Can China plug the Greek leak?

When the Greek prime minister, Antonis Samaras, launched a programme to give Greek residency to those who invest at least 250,000 euros (Rs 20,825,000) in real estate in his country, the unsurprising first beneficiary was a Chinese man. It was unsurprising because it highlights the paradox of China-Greece relations which, in a way, reflects the earlier paradox of Soviet-Chinese relations.

In the late 1940s, Stalin and the Soviet Union, then the standard-bearers of global Communism, supported Chiang Kai-shek and his Nationalists in China and not Mao Zedong and his Communists. Now, Communist China supports Greece’s ruling centre-right New Democracy Party and not the 96-year-old Communist Party of Greece (KKE for Kommounistikó Kómma Elládas), which is proud of being the oldest political group on the scene and was banned for decades until 1974. China is the only country that is investing in crisis-ridden Greece.

Under a 35-year concession agreement, Piraeus Container Terminal (PCT), a subsidiary of the Chinese-owned company, COSCO, has been working since 2009 to turn Greece’s biggest port, Piraeus, which adjoins the capital, Athens, into the leading container terminal in the Mediterranean region. Under COSCO’s management, the cargo terminal has already doubled the containers it processes. Following this success, the Chinese have taken up a dozen other projects in Greece.

The Chinese connection isn’t confined to Piraeus. Just outside Athens is a factory producing the Greek carbonated drink Frutop, which tripled its exports last year by selling to China. Bottles are sterilised, filled with the juice, sugar and preservatives and given labels in Chinese ready for shipment. Droves of Chinese tourists can be seen at the Acropolis and other historic sights and on the picture-postcard Aegean Islands. They provide a welcome boost for Greece’s biggest industry. Chinese retailers sell cheap readymades and household goods at almost every streetcorner.

But not all Greeks are overwhelmed by gratitude. Whispers of espionage forced a Chinese to close down the general store he opened on the island of Kythera. Some Greek businessmen complain the market is being flooded with Chinese goods. What Greece sells to the Chinese amounts to only one-twentieth of what China sells in Greece.

The general secretary of the Piraeus dockworkers’ union, Giorgos Gogos, accuses China of preying on a “vulnerable Greek economy” for its own benefit. “Nobody gives money for nothing, especially Chinese companies and the Chinese government,” he grumbles. Gogos’ union is a member of the All-Workers Militant Front known as Pame (from the Greek Panergatiko Agonistiko Metopo) which commands the allegiance of nearly a million workers. But here is the rub: COSCO strictly bans trade union activity.

Perhaps that is why Gogos is sceptical. According to him, China is only “interested in helping itself. The investment in Piraeus is positive for Chinese companies but not for the public interest,” he adds, saying PCT “didn’t create the jobs it said it would.” Actually, the project employs about 1,000 Greeks. Greece’s shipping minister, Miltiades Varvitsiotis, says a second agreement for a further expansion of port facilities will create 700 new job positions directly and some 1,500 indirectly in a country that has suffered from high unemployment and deep recession for four years.

Whether China alone can lead an ailing Greece out of the sickroom and to full health is another matter. Frozen out of debt markets in 2010, Athens was forced to seek a bailout from the European Union and the IMF to avoid defaulting. Four years of fiscal reform under EU-IMF tutelage has improved Greece’s debt rating, but many still regard Greek bonds as junk. The public debt is still a high 175 per cent of GDP.

Greeks don’t expect much good to come of the EU’s loans. For one thing, they carry interest. For another, the money received goes in repaying non-Greek European banks from whom Athens had borrowed. “The money goes out as soon as it comes in!” they say. Finally, the stringent conditions the EU set for granting the loans has added to deprivation and discontent.

The evidence of poverty and constant whispers of corruption are inescapable in Sparta, which survives on cultivating oranges and olives. The price of the best Valencia oranges has plummeted to six cents a kilo. Olives fare a little better only because Italians buy up the locally made olive oil to mix with their own.

“A lot of aid is poured in,” a Spartan businessman says, “but the money leaks away!” Leak is a popular word. Idle taxi drivers repeat the charge. Outside the city centre, pavement cafes are empty. Shops and restaurants have been boarded up. Hotels have slashed their rates. A housewife’s government pension has been halved. Someone has scrawled “MONEY DON’T GROW ON TREES” in crooked English capitals on the crumbling plaster of a derelict house in the shabby streets that run back from Sparti Square, the still smart city centre with the town hall that looks like a rich man’s attractive villa.

Samaras’ trip to China exactly a year ago, accompanied by a delegation of 87 Greek business leaders, confirmed that Chinese companies want to be further involved in Greece’s infrastructure.  “We are global shipping powers and we can cooperate in many areas,” said China’s premier, Li Keqiang.  “Since 2010, there has been heightened cooperation, while Chinese companies desire to become active in the infrastructure sectors. We will take action to boost commercial transactions, with the target of increasing the volume of transactions to eight billion Euro in 2015.”

They discussed expanding COSCO’s activities and Chinese investment in Greek railways, roads, regional airports and other ports.  Samaras promised fast-track procedures to facilitate Chinese investment.

Among the many new bilateral agreements are a cooperation protocol between the  Hellenic Republic Asset Development Fund and China Development Bank;  a cooperation agreement between the China Development Bank and Invest in Greece to promote cooperation in priority sectors like tourism, real estate, energy, telecommunications, transport and investment financing; and a cooperation memorandum, under which the Chinese company ZTE (among the world’s five leading manufacturers of telecommunications equipment with a presence in over 140 countries) will turn Piraeus port into a transit and logistics hub for ZTE products in Europe and the greater Mediterranean region.

Finally, the famous Chinese company Huawei, to which Indians need no introduction, is committed to creating a logistics hub in Greece and a centre for research and innovation. Huawei will also cooperate with Greek universities and research centres and offer training to students and young graduates.

The political price has yet to be ascertained. But Greece will get off lightly if all China demands is Li Keqiang’s stated hope that Athens will help to improve Beijing’s relations with the EU.

Sunanda K Datta-Ray

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