition.
Piraeus is behind the Netherlands' Rotterdam and Antwerp, Germany's Hamburg and Bremen-Bremerhaven, Spain's Valenicia and Algeciras, and Britain's Felixstowe, but growing under the hand of COSCO.
“The geographical advantages of Greek ports can be utilized for facilitating and increasing transfer flows from China and the Far East to the European Union, the Balkans and the Black Sea region, and vice versa,” Fragogiannis told CNBC.
China has stepped up interest and investments during Greece's 9 1/2-year-long economic and austerity crisis and tightened ties, to the dismay of some critics who think Greece is being used by China to increase its influence in the European Union.
Greece announced in August last year that it was formally joining China’s Belt and Road Initiative (BRI) — the ambitious investment plan of Xi that connects Asia, Africa and Europe and during his visit to Athens – after Mitsotakis visited the Shanghai international expo in search of more Chinese investments – that, “We want to strengthen Piraeus’ transshipment role and further boost the throughput capacity of China’s fast sea-land link with Europe,” according to Reuters.
“With his visit in Athens, the Chinese President Xi Jinping reaffirmed his commitment to strategic infrastructure investments in Greece, as part of the Belt Road Initiative,” Athanasia Kokkinogeni, Europe senior analyst at DuckerFrontier, told CNBC via email.
“Chinese investments have risen quickly, underpinning growth in the energy, telecommunications, and real estate sectors. Western firms should plan for intense Chinese competition in Europe in 2020 across most industries,” she added.
Greece’s Fragogiannis also told CNBC that Greece and China could announce further investment deals. “The two parts should examine investment prospects for the Chinese companies in port development, operation and combined transport in Greece,” he added.
China is the EU’s biggest source of imports and its second-biggest export market. China and Europe trade on average over 1 billion euros ($1.1 billion) a day, according to the European Commission's estimates.
COSCO investments in Piraeus are the key that will unlock future investments over the coming period in Greece,” Shipping Minister Yiannis Plakiotakis said Nov. 15, addressing the Thessaloniki Summit 2019 organized by the Federation of Industries of Northern Greece.
He said that relations between Greece and China are not limited to the port of Piraeus, pointing out that the recent opening of branches by two major Chinese banks in Athens proved that “there is much yet to come.”
Referring to Greece’s regional ports, Plakiotakis described them as a lever for growth in both local communities and on a national level, adding that the government was in talks with the Hellenic Republic Asset Development Fund (HRADF) so that it would be possible, through studies on their best use and sustainability, to improve the developmental role of each port on an individual basis.
“We will soon have news about this issue, there will be international tenders, at which time everyone is welcome. What I want to confirm is that there is great investment interest in all 10 ports,” Plakiotakis said.
He also underlined that “the ports are included in the national logistics plans” adding that “it is obvious that we link the development of the ports with the development of the supply chain,” the Greek state-run Athens-Macedonia News Agency (ANA-MPA) said.
In 2009 COSCO won a 35-year concession to upgrade and run container cargo piers in Piraeus and bought a 51 percent controlling stake in 2016 during a privatization spree pushed by Greece’s international creditors who had put up 326 billion euros ($359.16 billion) in three bailouts to prop up a sinking economy.
Once COSCO hits the 300-million-euro ($330.51 million) mark in the overhaul, expected by 2022, it’s in line to acquire another 16 percent stake in the port it has already remade into one of the busiest and best in the European Union.
It’s hasn’t been without opposition from local businesses fearing competition from a scaled-back mall and the government, while wanting more Chinese business, rejected COSCO’s hopes to build a new container terminal yet.
Both sides sought to play up Greece’s strategic location at the crossroads of Europe, Asia and Africa, saying it could become a hub for channeling goods from the world’s second-largest economy and top exporter into Europe, said the news agency Reuters in a feature.. We want to strengthen Piraeus’ transhipment role and further boost the throughput capacity of China’s fast sea-land link with Europe,” Xi said after meeting Mitsotakis before they visited Piraeus.
While in Shanghai, Mitsotakis said he wanted Piraeus to become Europe’s No.1 port and that COSCO's spending there could reach 1 billion euros ($1.1 billion.).
The European Investment Bank (EIB) on Nov. 11 agreed to extend a 140-million euro ($154.24 million) loan to help COSCO with its investment.