The Limits of the Dictates

BERLIN/ATHENS/BELGRADE/BEIJING (Own report) – Berlin’s austerity dictate, ruthlessly imposed on Athens, is suffering its first blowbacks, weakening German hegemony over the EU. The China Ocean Shipping Company’s (COSCO) purchase of stakes in the Piraeus Port Authority, Athens had been forced to sell under pressure from Berlin and Brussels, is one example. COSCO, which had already acquired a small share in 2009, has been upgrading the port with investments in the three-digit millions. In the meantime, Piraeus has become Europe’s eighth largest port and is among the top 40 worldwide. Greece, which economically has been completely ruined by the austerity dictates, is hoping for more Chinese investments – and is no longer willing to participate in the EU’s routine official condemnation of China at the UN Human Rights Council. A similar development can be seen with Serbia. As part of its “Silk Road” initiative, China is planning to upgrade the rail line between Belgrade and Budapest. For the Serbian government, this offers hopes for a long term recovery. Brussels has now launched a probe into this project. According to experts, a policy based solely on austerity dictates and open pressure, as has been pursued by Berlin and the EU, can no longer be successful “in a multi-polar world.”

China Invests

The port of Piraeus, near Athens, is a good example of the first blowbacks Berlin’s hegemonic policy can suffer due to its austerity dictates. The port is among the public property, the Greek government, under pressure from Germany and the EU, had been forced to sell to pay its debts, despite massive public protests. Last April, the China Ocean Shipping Company (COSCO) was authorized to purchase a 51 percent stake in the Piraeus Port Authority at €280.5 million, to be followed by the purchase of another 16 percent stake at €88 million in 2021, provided it will invest at least €300 million in the port within the next five years. It certainly seems to be the case. COSCO even plans to invest €600 million. The Chinese company had ultimately been the only bidder for the Piraeus Port Authority. In view of the total collapse of Greece’s economy during the crisis, no one considered investing in a Greek trading site. German firms, in particular, preferred to invest in crisis resilient branches, such as cheap discount stores,[1] or in a branch that generates profits, even in impoverished countries – tourism. ( reported.[2])

The “Silk Road’s” Terminal Port

COSCO, however, has big plans for the port of Piraeus. It is the terminal of the “New Silk Road” sea route, a bundle of transport corridors linking China and Europe by land and by sea. The project is officially called “One Belt, One Road.” Piraeus is particularly suitable to serve as a terminal for the sea route, because it is the closest European port to the Suez Canal, through which Chinese goods can be delivered to Europe. Already in 2009, COSCO had been granted concessions for Piraeus and effectively began upgrading the port. Whereas German austerity dictates strangled the Greek economy, the Chinese company invested €600 million, hired 1,000 new workers and increased the port’s container-handling volume from 880,000 TEU in 2010 to 3.47 million TEU in 2016.[3] This made Piraeus the world’s fastest growing port. According to the International Association of Ports and Harbors it ranks eighth among the largest container ports in Europe and 39th worldwide. After acquiring the majority of shares, COSCO will continue upgrading the port. The construction of a huge floating dock is the next step planned. This will bring Piraeus repair contracts.

“Seeds of Discord”

Athens has begun making political concessions to the People’s Republic of China, in light of China’s rapidly growing economic influence. This became clear for the first time in June, when the EU, as it has many times before, sought to introduce another declaration condemning China before the UN Human Rights Council. This effort, however, proved unsuccessful – not solely, but also due to Greece’s resistance: “unproductive and often selective criticism of particular countries does nothing to facilitate the promotion of the human rights situation in these countries,” a Greek diplomat reasoned.[4] This was the first time the EU could not reach an agreement on a common declaration. German politicians sharply criticized Athens. The EU parliamentarian Jo Leinen (SPD) was quoted calling Greece’s sovereign judgment “threadbare and superficial.” Massive pressure on Athens is expected. German media are already fuming over Chinese “seeds of discord.”[5]

Hope for Recovery

Weakening Center of Gravity

EU think tanks are sending out a warning. Projects such as the extension of the Belgrade – Budapest rail line “shouldn’t just draw attention to China’s growing economic presence on the continent;” they should trigger significant reflection about “the apparent decline of the EU’s ability to act as a political-economic centre of gravity,” even “for countries on its immediate periphery” wrote the European Council on Foreign Relations (ECFR) in a declaration in late 2016.[9] Recently the ECFR also pointed out that in 2016 the European Commission assessed that the alignment of the Balkan candidate country, Serbia, with EU foreign policy declarations is decreasing significantly: from 89% to 59%. China is not solely responsible for that change, but its growing presence contributes.[10] Brussels must take counter-measures.


The consequences of Strangulation

The economist John A. Mathews, who, for a while had taught at Rome’s Libera Università Internazionale degli Studi Sociali Guido Carli and is currently teaching at Australia’s Macquarie University’s Macquarie Graduate School of Management, recently made a very clairvoyant assessment of the German-EU Southeast Europe policy. Had the Germans “not been so obstinate,” insisting so hard on austerity, and “strangling the Greek economy,” the Greek government might not have been “so keen to welcome the Chinese as new owners of their port.”[12] Berlin’s strategy “has succeeded in its narrow aims of keeping Greece a subservient partner in the Euro zone – but at the cost of allowing China to establish its bridgehead in Europe’s transport networks that will be of major long-term strategic significance.” This “episode” reveals, explains Mathews, that “in a multi-polar world, there are limits” to “a strategy of imposing ideologically driven austerity on a single country.”

Full article: The Limits of the Dictates (German Foreign Policy)

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