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Foreign Policy

China Deepens its Influence in Europe with Help of New Greek Government

Nov 27, 2019

Chinese President Xi Jinping recently embarked on a three-day tour through Greece, deepening relations and signing a number of economic agreements with Greece’s new center-right government led by New Democracy (ND). Just one week prior, Greece’s new prime minister conducted his own parallel trip to Shanghai, attempting to highlight the potential of Greco-Chinese economic cooperation. China and Greece are set to continue building upon the relationship established by the previous SYRIZA government, which proceeded despite some substantial initial hurdles. Indeed, all signs point to the fact that Greece’s new government will continue to fight for Chinese interests in Europe in return for investment assistance, without the need to consider the opinion of a left-wing electoral base. 

Greece was in many ways the poster child of the devastation that the 2008 crisis wrought upon the economies of southern Europe. Its official unemployment rate peaked at over 27%, capital fled the country, and its banking system was only stabilized through continuous intervention by other EU governments – namely, Germany – and the European Central Bank. The price of this ‘stabilization’ was a massive austerity program that slashed working-class living standards for the benefit of Greece’s creditors and privatized publicly-owned assets. Austerity politics faced massive resistance from anarchists, communists, and other progressive forces, frequently paralyzing economic life in the country. By 2015, the ruling coalition of the center-right New Democracy and center-left PASOK had been completely delegitimized, paving the way for a landslide electoral victory by SYRIZA, the “coalition of the radical left.” 

SYRIZA was elected on a radical platform, vowing to end austerity and privatizations, reject the EU’s bailout terms, and forge a new path for Greece. The party’s subsequent U-turn became an exemplary cautionary tale for the global left. SYRIZA was not prepared to carry through on its threats of defaulting on Greece’s debt and had no control over its own currency, and found itself thus unable to fight the demands of its creditors. SYRIZA capitulated to the next EU bailout package, accepting its terms even after holding a referendum that saw an over 60% supermajority of Greeks reject the proposal. Over the next four years, SYRIZA enthusiastically implemented austerity and further privatizations, slashed taxes on business, and even courted Israel and the Trump administration

This U-turn was mirrored by the previous government’s relationship with China. China saw an opportunity in Greece’s financial distress, and state-owned shipping company COSCO bid on Athens’ Port of Piraeus as it was being sold off. The port’s privatization was a controversial symbol of Greece’s fire sale of domestic wealth to foreign bidders. Fresh off its election, the SYRIZA government suspended the privatization, provoking deep anger in China. In Greece, the move was hailed as a blow struck against foreign capital for the Greek worker. But this halt ended with Greece’s acceptance of the bailout program later that year, and SYRIZA allowed COSCO to acquire a controlling 51% stake in the port – the shipping company’s only such stake in Europe. 

The Port of Piraeus deal marked a new chapter in Greco-Chinese relations. In 2016 and 2017, Prime Minister Alexis Tspiras and SYRIZA blocked the rest of the European Union from condemning China over its assertive behavior in the South China Sea and human rights abuses. These moves were widely, and correctly, seen as quid pro quo for Chinese investment in the port and future economic support. In 2018, Greece officially signed onto the Belt and Road memorandum, hoping for future Chinese investment in a rail corridor linking Athens to Budapest. Today, after COSCO’s investments in modernized infrastructure, the Port of Piraeus handles ten times its 2010 cargo volume, and is poised to become the biggest shipping port in the Mediterranean. But all has not been smooth sailing. Earlier this year, Greece’s Archeological Council temporarily halted further expansion of the port to preserve archeological sites. Some saw the move as an attempt to curry electoral support for Piraeus’ mayor, a SYRIZA member. 

SYRIZA’s years of abandoning its left-wing principles eviscerated its grassroots support. In July, one of the lowest turnout elections in decades handed power back to New Democracy. Unlike SYRIZA, ND has no need to pose as a leftist party allegedly-committed to workers’ rights or resistance to foreign capital. The party ran openly on a pro-business platform pledging to secure as much foreign investment as possible. It thus comes as no shock that the new government deepened its economic ties with China during Xi’s recent visit, signing 16 different new agreements. These memoranda include an additional $675 million investment in the Port of Piraeus, expansion of Greek agricultural exports, and Chinese participation in energy infrastructure investments on Crete. Proffering an easy domestic win to ND, Xi offered China’s support on a symbolic and thorny cultural issue, proposing to help retrieve the Elgin Marbles from the British Museum in London. 

The expansion of Chinese economic interests in Greece have raised U.S. fears of a further deterioration in NATO’s southeastern flank. With Turkey already acting as an ‘ally in name only,’ the prospect that Greece could fall further into China’s orbit, perhaps even serving as a future naval base in the Mediterranean, no doubt riles military planners. These fears are probably well-placed. Greece’s ostensible NATO allies like Germany and France have been bleeding it for years, imposing brutal fiscal constraints in order to shore up their own domestic banks. Turkey – Greece’s long-time rival and a fellow NATO member – has grown increasingly assertive as Erdogan’s AKP seeks to distract from the country’s economic deterioration. The United States is long on promises, pledges, and warnings about China, but short on the directed investment dollars that a country like Greece so desperately needs. 

Greece has few bargaining chips to attract foreign investment other than its strategic location, and only China seems willing to invest the billions necessary to take advantage of that fact. The new ND government needs to make no pretense that it is not doing whatever it can to keep Chinese investment flowing by appeasing its interests. To be sure, there will be a degree of balancing – Greece cannot yet afford to ditch its European and U.S. allies in favor of China alone. But as long as Chinese money continues flowing into the country, there can be no doubt that China’s influence in its most promising foothold in southern Europe will continue to expand.

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