This article was published on Al Jazeera.
For half a decade, Greece has become notorious for its dwindling fortunes. Its stubborn recession has broken postwar European records. Its unemployment levels, the highest in the European Union, threaten political stability. It seems as though no story is too bad to be true.
Yet days ago Greece surprised the world with two developments suggesting that it may finally be turning a corner in this crisis.
The first is that Greece will form the heart of the so-called Southern Gas Corridor, an energy security strategy emanating from Brussels aimed at weaning Europe off the dominance of Russian gas.
The second is that Greece’s biggest port of Peiraieus, near Athens, is well on its way to becoming Europe’s main gateway for trade with China. The projects are worth $2.3 billion in direct investment and 2,300 construction jobs over three years, a fact Prime Minister Antonis Samaras was quick to emphasise.
“This is a very important vote of confidence in Greece,” he said after the Trans-Adriatic Pipeline, two thirds of which will be built across northern Greece, was chosen as the conduit for Azeri gas to Europe. The gas, which is to be extracted by the European-dominated Shah Deniz Consortium, is to flow in 2017. “Who would invest so much money in an economically, socially and politically dangerous country?” Samaras rhetorically asked.
The Institute of Economic and Industrial Research has estimated TAP‘s total beneficial effect over its half-century lifespan at some 33 billion euros, translating into at least 4,300 jobs on an annual basis.
No less important is the decision by the China Ocean Shipping Company, or Cosco, to invest $290 million in expanding its container port terminal from a capacity of about 2.5 million 20-foot containers (or TEU) a year to 6.2 or even seven million.
"We want to turn Piraeus into the top port in the Mediterranean and Europe," said Wei Jiafu, Cosco’s outgoing chairman at the inauguration ceremony. “Greece can– and I say will – become the commercial gateway for China and Europe,” replied Samaras.
The political timing of these announcements could hardly be better. A week earlier, Samaras’ government was hobbled by the departure of a key coalition member, reducing his parliamentary majority to a mere three seats.
“The immediate priority is to bring the turnaround as quickly as possible, to defeat unemployment, to bring investments, to avoid new austerity measures… and to raise our geopolitical profile,” he told his reshuffled cabinet.
Tangible economic benefits are a matter of existential importance to Samaras, who pledged himself to an agenda of growth over austerity during last year’s election; but the true value of the two investments arguably lies in the fact that they place Greece at the heart of strategic European relationships with the rest of the world.
“The political effect of being part of such a huge undertaking firmly puts Greece on the energy security map of Europe,” TAP’s managing director, Kjetil Tungland, told Al Jazeera from Baku. “European gas production is going down. Russia is almost the sole supplier. The southern route is almost a dream about to come true. How Greece benefits from this is up to Greece. It should have plenty of opportunities.”
The big question is whether Greece can make the most of these opportunities. Reaping benefits requires investment, and the country is caught in a debt trap. Last year it spent its entire primary surplus of $16 billion servicing loans. This year’s tax revenues are almost a billion dollars behind schedule as the recession ploughs into its sixth year. Nor is any investment revenue forthcoming from its privatisation plan; anything raised from asset sales must go directly to creditors. Even EU-funded public investments don’t amount to more than $9 billion this year, and Greece may not manage to launch enough projects to claim the full amount.
The cash crunch means that the government is a beggar rather than a chooser. For example,
TAP has announced that it will contract the operator of the Greek natural gas distribution system, Desfa, to carry out maintenance on its pipeline. But Desfa is about to be sold to the Shah Deniz Consortium, according to the Hellenic Republic Asset Development Fund, which oversees privatisation, so the Greek state will not reap the benefits of expansion.
Divestment, rather than investment, is the order of the day, says Stelios Stavridis, who heads the Fund. “Public companies are falling apart. In two years’ time nothing will be left standing because there’s no money. And the companies due to bad management will collapse,”
Stavridis insists that privatisation is now the key to development, because once they are in private hands, assets’ true value will shine through. “Every boatload of containers saves $1.5 million by coming to Peiraieus compared to going through Rotterdam or Hamburg or elsewhere in northern Europe,” he says.
The Fund now wants Cosco to take over the entire Peiraieus Port Authority, or OLP, a state enterprise of dubious profitability. OLP, which currently competes with Cosco, managed to increase its container traffic by 14 percent over three years. During the same period, Cosco increased container traffic through its Peiraieus terminal a dozen times over.
Cosco says it is willing to bid for OLP, and intimates that it plans to invest massively in other network industries that complement its European bridgehead. The reason is that once its container capacity has expanded to seven million TEU a year, Greece’s single-track rail line to the north will no longer suffice for overland shipping to the Balkans and beyond.
“The state will have to consider at that point whether it is willing and able to make the necessary investment,” says Tasos Vamvakidis, commercial director at Cosco’s subsidiary, Piraeus Container Terminal. “Cosco, which is making these investments here, would not want to be at the mercy of whoever takes on the management of rail in future. We’re interested in studying whichever proposal the government puts forward,” he told Al Jazeera.
But privatisations do not always go as planned, partly because Greece’s dependence on its creditors also bends it to their political will. Last month they stymied efforts by Russia’s Gazprom to buy Greece’s gas monopoly, DEPA, depriving it of $1.2 billion. DEPA will be re-floated later this year to what is expected to be a narrowed field of bidders.
“I think we would be kidding ourselves if we denied that Greece’s negotiating position is reduced,” says Thanos Dokos, director at the Hellenic Foundation for European and Foreign Policy, or ELIAMEP, a leading think tank. “And the investors know this.”
“Focusing on how to sell a dozen assets won’t bring Greece to a new period of prosperity,” Dokos says. “If we allow a few companies in without creating a plan, we are doing half the job. The point is to place all this into a broader strategy.”
That broader strategy has so far evaded Samaras, who is often accused of spasmodic moves. Yet he has also demonstrated an ability to stick to his guns in a crisis. If he can train those guns on restoring lost Greek sovereignty as well as prosperity, he might prove that what goes down must come up.