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Sunday, July 3, 2016

Cosco Deal Final - At Long Last!

For several years now have I been stating my view that the Cosco investment at Piraeus is arguably a prototype of the foreign investment which Greece should attract: no short-term cash milking; instead, longer-term investments with longer-term perspectives and longer-term contributions to the Greek GDP.

Long before SYRIZA, leftist Greek politicians had criticized Cosco as a classic example of Chinese sweat shops being introduced to Greece. When SYRIZA assumed power, it seemed like one of their top priorities would be to reverse the Cosco investment (but certainly not allow an expansion).

It did not require much from the Chinese side. Only a few reminders from China what they meant by old friend status had a magic mind-changing effect on SYRIZA. Negotiations were quickly started and in April of this year the deal was signed: Cosco will buy 51% of Piraeus for 280,5 MEUR and another 16% for 88 MEUR after 5 years and once Cosco completes investments of 350 MEUR over the next decade.

A few days ago, the Greek shipping ministry submitted to parliament for approval the terms of the Cosco deal. Only one slight glitch happened: Cosco immediately sent an email stating that "the content of the specific plan is a complete reverse of what was agreed between Cosco HK and Taiped". Ouch!

At first, shipping minister Theodoridis Dritsas misjudged the situation and said that while there were differences, the government had the right to make changes. That must have prompted another few phone calls from the Chinese side.

And then things happened quickly: one day before PM Tsipras' departure to China, parliament ratified the Cosco deal with 223 votes (out of 300). And the alterations which the shipping ministry had made? No longer a problem, they were all rectified.

I don't consider this as an embarrassment. Instead, it is a terrible faux-pas which sheds bad light on the intentions of the Greek government which obviously ignored the 11th commandment ("Don't get caught!"). And it also questions the government's international wherewithall when they don't know that a foreign investor will always closely monitor how their cases are treated in parliament.


  1. A long article to cover the reality with euphemisms.
    What you call a faux-pas, the world calls lying through their teeth.
    What you call lack of wherewithal of knowledge, the world calls stupidity caused by insular mentality.
    Both are things this and the previous governments excel in.

  2. I can only agree with anonymous, and he certainly wrote it shorter than I could ever have done. I can only stick to some politeness of language, it will not prevent me from keeping the truth out of the content. To describe it as a certain frugality with truth and alternative intelligence is a downright lie. It appeals to Greeks with a flexible yardstick, any small achievement can be measured as mega, and any large failure as micro, the conclusion is that the average is progress, so no need to do anything. I am quite sure that the language of anonymous was used at the investment meetings you (Klaus) have been to (the MOM's may have used a language closer to yours). I find it imperative for Greece to realize that the investor's yardstick is what counts.
    PS. Judging from track records the deal is far from done, there will be years of rear guard skirmishes. No other investor will risk that.

    1. Lennard, please don't judge our esteemed blog owner too strictly ;)

      Just read what beautiful words Tsipras has published about it:


    2. @Trickler
      Well, if that doesn't prove that Tsipras and SYRIZA are the best partners foreign investors could ever find, then I don't know what...

  3. People are way to soft and political correct around Greece, they avoid the truth, some do it out of ignorance or misunderstood empathy, others to avoid the usual response that if they criticize Greece they are "Greek haters". Attacking the person who criticize is the easy way, then you do not have to argue with the criticism itself, not very logic but normal also in between Greeks themselves. That way Greece get away with their very successful PR internal and external.

    1. Funny then how you do exactly what you chastise others for ...

  4. COSCO have announced their goal for cruise passengers in Piraeus, 3,0 MIO in comparison with the present 0,98 MIO. But they have a good track record, in the container terminal they added 800% to the turnover in 7 years.

  5. Tsipras got a rude message from his Chines friends "On your bike, mate".

  6. One wonders what Piraeus Port Authorities are going to do with the employees. When COSCO took over half of the container port the employees were just transferred to the half that stayed PPA controlled.

  7. @ H. Trickler.
    I do not judge our host harshly or otherwise. That I do not always agree with him is natural, I have yet to meet a person I totally agree with, and doubt that I would spend much time together with such a person.
    That Tsipras utter beautiful words does not help, most investors subscribe to the idea that when discrepancy exist between words and deeds, the words are the lies and the deeds the truth.

  8. "Avoiding the truth". Yes,I think mostly to be polite or for fears of confrontations. Let's try.
    One of the most popular myths is the one about people working longer hours in Greece than in Germany. Should you ever question it in Greek company you will be shouted out of the room. It is supported by figures from OECD and they don't lie. (Data and methodology by OECD 2014). They say that Greeks work 2014 hours per year and Germans 1371, or in proportion, Greeks 8,0 and Germans 5,4 per working day.
    OECD consider as working population anybody the age of 15 or more, who is registered as having gainful occupation.
    % of working population: Greece 33, Germany 49.
    % of working population on part time: Greece 11, Germany 22.
    Add to that the self-employed, who notoriously over report their working hours in order to obtain preferential tax statuses. Self-employed in Greece 37%, in Germany 10%.
    So, OECD tells us that average registered Greek workers, work more hours per capita than ditto Germans, an irrelevant observation.
    What OECD does not tell us is that average German citizens work more hours per capita than Greek ones, but that is the figure that influences the economy.

    As an example, let me present a Greek and a German family with one 15 year old child. The Greek father works 8 hours per day, the mother is a housewife without gainful employment (the political correctness), the son distribute newspapers 1 hour per day (but is not registered and escape the statistics). The working population in this family (country) works 8,0 hours per day.
    The German father works 8 hours, the mother 4 hours and the son 1. The working population in this family (nation) works 4,3 hours per day.
    Who do you think can better sustain the family (nation) economy?
    To the Greek father who feel tired in spite of the clarifications: Register your sons work, that will lower your average working hours to 4,5. Still tired? Let your wife work 1 hour per day and you have a mere 3,3 hours working day.
    Do you dare to tell your Greek friends that?

  9. It's boring statistics and old hat. With the words of Andreas Pap. on one of his more lucid days "We are consuming more than we are producing".

  10. COSCO did not take long to answer Tsipras, it remains to be seen if he can understand the message. In view of the rail strike COSCO now transship containers to feeder vessels in Piraeus, with destination Koper in Slovenia.
    Koper is a midsize (0,6 MIO TEU per year) container port with lots of space to expand. It is a Freeport with common administration of custom, cargo handling, ship movement and onward transport. They are close to many of the end users. They are directly connected to the main European rail network with an extended rail system in the port. They are connected to the central European road network.They are close to Danube inland ports in east and west direction.
    They are everything Piraeus is not. Piraeus has again relegated itself to the menial work, letting the others pick the cherries. How predictable.