GREECE: Is Mitsotakis determined to sell-off state assets to the Chinese?

8 mins read


By Makis Georghiou

Assured his administration remains intact after four months, Kyriakos Mitsotakis continues on his economic roadshow, only this time, the Greek prime minister is not pitching an upcoming IPO to investors but trying to lure big-ticket financing for the country’s infrastructure and privatisations programme.

Having convinced his fellow EU leaders of stability returning to Athens, with unemployment receding to 16.7%, the lowest since April 2011, and the trade deficit narrowing by a further 2.3%, Mitsotakis is trying to find ways to secure funding on better terms.

Earlier this week, he turned to Beijing from where he came back a wealthier man, with major deals in his pocket, paving the ground for Xi Jin Ping’s first state visit to Greece this month.

Top of the agenda of the Chinese leader’s visit is the EUR 800 mln investment programme in Cosco-controlled Port of Piraeus, an ambitious move dubbed “China’s Gateway to Europe” for goods headed to the heart of the continent.

It paid EUR 280 for a 51% share and 35-year concession, with an option to take 16% more for EUR 88 mln. Beijing has also eyed the Greek national railway grid and is keen on energy projects.

The former venture capitalist-turned-politician wants to see flourishing economic cooperation with China, a plan he may have designed even before the July elections, probably making some promises of concessions, for which Premier Xi wants to collect on.

Accompanying Mitsotakis to Beijing were executives from major Greek energy companies, some of which already have close ties to Chinese investors.

These included power producer DEH (PPC) and Copelouzos, both of whom have cooperation deals with the likes of China Energy and Sumec.

The giant China State Grid Corporation acquired a controlling 24% in electricity power transmission operator ADMIE back in 2017, a stake it wants to increase and to partake in joint ventures for electricity interconnector projects, such as the Crete-Attica link, through the State Grid subsidiary NARI.

Ironically, the Greek energy regulator RAE, that green-lighted ADMIE to seize the interconnector, is now having cold feet, hinting that it would allow the state operator to take control, but could not allow investors (including Chinese) to join the venture.

And this is where the problems have started to show, with a report in daily Kathimerini suggesting that the Greek state is short of EUR 600 mln for the Crete-Attica interconnection.

A project it wanted to hand on a silver plate to Chinese investors, shunning a partnership with the Cypriot developer of the original project, the EuroAsia Interconnector, denying the Greek taxpayer from access to EU funds.

It is hoped that the money will come in the form of loans-for-equity from the likes of Bank of China and ICBC, two behemoths in the Chinese project finance sector, probably in exchange for a bigger stake in ADMIE and penetration of PPC.

On the other hand, these financial institutions would be happier to fund purchases in the maritime sector, with Greek shipowners ordering some 1,000 new vessels at a cost of EUR 50 bln in the last 15 years.

But it doesn’t end there. Whereas the US and EU partners seem unperturbed by Chinese investments in the Greek energy sector, they are cautiously watching the ports’ investments which will rival Rotterdam and Hamburg.

However, they are more worried by China’s efforts to push its 5G technology, with officials accompanying Mitsotakis to Beijing reassuring their western partners that Greece “will align with its EU partners” to bar Chinese companies from investing in telecoms.

Already, in neighbouring EU-hopeful Albania, political analyst Arbana Xharra wrote “the US embassy in Tirana has reacted because the Chinese are likely to receive the tender for the 5G network. The Americans do not want the Chinese to take control of such a project that will allow them access to personal and national servers.”

As regards the rhetoric about China-Greece relations, Jens Bastian, an Athens-based economic analyst and financial sector consultant, wrote in the respectable that different examples highlight that project delays, their cancellation or outright failures are also part and parcel of the Sino-Greek investment story during the past decade.

“They highlight the complexities of navigating Greek politics and administrative obstacles. They also illustrate that Chinese companies can become the victims of fraud and manipulation.

As the US Secretary of State Mike Pompeo reminded his Greek interlocutors recently during his Athens visit, not every Chinese proposal comes without strings attached.

It may also be appropriate at times to say “no, thank you” to a further investment proposal from Beijing. Chinese companies will continue to participate in public tenders in Greece. But they are likely to face higher hurdles, not least from European Union regulatory scrutiny towards Chinese investments in the technology sector and financing of infrastructure projects in EU member states.

Crete-Attica opposition

Meanwhile, as the Crete-Attica link gets underway, the operator will have to face a greater headache of resistance from local communities objecting to the location of the converter station at Damasta.

The original project developer, EU-approved EuroAsia, had suggested the converter station be located at Korakia, while ADMIE insisted on Damasta, despite local opposition, as it is a small community of national historical importance.

The nearby municipality of Malevizi convened its energy commission this week and awaits an ADMIE delegation to visit, to say if it will move its site, while ‘Greek Solution’ MP Vasilis Viliardos submitted a parliamentary question to the Energy Minister inquiring about the financing of the entire project and the use of state funds.

The MP asked if public resources of EUR 900 mln are being used to fund a project that would rival state utility PPC and also inquired about Copelouzos’ involvement in the project, an answer Viliardos will probably not receive until after Xi Jin Ping’s visit to Greece is concluded.

The writer is a regular columnist on energy, geopolitical and maritime affairs