ATHENS, Greece — Unlike many in Europe, Chinese investors saw the Greek economic crisis of the past decade not as a disaster but as an opportunity.
Since 2008, Chinese business leaders have agreed to almost $9 billion worth of infrastructure and business deals — equivalent to about 5 percent of Greek gross domestic product — involving ports, telecommunications companies, energy facilities, real estate and tourism, according to the American Enterprise Institute.
For many, it’s a case study of how Chinese investment dollars lead to political payoffs. As Greek political leaders feuded with principal members of the European Union — notably Germany — over an imposed policy of harsh austerity, China offered an economic lifeline. In return, Greece became a leading voice inside the EU to take a softer line on China’s political failings and to offer a warmer welcome to Chinese investments.
“The Greek economy is thirsty for investments, and the presence of Chinese companies is important and we welcome it,” Greek Prime Minister Alexis Tsipras said in September during a business conference in Thessaloniki that featured representatives of Chinese business.
Although the economic situation has improved, Greece remains mired in a decade of economic turmoil. The unemployment rate still tops 20 percent, growth lags and punitive high taxes are necessary to pay off a debt burden that amounts to 180 percent of GDP.
The Institute of International Economic Relations, in a major survey of the burgeoning Sino-Greek economic relations released in December, noted that “Greece’s debt crisis has definitely contributed to the rapprochement between Athens and Beijing.”
DOCUMENT: China's foothold in Europe
Chinese officials have openly played on the tensions between Greece and its fellow EU states. The state-controlled Chinese news site Global Times noted in an editorial that “different from the EU, which has treated Athens as a delinquent borrower, Beijing designates the country as a ‘trusted partner.’”
At a popular level, Greeks are split. Many are thankful that China invested at a time when few other foreigners would take a chance and say Greece badly needed the cash and the jobs. A Pew Research Center survey in early 2017 found that 50 percent of Greeks had a positive attitude toward China, compared with 40 percent negative. The Greek pollster Kapa Research last year found China behind only Russia among countries that Greeks would most like to see closer bilateral relations.
But others are concerned about Chinese influence and Chinese-style management in a southern European country, where management traditionally respects labor rights and workplace conditions.
China Ocean Shipping Co., or COSCO, a state-owned company, purchased a majority stake in the port of Piraeus from the Greek government in 2016 for $456 million — the largest Chinese investment in Greece to date. The port is now a major node in China’s $1 trillion Belt and Road initiative, a system of trade routes and infrastructure projects that follow the old Silk Road and maritime passages through the Indian Ocean and Suez Canal.
Labor unions negotiating a new contract with COSCO are likely to have to accept lower wages. Since 2009, when a COSCO subsidiary purchased two piers at Piraeus, workers lost overtime and faced pay cuts of 30 percent.
DOCUMENT: China's involvement in Piraeus, Greece
“This deal shouldn’t make the port into a Chinese colony,” said Giorgos Gogos, secretary of the Piraeus dockworkers union. “It’s important to secure good labor conditions and make sure the state actually profits from the investment.”
As real estate prices in Greece continue to fall, 850 Chinese nationals have purchased properties worth more than $310,000, making them eligible for Golden Visas that allow them to travel within 26 European countries that have eliminated internal border controls. Golden Visas have generated more than $500 million in revenue for Athens, according to Enterprise Greece, a state economic development agency.
Even so, Chinese money is raising political questions about Beijing’s influence in Greece and its long-term ambitions for countries all along Europe’s eastern flank.
In June, Greece’s left-wing government surprised European leaders by blocking a critical EU statement at the U.N. Summit on China’s human rights record. A year earlier, Greece, Croatia and Hungary — where Chinese investments are also extensive — opposed a joint EU statement on China’s military expansion in the South China Sea. Without the required consensus, the EU statement was blocked.
“China uses Greece in order to have a strong foothold in the European Union,” said Michael Tsinisizelis, a professor of international and European studies at the University of Athens.
Greece is in line for membership in Beijing’s Asian Infrastructure Investment Bank. In November, the government sent a delegation to the so-called 16+1 annual summit of China with 16 Eastern and Central European nations. Athens and Beijing in May signed a three-year action plan to guide investment and trade deals. In December, French President Emmanuel Macron delivered an ardent speech under the Acropolis, where he expressed concern about Greek and European economic weaknesses that Beijing could target and keep the bloc from speaking with a united voice about global issues.
“Our European sovereignty is what will enable us to be digital champions, build a strong economy, and make us an economic power in this changing world and not be subjected to the law of the fittest — the Americans and, soon, the Chinese — but our own law,” he said.
China is now the EU’s second-biggest trading partner behind the United States. In 2016, China spent $40 billion compared with $23 billion in the prior year.
While COSCO is expanding its footprint at Piraeus, among the world’s fastest-growing ports, the EU is looking to closely regulate foreign investments in European strategic assets, including ports.
“There’s a general uneasiness in the EU concerning Chinese investments,” said Polyxeni Davarinou, a researcher at the Institute of International Economic Relations in Athens. “The EU wants to have a better control. At the same time, though, Greece and Eastern European countries really need these Chinese investments.”
She said Greece and Europe have the power to contain Chinese influence if leaders enact bold rules to monitor foreign investment.
“There are voices in Europe that believe Greece is too close to China, and that’s because we’ve given them reasons to see it that way,” she said. “Greece’s problem is how to develop a clear and steady strategy.”
The survey by the Institute of International Economic Relations noted that Greece is still emerging from a period when it could hardly afford to be choosy about who invested in its beleaguered domestic economy.
“It is an indisputable fact that, trapped in its severe fiscal and economic predicament, Greece is not in a position to discourage foreign investment from any legitimate source,” the report concluded. “In fact, a certain diversification of foreign investment from countries outside the EU is even welcome.”
But the survey also cautions that, “engulfed by its economic woes and disenchantment with the EU, Greece welcomes China with a coherent strategy.”
In Piraeus, meanwhile, cranes are offloading shipping containers from huge cargo ships around the clock. COSCO is planning to invest an extra $372 million to build three five-star hotels and a new dock that can accommodate 14 cruise ships.
Still, Mr. Gogos, the union leader, is pessimistic about Greece’s recovery. No matter how much Chinese money flows into Greece, he said, the country is still laboring to repay its debts. Greeks won’t see the benefits of their hard work for generations, he said.
“Nothing will change for Greece,” Mr. Gogos said. “All the money ends up in the country’s black hole, repaying its humongous public debt instead of rebuilding the economy.”