China 'to save the euro' For a Price
China's new Silk Road into Europe
A bold bid for Greece's premier port of Piraeus by state-owned Cosco has given Beijing a foothold on the doorstep of the Continent.
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An employee of China Ocean Shipping Company (COSCO) stands in front of the ship Cosco Qingdao Photo: AFP/GETTY
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China's Vice-Premier Zhang Dejiang poses with crew members of a Chinese cargo ship during a visit at Piraeus port Photo: AFP/GETTY
By Harriet Alexander in Athens 7:00AM BST 04 Jul 2010
Golfis Yiannis stands on the dock of the Athenian port of Piraeus, unflinching among the dust clouds stirred by the thundering lorries and clattering forklift trucks unloading the vast container ships.
"That's Europe's new China Town over there," he says, pointing to the pier adjacent to where he is standing. "The only thing that is certain is that we've sold our soul to the Chinese."
Pier Two of the container port, where Mr Yiannis, 48, has worked for the last 22 years, may seem exactly the same as Pier One – certainly larger, but similarly flanked by gigantic ships and stacked with huge Lego brick-style containers.
But where as Pier One is Greek, Pier Two is now Chinese.
China's state-owned shipping giant Cosco last month took control of Pier Two in a £2.8 billion deal to lease the pier for the next 35 years, investing £470 million in upgrading the port facilities, building a new Pier Three and almost tripling the volume of cargo it can handle.
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The container port, just next door to the Piraeus ferry harbour that is the tourist gateway to the Greek islands, can currently load and unload 1.8 million containers a year - meaning 5,000 come and go each day.
While many investors flee from the struggling European nation, which last month only avoided bankruptcy by accepting a 110 billion euro (£90 billion) bailout from the European Union and the IMF, China seen an opportunity to make strides into Europe, buying key assets at enticing prices and gaining access its valuable markets.
The Chinese envisage creating a network of ports, logistics centres and railways to distribute their products across Europe – in essence a modern Silk Road - hastening the speed of East-West trade and creating a valuable economic foothold on the continent. They aim to make the container port a hub to rival Rotterdam - Europe's largest port.
"The Chinese want a gateway into Europe," said Theodoros Pangalos, deputy prime minister. "They are not like these Wall St ****s, pushing financial investments on paper. The Chinese deal in real things, in merchandise.
And they will help the real economy in Greece."
It is not the first time China has seen opportunity where others see adversity. With their economy booming and their currency strong, the Chinese have made a series of controversial investments in mining and infrastructure in Africa, which critics say allow them to remove valuable raw materials with little benefit to the local economy.
Workers at the port, like others in Greece, are uneasy the long-term implications of allowing China to take advantage of the country's economic weakness to take such an important stake in a strategically crucial part of its economy.
From his union's office overlooking the port and the jumble of high-rise blocks that crowd Piraeus's hills, George Nouhoutides, president of the Union of Dockworkers, told The Sunday Telegraph that the decision to sign the contract was "catastrophic".
"When you discuss a deal with one wealthy country and one which has a lot of debt, who dictates the terms?" he asked. "China wants a 'Made in Europe' label with tax exemptions, favourable terms and to hell with Greek interests."
Mr Nouhoutides - who was born two block from the port and has worked there for 34 years - added: "They are playing a clever game. They have 1.5 billion slaves and money to burn, so of course they want to access our markets. It is catastrophic for all workers – not just for the Greeks."
But Katinka Barysch, deputy director of the Centre for European Reform, says that it was unlikely the Chinese investment in Greece will be of such a "vulture" nature.
"The danger that Cosco will behave like some of the Chinese mining and oil companies in Africa is pretty remote," she said.
"Greece is a member of the EU, so it has a much more solid legal framework. There are clear constraints about what foreign investors can and cannot do in our markets.
"The risk is more that these sovereign companies invest too quickly in trophy assets and then manage them badly or don't manage to make a profit out of them.
"But cash is very short in Europe now. So my guess is that the Chinese investment will not encounter too much political opposition. Where else would the money come from?"
Indeed, many see the Chinese investment in Piraeus as just the beginning of a far broader scheme to access European markets.
As countries such as Spain, Portugal and Ireland struggle with their financial burdens, China is eyeing up potentially irresistible investment opportunities.
