Angry at EU’s public finance demands, Greece embraces China’s cash and influence

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After years of struggling under austerity imposed by European partners and a chilly shoulder from the United States, Greece has embraced the advances of China, its most ardent and geopolitically ambitious suitor.

While Europe was busy squeezing Greece, the Chinese swooped in with bucketloads of investments that have begun to pay off, not only economically but also by apparently giving China a political foothold in Greece, and by extension, in Europe.

Last summer, Greece helped stop the European Union from issuing a unified statement against Chinese aggression in the South China Sea. This June, Athens prevented the bloc from condemning China’s human rights record. Days later it opposed tougher screening of Chinese investments in Europe.

Greece’s diplomatic stance hardly went unnoticed by its European partners or by the United States, all of which had previously worried that the country’s economic vulnerability might make it a ripe target for Russia, always eager to divide the bloc.

Greek Economy Minister Dimitri Papadimitriou.
Greek Economy Minister Dimitri Papadimitriou. Yiorgos Karahalis

Instead, it is the Chinese who have become an increasingly powerful foreign player in Greece after years of assiduous courtship and checkbook diplomacy.

Among those initiatives, China plans to make the Greek port of Pireaus the “dragon head” of its vast “One Belt, One Road” project, a new Silk Road into Europe.

When Germany treated Greece as the eurozone’s delinquent, China designated a recovery-hungry Greece its “most reliable friend” in Europe.

“While the Europeans are acting towards Greece like medieval leeches, the Chinese keep bringing money,” said Costas Douzinas, head of the Greek parliament’s foreign affairs and defense committee and a member of the governing Syriza party.

Quid pro quo?

European Commission president Jean-Claude Juncker (left) and Greek Prime Minister Alexis Tsipras (right).
European Commission president Jean-Claude Juncker (left) and Greek Prime Minister Alexis Tsipras (right). Petros Giannakouris

Douzinas said China had never explicitly asked Greece for support on the human rights vote or on other sensitive issues, though he and other Greek officials acknowledge that explicit requests are not necessary.

“If you’re down and someone slaps you and someone else gives you an alm,” Douzinas said, “when you can do something in return, who will you help, the one who helped you or the one who slapped you?”

The Trump administration, recognising it has a geopolitical and economic challenger, recently intervened to help lift a US deal over a Chinese competitor and the Greeks seemed happy to play one power off the other.

EU officials are concerned that China is buying silence on human rights issues and undermining the bloc’s ability to speak with one voice. Analysts say China targets smaller countries in need of cash, among them Spain, Portugal and others that suffered in the financial crisis. Hungary, where China is pledging to spend billions on a railway, also blocked the EU statement on the South China Sea.

In July 2015, German Chancellor Angela Merkel (left) and  European Central Bank President Mario Draghi held emergency ...
In July 2015, German Chancellor Angela Merkel (left) and European Central Bank President Mario Draghi held emergency talks on the Greek economy with Prime Minister Alexis Tsipras (second left). Yves Herman

Many analysts have noted that Greece’s human rights veto came as Prime Minister Alexis Tsipras returned from a summit meeting in Beijing in May, where he signed billions of euros’ worth of new investment memorandums with Chinese companies.

Greek officials insisted that, despite all the Chinese investments, the country identified with, and was loyal to, the EU and did not do China’s bidding. Some European officials are not so sure.

“The Greek government needs to choose where its alliances lie and realise the EU is not only a market, but first and foremost a community of values,” said Marietje Schaake, a prominent member of the European parliament from the Netherlands.

Over the summer, Chancellor Angela Merkel of Germany tightened rules to limit takeovers of German strategic assets, a move aimed at Chinese state-backed firms. As Merkel put it to a German newspaper after Greece’s vote blocking the condemnation of Chinese human rights violations, Europe “has to speak with China in one voice.”

She added that China’s economic might allows it to pressure weaker European nations. “Seen from Beijing,” she added, “Europe is an Asian peninsula.”

Gateway to Europe

In January 2015, Greek voters shook Europe by electing the radical leftist Syriza party and its leader, Tsipras. He had campaigned to end the austerity measures of the EU and halt privatisations like the port of Pireaus. Boisterous protesters spilled into Athens, waving Syriza flags and denouncing the European power centers, Brussels and Berlin.

But it was Beijing that became quietly nervous. China’s years of laborious and expensive spadework in Greece suddenly seemed imperiled, especially its investments in Pireaus.

Immediately after Tsipras took office, the Chinese ambassador, Zou Xiaoli, became the first foreign official to pay him a visit. Zou pressed Tsipras to honor the previous Greek government’s commitments to privatise Piraeus, according to several people with knowledge of the meeting.

Back in Beijing, Chinese officials expressed displeasure, and state-run media ran articles questioning Greece’s friendship with China. Less than a week later, the Chinese premiere, Li Keqiang, telephoned Tsipras to make sure there were no more misunderstandings.

In response, Tsipras and his deputies announced an “upgrading of relations between Greece and China.” Within weeks, three Chinese frigates arrived in Piraeus port. At a ceremony, Tsipras affirmed Greece’s intent to “serve as China’s gateway into Europe.”

Even as Berlin and Brussels grow wary of Chinese investment, Greece may not care, after suffering under German-enforced austerity attached to the international bailouts that have kept the country afloat since the 2010 debt crisis.

New neocolonialism?

Along more than 20 miles of coastline outside Athens, a forest of cranes at the Piraeus port load and unload thousands of containers from China and around the world. An ultramodern floating dock is scheduled for arrival in November from China. A planned new Chinese-financed passenger hub is also in the works.

China has transformed Piraeus into the Mediterranean’s busiest port, investing nearly half a billion euros through the state-backed shipping conglomerate COSCO. It hopes to make Piraeus the entry point to Europe under its One Belt, One Road project.

Chinese goods would travel along a new network of railways and roads radiating up through central European nations, with the prised destination being Germany, where China invested $US12 billion ($15 billion) last year alone.

COSCO has brought about 1000 jobs to the area, but it has outfitted cargo docks with cranes made in China, not in Greece, and expanded the docks with building materials from China. And as Greece struggles through record joblessness, the company has used subcontractors to hire around 1,500 workers mostly on short-term contracts at wages far below what unionised Greek dockworkers are paid.

“There are more workers, but they earn less income,” said Giorgos Gogos, general secretary of the Piraeus dockworkers union.

Yet Greece needs any jobs, and leaders are counting on more Chinese investment. Fosun International Holdings, a Chinese conglomerate run by Guo Guangchang, often referred to as China’s Warren Buffett, is spending billions of euros with a consortium with Greek and Arab investors to convert an abandoned former airport on the seaside outside Athens into a posh playground three times the sise of Monaco for moneyed tourists. The project, Hellenikon, is part of a bigger plan to bring more than 1.5 million Chinese tourists to Greece during the next five years.

Tsipras has swept aside regulatory hurdles, clearing two large refugee camps installed in the former airport, and quashing attempts by members of his own party to delay construction because of concerns the project might pave over ancient archaeological sites.

“That also has been unstuck,” said Dimitri Papadimitriou, the Greek economy minister.

by Jason Horowitz and Liz Alderman
The New York Times

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