China sees investment into Greek financial crisis as an economic opportunity

ATHENS, Greece – Unlike many in Europe, Chinese investors saw the continent’s economic crisis as an opportunity.
Since 2008, Chinese business leaders have agreed to almost $9 billion worth of deals – equivalent to around 5 percent of Greek GDP – involving ports, telecommunications companies, energy facilities, real-estate, and tourism, according to the American Enterprise Institute.

In its eighth year of economic turmoil, Greece continues to struggle with unemployment topping 20 percent and high taxes that are hurting growth but necessary to pay off a debt burden that is 180 percent of gross domestic product.

Greeks are split. Many are thankful that China is investing as they say Greece needs the cash and the jobs.

“The Greek economy is thirsty for investments and the presence of Chinese companies is important and we welcome it,” Greek Prime Minister Alexis Tsipras said in September during a business conference in Thessaloniki that featured representatives of Chinese business.

But others are concerned about Chinese-style management in a southern European country where management traditionally respects labor rights and workplace conditions.

China Ocean Shipping Company, or COSCO, a state-owned company, purchased a majority stake in the port of Piraeus from the Greek government in 2016 for $456 million – the largest Chinese investment in Greece to date. The port is now a major node in China’s $1 trillion Belt and Road Initiative, a system of trade routes that follow the old Silk Road and maritime passages through the Indian Ocean and Suez Canal.

Labor unions now negotiating a new contract with COSCO are likely to have to accept lower wages. Since 2009, when a COSCO subsidiary purchased two piers at Piraeus, workers lost overtime and faced pay cuts of 30 percent.

“This deal shouldn’t make the port into a Chinese colony,” said Giorgos Gogos, secretary of the Piraeus dockworkers union. “It's important to secure good labor conditions and make sure the state actually profits from the investment.”

As real-estate prices in Greece continue to fall, 850 Chinese citizens have also purchased properties worth more than $310,000, making them eligible for so-called “Golden Visas” that allow them to travel within 26 European countries that have eliminated border controls between them. Golden Visas have generated more than $500 million in revenues for the state, according to Enterprise Greece, a state economic development agency.

Still, Chinese money is also raising political questions about Beijing’s influence in Europe.

In June, Greece's leftwing government surprised European leaders by blocking a critical EU statement at the UN Summit on China's human rights record. A year earlier, Greece, Croatia and Hungary – where Chinese investments are also extensive – opposed a joint EU statement on China’s military expansion in the South China Sea.

“China uses Greece in order to have a strong foothold in the European Union,” said Michael Tsinisizelis, a professor of international and European studies at the University of Athens.

In December, French President Emmanuel Macron delivered an ardent speech under the Acropolis where he expressed concern about Greek and European economic weakness that targeted Beijing.

“Our European sovereignty is what will enable us to be digital champions, build a strong economy, and make us an economic power in this changing world and not be subjected to the law of the fittest – the Americans and, soon, the Chinese – but our own law,” he said.

China is now the EU's second-biggest trading partner behind the United States. In 2016, China spent $40 billion compared to $23 billion in the prior year.

With its influence increasing, the EU is currently looking to closely regulate foreign investments in European strategic assets, like ports. At present, Greece and many other European countries don’t track foreign investment. The same lack of oversight has prompted many American companies to shift their operations to Ireland and the Netherlands.

“There's a general uneasiness in the EU concerning Chinese investments,” said Polyxeni Davarinou, a researcher at the Institute of International Economic Relations in Athens. “The EU wants to have a better control. At the same time though, Greece and Eastern European countries really need these Chinese investments.”

She believed Greece and Europe could control Chinese influence if leaders enacted bold rules to monitor foreign investment. “There are voices in Europe that believe Greece is too close to China and that's because we've given them reasons to see it that way,” she said. “Greece's problem is how to develop a clear and steady strategy.”

In Piraeus, meanwhile, cranes are offloading shipping containers from huge cargo ships around the clock. COSCO is planning to invest an extra $372 million to build three five-star hotels and a new dock that can accommodate 14 cruise ships.

Still, Gogos was pessimistic over Greece's recovery – no matter how much Chinese money flowed into Greece, he said, the country was still laboring to repay its debts. Greeks wouldn’t see the benefits of their hard work for generations, he said.

“Nothing will change for Greece,” Gogos said. “All the money ends up in the country's black hole, repaying its humongous public debt instead of rebuilding the economy.”

An altenative version of this story can be found in The Wasington Times.
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