This month a group of Chinese manufacturers hope to be given approval to develop a £40 milion plot in Athlone, central Ireland, and begin construction of a hub of schools, apartments, railways and factories to create Chinese products. The Chinese plan to ship in 2,000 Chinese workers to construct the site, and eventually employ 8,000 Irish staff in what has been dubbed "Beijing-on-Shannon".
And Chinese investment is something the cash-strapped Greek government has welcomed with open arms.
Last month Zhang Dejiang, China's vice premier, lead a delegation of 30 of the country's leading businessmen to Athens to sign hundreds of millions of euros worth of investments in Greek shipping, logistics and infrastructure projects.
Greek officials said that the 14 deals amounted to the biggest single investment that China had ever made in Europe.
"I am convinced that Greece can overcome its current economic difficulties," said Mr Dejiang. "The Chinese government will encourage Chinese businesses to come to Greece to seek investment opportunities."
Yet China hungrily eyeing up Greek assets has not been met with universal approval. Dock workers have repeatedly gome on strike to protest against the deal since it was first mooted in 2006 - and were further infuriated when it was signed with great fanfare and a personal visit by President Hu Jinato in November 2008.
They say that the port was making a profit so did not need to be taken over, and claim that the Chinese pay their workers just 50 euros a day, which in the face of unemployment the Greek dock hands have to accept. Cosco refused to discuss pay rates or other aspects of the project with The Sunday Telegraph.
"They want desperate people who will work for one bowl of rice a day," said Charalambos Giakoumelos, 53, who has worked at the docks for 22 years.
"This was to be the lungs of the Greek recovery – and yet the government has given it away for the price of a piece of bread." "Cosco came here, and the nice Greek government gave everything away," agreed Nick Vithoulkas, 55.
"It's not only the port they are after. My son is 26 and I have told him he should leave Greece. There is no future here."
As Cosco took control of Pier Two, the Greek state-owned Pireaus Port Authority was left with Pier One – which is smaller and shallower, thus unable to accommodate the larger ships.
"It is as if they have created a supermarket right next to our minimarket," said Mr Nouhoutides. "How can we ever compete with that?"
Yet many in Greece believe that the arrival of China in the form of Cosco is exactly what its ailing economy needs.
"This is the locomotive for our development," said Nikolaos Arvanitis, president of the International Maritime Union – the organisation that represents the world's largest shipping companies - including Cosco.
"Greece needs investment. The Chinese came with good will and we are open to other people who want to come and invest here.
"Our old ways of working were very primitive. Now we can really drive forwards and improve Greece's economy. There is nothing to be afraid of – the Chinese are here to develop our infrastructure, and we will benefit. It is a win-win project."
The port may prove just the beginning of China's ambition in Greece. By the end of the year China is expected to make a joint bid with a Greek company to create a 200 million euro (£165 million) logistics hub at Attica, near the port, to distribute goods from China into the Balkans and the rest of the continent. The Chinese are also in talks to buy a share in the struggling state-owned railway.
With the strategic position of Piraeus as being near the Bosphorus, the port also provides a way into the Black Sea region, central Asia and Russia.
Yet although the Chinese are undeniably involved in Athenian affairs, their physical presence is decidedly limited. In the slightly down-at-heel immigrant quarter of Omonia, where tacky Chinese hypermarkets sell cheap plastic jewellery, household goods and nylon clothes, the few Chinese on the streets claimed never to have heard of Cosco, and hurried away quickly. Chinese noodle bars are yet to replace the Greek tavernas lining the streets.
Staff in the offices of Cosco's shipping company, in an unprepossessing office block overlooking the cruise ships of the passenger terminal, said that of their 45 members of staff, only the director and financial director were Chinese. In the port terminal offices, of 250 members of staff only 10 administrative and managerial staff were Chinese.
But the Chinese are certainly making their mark in Europe, keen to flex their muscles. And with their deep pockets and seemingly limitless ambition, they look likely to succeed.
Wei Jiafu, Cosco's chief executive, said in a recent television interview with Greece's Skai Television: "I came here to help bring the port of Piraeus back to its original position. I hope that within a year's time it will be the number one container port in the Mediterranean.
"We have a saying in China, 'Construct the eagle's nest, and the eagle will come'. We have constructed such a nest in your country to attract such Chinese eagles.
"This is our contribution to you."
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