COSCO Solidifies Hold on the Port of Piraeus
China’s Belt and Road Initiative (BRI) got a major boost last week when the Court of Audit in Greece approved the sale of another 16 percent stake in Piraeus Port (OLP) to COSCO Shipping Line. The agreement includes a five-year extension for the company to complete the investments it intends to undertake.
This effectively raises COSCO Shipping’s stake in OLP from its current 51 percent to 67 percent.
“COSCO demanded that the provision in the privatization agreement allowing it to acquire the extra stake be activated despite not having completed the $350 million investment program it had undertaken to implement within five years of its purchase of a 51 percent stake in OLP from the state,” reported Greek newspaper Kathimerini.
Although the Greek state gets a veto on strategic decisions, only one member represents it, down from three on the 11-member OLP board.
The deal solidifies China’s influence on the lucrative trans-Mediterranean maritime artery. This route connects Egyptian ports to the European mainland through Piraeus. With COSCO as Piraeus’s port operator, it has developed rail infrastructure with reach to Austria, the Czech Republic, Germany and Poland.
Both Egypt and Greece occupy a pivotal space in China’s BRI ambitions to connect the Far East to the West through their maritime assets. China is also Egypt’s major partner in maritime development, especially along its Mediterranean ports. According to Prof. Michael Tanchum, a non-resident fellow with Middle East Institute’s Economic and Energy Program, China is assisting Egypt to increase the total container capacity of its Mediterranean ports to collaborate with Piraeus as the dominant trans-shipment hub in the Mediterranean basin.
In two of Egypt’s strategic ports to foreign trade -Alexandria and East Port Said - Chinese corporations are at the center of the capacity expansion. China is the largest investor in the Suez Canal Corridor megaproject, with COSCO owning a 20 percent stake in the 5.4 million TEU Suez Canal Container Terminal (SCCT) at East Port Said.