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Greek PM Tsipras douses fires over changes to Cosco port deal

Greek PM Tsipras douses fires over changes to Cosco port deal
Greek Prime Minister Alexis Tsipras headed off for a state visit to China 1 July after a frenetic day in Parliament led his leftwing government to make a U-turn regarding the concession sale of the country’s largest port, Piraeus, to Chinese shipping conglomerate, Cosco.

Before the PM set off for Beijing the government had to douse a fire that started when the Chinese shipping giant raised objections to “unilateral” changes to the agreement for the sale of a majority stake in Piraeus Port Authority (PPA) when it was tabled for ratification by Parliament, 28 June.

Fearing the latest fiasco would cast a shadow over the Beijing visit – which Tsipras hopes will help pave the way for further deals and investments – the government back-tracked on 30 June on the changes it made to the agreement that had angered the Chinese company.

Cosco and Greece's privatisation agency Taiped, 8 April, signed a EUR668.5m ($703m) deal for the Chinese shipping conglomerate to buy 51% of the PPA for EUR280.5m and purchase the remaining 16% owned by Taiped for EUR88m in five years, after having first completed investments worth EUR300m.

In what can only be described "as an angry letter", the gm of Cosco Hellas, Angelos Karakostas, wrote to Taiped, and the country's Trade committee, stating: “With the submission of the draft bill ratifying the new concession agreement between the Greek government and PPA, we were confronted with a very unpleasant surprise, as the content of the specific bill constitutes a complete reversal of what our company Cosco HK agreed with Taiped, regarding the acquisition of a majority stake in PPA.”

Karakostas requested that the original text be restored so it reflects “fully and completely” what was agreed between the Greek state and the company.

Speaking in Parliament, Shipping and Island Policy minister, Thodoris Dritsas admitted there were discrepancies, insisting the government had every right to make changes but that it would consider making improvements. “The government will look into it, it will look into the objections and will probably consider making improvements,” said Dritsas.

Cosco's letter focused on seven points which it claimed had been altered. Among the changes cited by the Chinese company was the obligation of the Greek state to approve licensing for projects within a 90-day time frame. Removing this from the bill, the company said, would affect the amount it bids for a project and could also discourage the submission of a bid.

Cosco also says another clause removed was one stating that labor laws governing private companies will also apply to the PPA. This clause has led to prolonged strike action by port workers in Piraeus and Thessaloniki ports.

The action was suspended in Piraeus, 24 June, after 29 days when minister Dritsas pledged "jobs and syndicate rights will be protected".

Before the changes were made, the government had insisted the whole issue had been blown out of proportion, while senior officials alleged the main concerns of some of Cosco’s Greek executives were not the company’s best interests but rather playing political games against the government.

However, the fallout over a business deal which has been hailed by officials of both countries and analysts generally, as an important catalyst to kick-start growth in debt-ridden Greece concerned the government fearing the complication would further damage the country’s international standing at a time when it is trying to signal to international markets and investors Greece has embarked on a new course.

Opposition parties called the issue a “fiasco,” and held it up as yet more proof the government is incapable of pushing through reforms and privatisations. “Never in the history of Parliament has a government gone back on its signature on a bilateral agreement,” New Democracy leader Kyriakos Mitsotakis told the Parliament, holding Tsipras responsible for the government’s “erratic” policies.

Conservative spokesman Giorgos Koumoutsakos said: “Erratic policies on investment and privatisations kill off any possibility of economic growth,” adding “incompetence and unreliability drive away investments" and "undermines growth".

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