Angry at EU, Greece warms to China's cash

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 bucket-loads 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 US, 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. Instead, it is the Chinese who have become an increasingly powerful foreign player in Greece after years of assiduous courtship and cheque-book diplomacy.

Among those initiatives, China plans to make the Greek port of Pireaus the “dragon head” of its vast “Belt and Road Initiative”, 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 defence committee and a member of the governing Syriza party.

China has already used its economic muscle to stamp a major geopolitical footprint in Africa and South America as it scours the globe for natural resources to fuel its economy. If China was initially welcomed as a deep-pocketed investor — and an alternative to the US — it has faced growing criticism that it is less an economic partner than a 21st-century incarnation of a colonialist power.

If not looking for natural resources in Europe, China has for years invested heavily across the bloc, its largest trading partner. Yet now concerns are rising that Beijing is using its economic clout for political leverage.

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.

Over the summer, German Chancellor Angela Merkel tightened rules to limit takeovers of German strategic assets, a move aimed at Chi-nese state-backed firms. As Merkel put it 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.”

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 centres, Brussels and Berlin.

But it was Beijing that became quietly nervous. China’s years of laborious and expensive spadework in Greece suddenly seemed imperilled, especially its investments in Piraeus. Immediately after Tsipras took office, Chinese ambassador Zou Xiaoli became the first foreign official to pay him a visit. Zou pressed Tsipras to honour 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.”

‘A kind of 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 Belt and Road Initiative. Chinese goods would travel along a new network of railways and roads radiating up through central European nations, with the prized destination being Germany, where China invested $12 billion last year alone.

In the middle of the port, Chinese, Greek and EU flags flutter in front of the headquarters of COSCO, which now controls the entire waterfront through its 67% stake in the port. “It’s a kind of neocolonialism without the gunboats,” said Douzinas with a chuckle.

COSCO has brought around 1,000 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.

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 size of Monaco for moneyed tourists. The project, Hellenikon, is part of a bigger plan to bring over 1.5 million Chin-ese 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 B Papadimitriou, the Greek economy minister.