Its no secret that Greece is hurting from a lack of international direct investment.
Let’s face it, no company in their right mind wants to touch Greece given its high business cost and strict labor laws.
Now in meltdown mode, foreign investment into Greece is critical in keeping the country alive, but uncertainty looms large in Hellas and risk is high.
In real simple terms, companies do not know whether Greece will be using the Euro, Drachma or something else altogether come summer. Not an appealing case for foreign direct investment and job creation.
In comes China, who used some good old leverage during negotiations with previous Greek governments, and managed to invest in the Piraeus port, without having to deal with heavy Greek bureaucracy and crippling labor laws.
What is seen as a lone bright spot, in an utterly black five years, China’s major investment coming from China Ocean Shipping Company (COSCO Pacific), into Greece’s largest port of Piraeus, was a model that may provide the struggling SYRIZA government with something to build on…given Greece’s rulers in Brussels do not block Greek cooperation with the ever evil (in their eyes) Silk Road initiative.
Sputnik News Agency reports…
With China’s effort to improve efficiency of its supply chains into Europe and expand its economy, the recently planned Silk Road aspires to link Europe via the Indian Ocean and the Suez Canal.
In 2008, COSCO, reached a €4.3 billion deal with the government of Kostas Karamanlis giving the Chinese the right to operate the second terminal of the Piraeus Port Authority (PPA), as well to rebuild and operate an unused third terminal, for a period of 35 years.
Since 2010, when COSCO began operating in Piraeus, it has magnified the number of shipping containers passing through Athens every year. Chinese investments in Piraeus may be one of the few things that can help Greece’s economy, but since Syriza’s government took office in late January, such investment is getting delayed.
“My assessment is that there can be a strategic development partnership with China,” Yannis Dragasakis, deputy prime minister and a key representative of the moderate wing of Syriza, told Politico
“In the context of the New Silk Roads initiative, there are infrastructure projects which are of common interest,” he said. “A significant part of Greece’s recovery in the coming years needs to come from increased infrastructure investment.”
The problem is that Greece is no longer “accelerating privatization.” Since the Syriza-led government took office in late January, there have been a number of contradictory statements by ministers on the outcome of the privatization process.
Syriza’s Shipping Minister Theodore Dritsas had not even been sworn in before declaring: “The privatization of PPA stops here.”
Dragasakis spoke about the privatization saying that Greece wants joint ventures between the state and the private sector, but does not want to just sale government’s stake in a company, although management control can be placed in some cases in the hands of the private investor.
The absence of long-term strategy, a recurrent bane of Greek policymaking, has meant that a great deal of potential has been wasted. China’s presence in Piraeus is making that waste more visible in three sectors in particular: rail transport, logistics and ship repair.
China is expecting Syriza’s government to make up its mind on the key issues of attracting investments soon because China does have other alternatives for the Silk Road initiative.