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The ins and outs of China Cosco's Pireaus deal

The ins and outs of China Cosco's Pireaus deal

The long touted privatisation of Piraeus port is at an end … almost and both Greece and China are now talking about the benefits they hope to glean from the EUR368.5m ($412m) deal between Greece’s privatisation fund and China Cosco Shipping, signed in Athens on 8 April.

Greece stands to benefit from China’s growing global influence, while the port of Piraeus can play a pivotal role in the development of its economy, said Xu Lirong, president of China Cosco Shipping after putting pen to paper. “Greece will have many benefits from China’s growing influence and power in the global market,” said Xu.

“Chinese companies see huge investment opportunities in Greece and this is something backed by the Chinese government,” said Xu, insisting his company’s objective is to transform Piraeus into the Mediterranean’s most competitive port.

As Greece struggles in economic quicksand, Greece’s Prime Minister Alexis Tsipras saw the “agreement as an important message to the world’s financial community”. After signing the deal he noted it makes the “Silk Road” faster and shorter at a time when Greece is putting emphasis on economic recovery, adding, “this investment will be the start for a series of new investments”.

Perhaps trying to explain why the process has taken three years to materalise Tsipras added the Greek government wants to protect the working conditions and the environment.

Indeed, Shipping and Island Policy Minister, Theodoris Dritsas, refused to attend the signing underpinning the socialist Piraeus MP's stance on privatisations. Dritsas believes the deal has no legal standing unless it is ratified by Parliament and intends to fight until the parliamentary vote in a few days.

Dockworkers are also opposed to the deal saying it will put their jobs at risk. Their union struck during the signing and held a protest in central Athens over the past weekend.

Greek President Prokopis Pavlopoulos hopes “this deal is just the beginning for many more investments to come to Greece”. He met with Xu after the signing stressed the importance of the agreement for both sides.

“When we talk about economic development we always mean sustainable growth, which places people at its centre,” said Pavlopoulos.

Under the deal, Cosco will pay EUR280.5m to buy 51% of the PPA and EUR88m for another 16% after five years, on the condition it commits to investments of EUR350m in the next decade.

Xu has pledged that as soon as the deal comes into effect, Cosco plans to invest in maintaining the shipbuilding infrastructure, seek a greater share in the cruise sector and organise coastal shipping. He also assured the company will “pay great attention” to the labour relations and to “provide the best working conditions” for the employees.

Since 2009, Cosco's subsidiary Piraeus Container Terminal (PCT) has been operating container terminals II and III at Piraeus under a 35-year concession. In 2015, the container throughput of Piraeus increased to 3.36m teu from 880,000teu in 2010, while the global ranking of Piraeus rose from 93rd to 39th in terms of container capacity.

According to Tassos Vamvakidis, commercial manager of PCT, since 2010 Cosco has invested EUR600m in the two container terminals, paid Euro 200m to the Greek state in rent, EUR100m in taxes, EUR105m in salaries and provides work for 1,047 people, of which just a handful of executives are Chinese.

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