COSCO's acquisition of Greek Piraeus Port to further contribute to local economy

BEIJING - China COSCO Shipping Corporation Limited, China's State-run shipping giant, entered into a deal with Greece's privatization fund HRADF on Friday to take over a 67-percent stake in the European nation's main port of Piraeus.

Under the deal, COSCO, the fourth-largest container shipping firm and second-largest port operator in the world, will pay the cash-strapped country 368.5 million euros ($418.8 million), and also promises to invest another 350 million euros ($398.9 million) over the next decade in infrastructure work at the port.

The agreement was signed by HRADF chief Stergios Pitsiorlas and COSCO Hong Kong CFO Feng Jinhua in the presence of Greek Prime Minister Alexis Tsipras, China COSCO Shipping Chairman Xu Lirong and Chinese Ambassador to Greece Zou Xiaoli at the office of the Greek Prime Minister.

COSCO's vision for Piraeus

According to Lloyd's List, a British daily covering maritime industries, Piraeus ranks third in port volume in the Mediterranean and is among the top 10 in Europe.

However, trapped in Greece's longstanding debt crisis, the Piraeus port had fallen into a mess with ships and containers piling up.

In 2008, COSCO won a container operation project for Piraeus port to manage Pier II and Pier III of Piraeus Container Terminal (PCT) for 35 years. In 2015, the port's capacity rose to 3 million containers, a dramatic increase from 685,000 in 2010.

By 2020, PCT officials expect that Piraeus' cargo handling capacity will reach some 6.3 million TEUs (20-foot equivalent unit) per year, making Piraeus the largest port in terminal capacity in the Mediterranean.

The Chinese enterprise has also created over 1,000 jobs for local people over the last two years. Among the incessant strikes around the country, workers at the port have never held a strike.

These have said that COSCO "has always been committed to harmonious development in Greece and to promote a win-win situation for all parties," said China COSCO Shipping Chairman Xu at Friday's deal-signing ceremony.

In five years of operation, COSCO aims to make the Piraeus port the south gate of the China-Europe land-sea express to speed up transportation between China and Europe, said Xu.

COSCO's vision to turn Piraeus into a leading international transit hub for products and services from Asia to Europe has already attracted other major multinationals at the port, which are cooperating with PCT to distribute their products in the region.

Greek officials, local business bodies and experts have repeatedly stressed that new investments in Piraeus will further boost the port's role as a key transit hub for products in the Mediterranean, create much-needed jobs in the recession-hit country, and breathe new life into the ailing economy by attracting more investors.

Greek Prime Minister Alexis Tsipras said Friday that the agreement offers an important opportunity for the two countries to develop a growth path that can benefit both countries.

"The agreement sends a strong message to the global economic community for the recovery of the Greek economy," he added.

Typical project under Belt and Road Initiative

As a matter of fact, COSCO's investment in Piraeus is the first major Chinese investment in Greece.

China and Greece deem the construction of the port as a typical project under the China-proposed Belt and Road Initiative, which includes the Silk Road Economic Belt and the 21st-Century Maritime Silk Road.

China and Greece have made the year 2015 the "China-Greece Maritime Cooperation Year" during a meeting between Chinese President Xi Jinping and former Greek Prime Minister Antonis Samaras in July 2014.

Xi said during his visit that China would like to further enhance its comprehensive strategic partnership with Greece and make the country "an important bridgehead and transit point" for China-Europe cooperation through the Belt and Road Initiative.

The two countries' collaboration at the port in recent years has been praised by officials of both sides, the local business community and experts as a great success story in bilateral ties in difficult times for Greece amid the acute debt crisis that broke out in late 2009.

Chinese Ambassador to Greece Zou stressed that confidence, mutual trust and cooperation are needed for the recovery of Greece, China and the global economy.

"As long as we work together we believe the port of Piraeus, Greece, China and the whole region will have a better future," he said.

Multiple benefits for Greek economy

Studies by the Foundation for Economic and Industrial Research (IOBE), one of Greece's leading think tanks, and other Greek and foreign experts have shown that COSCO's development plan for the port will bring additional long-term revenues of 5.1 billion euros per year to the Greek economy and add some 125,000 jobs until the new concession agreement expires in 2052.

IOBE experts expect that the privatization of Piraeus port will generate half a billion euros in investments by other entrepreneurs in the first five years, according to a survey released by the Greek institution.

"The privatization can play a catalytic role in the port's development, sending a strong signal to international markets that Greece is a safe and attractive investment destination," the IOBE survey concluded.

Ioannis Tzoannos, an economics professor and former general secretary of the Greek shipping ministry, said COSCO's acquisition of the Piraeus port is a "win-win situation despite what skeptics say."

He expects that COSCO's further investment in the port will generate more investments in the Greek economy and will benefit both sides.

"I believe it is a positive development for the Greek economy, a key parameter in the Maritime Silk Road which enhances the strategic importance of Piraeus," he said.

The sea and the shipping industry were and remain the key elements in the development of bilateral relations, and the Maritime Silk Road opened routes for trade, cultural contacts and stronger cooperation in more fields, Tzoannos said.

Similarly, Christos Staikos, chairman of Enterprise Greece, a Greek investment promotion body, noted that Greece is important in the context of the Belt and Road Initiative, saying China is becoming one of the main strategic partners of Greece on its road to recovery.

"All these factors create a stable framework for the further improvement of bilateral trade and business cooperation," he said.