Fight or flight?

The new government, led by the left-wing Syriza party, has quashed plans to privatise the Port of Piraeus, through the sale of two-thirds of Piraeus Port Authority. The original plan was set in motion by the previous Greek government to raise funds and drag the Euro-nation out of its economic quagmire.

Cosco Pacific had been shortlisted and was seen as a clear favourite to win Piraeus’ hand given its strong existing presence in the port through its operation of two piers at its wholly-owned Piraeus Container Terminal. APM Terminals, Ports America, and ICTSI had also shown an interest in the privatisation.

Cosco Pacific’s presence has been a boon for Piraeus, with container handling up fourfold since the concession started in 2008. In fact, the operator’s involvement in the Greek port has been praised as one of the few success stories of Greek privatisation.

But in what must be a fly in the ointment for the new government, it has found that it is unable to untie the Chinese from the 35-year deal that it currently has to develop its existing terminals. This expansion deal with the Chinese shipping conglomerate was a condition of the EU-IMF bailout.

Cosco Pacific, through Piraeus Container Terminal, has four berths at Pier II and will add a further two when works at Pier III are completed later this year. This will take PCT’s capacity to 3.7m teu, something both the Greeks and the Chinese can be proud of. Cosco Pacific also plans to invest in a fourth quay to take capacity to in excess of 6m teu.

The stock markets have not reacted kindly to the blanket halt on privatisation plans, with stocks plummeting on the news of the Piraeus withdrawal. The planned sale of a stake in the port of Thessaloniki is also expected to be culled. Greek shipping cannot sleep easily either. New shipping minister Theodoros Dritsas has warned its shipping community that it should be prepared to “lift the heaviest possible burden” to help lift the country out of its financial malaise. This includes re-examining all tax concessions on shipowners, which must be a worrying thought indeed for Greece’s many shipping magnates.

With political tensions high, Cosco Pacific may find it is forced to tread on eggshells to get its planned works done on its existing terminals, not an ideal way to promote future business. Will the Chinese choose to fight or take flight now that the honeymoon period is most definitely over for this soured Mediterranean love affair?