By Plamen Tonchev
7 November 2019
Welcome Recalibration of Sino-Greek Relations
Plamen Tonchev*
Greek prime minister Kyriakos Mitsotakis returns from a visit to Shanghai and hosts China’s president Xi Jinping in Athens three days later – no doubt, the media cannot miss this! The exchange of high-level visits between Greece and China within a single week would suggest an impressively tight bond between the two countries. Yet, this may be a bit of a rash conclusion. Assessing Sino-Greek relations and guessing where they may be heading next requires a step back in time and a look at the way the two countries got to this point. If the ties between Greece and China were a theatrical performance, they would probably be split in three distinctive acts under the following headings: get-to-know, romance and sobriety.
Evolution of Sino-Greek Relations
The ‘get-to-know’ phase started in 2006, when then prime minister Costas Karamanlis visited China and relations between the two countries were elevated to a ‘strategic partnership’. Two years later, the shipping behemoth COSCO won the tender for a concession of two-thirds of the Piraeus sea port and started operating it in early 2009. Piraeus was an economic backwater at the time, but over the next decade COSCO transformed it into a vibrant port, with a throughput that’s been growing in leaps and bounds.
January 2015 saw a new Greek government, formed by a coalition of two unlikely bedfellows and headed by Europe’s enfant terrible, Alexis Tsipras. His SYRIZA party, a constellation of radical left factions that the flamboyant finance minister Yanis Varoufakis has famously called a riff-raff, shared power with the far-right and populist Independent Greeks. At the beginning of its term of office, the Tsipras government fuelled a ferocious anti-European and anti-western rhetoric, and opted for a headlong collision with the country’s international creditors. Against this backdrop, and in a quest for alternatives to the much-vilified West, Greece pursued closer ties with illiberal states, such as Russia, Iran, Venezuela and, of course, China. Starting from 2016, when COSCO won a second tender and took over the management of the entire Piraeus Port Authority (PPA), Sino-Greek relations entered their second stage, which could be seen as the period of ‘romance’.
Over the next three years a raft of high-profile goodwill gestures to China raised many eyebrows in western capitals and fed a suspicion that Greece was turning into Beijing’s fifth column or Trojan horse in Europe. A few days after Tsipras’ first visit to Beijing in July 2016, his government backed Beijing over the South China Sea dispute in the wake of the ruling by the Permanent Court of Arbitration in The Hague. In May 2017, Alexis Tsipras was one of only five EU leaders to attend the first Belt & Road Forum, and a month later, Greece blocked an EU statement on human rights in China, causing dismay in the West. In August 2018, the foreign ministers of Greece and China signed a Memorandum of Understanding to advance Beijing’s flagship Belt and Road Initiative. In April 2019, Greece joined the 16+1 (now 17+1) platform for cooperation between China and Central/Eastern Europe, which many in Brussels and other western capitals view as an attempt at undermining EU unity. A few days later, Tsipras was back in Beijing, attending the second Belt and Road Forum.
The ‘romance’ period was marked by misconceptions in Athens and Beijing alike: the Greek government assumed that it could rely on China as a counterweight against creditors’ pressure for painful – and much-needed – structural reforms in the country; the Chinese government thought that in Greece it had found a vehicle for the attainment of its political objectives in the EU.
The mood has now changed quite a bit, with a new centre-right government in place since July 2019. For instance, up until the elections, the Tsipras government supported Nicolás Maduro in Venezuela in a display of ideological camaraderie. However, only three days into the premiership of Kyriakos Mitsotakis, Greece recognised Juan Guaidó as the legitimate interim president of the South American country, thus sending an unequivocal message across to western partners, as well as to Beijing and Moscow who continue to back Maduro’s regime.
The Return of Geopolitics
But the real game-changer for Athens has been the return of geopolitics to Greece’s neighbourhood, both in the Eastern Mediterranean and the Western Balkans. The magnitude of the security challenges that Greece is facing highlights the West’s edge, as compared to China’s. Next-door Turkey is a big chunk of the geopolitical conundrum in the region and Greece definitely needs powerful allies. For instance, in case tension in the Aegean rises abruptly, and it is already dangerously high, who do you call? Beijing? Certainly not – China will opt for a non-engagement policy, as it has done in the Mediterranean and the Middle East to date. Chinese military vessels, which occasionally pay friendly visits to the COSCO-controlled port of Piraeus amount to a symbolic presence of little substance. In case the migrant flows to Greece trigger a crisis of the proportions Europe saw in 2015, who do you call? Beijing? Certainly not: once again, China will sit on its hands, as it has no skin in the game.
It has now become clear what exactly Beijing can – and cannot – do for Greece, i.e. there is a realisation setting in that China is essentially a trade partner and a potential investor, but not a significant actor in the realm of security. Conversely, last October Greece and the US renewed their bilateral military defence cooperation agreement (MDCA), which confirms and even upgrades the American footprint in the country, alongside growing US investment. As for the resurgence of migration flows, it’s the EU that Greece relies upon to address this formidable threat.
De-coupling Business and Politics?
Therefore, the third stage of ‘sobriety’ the two countries are now entering is marked by a switch to a different mode and a higher degree of clarity. There is now a clearer distinction between high politics and security on the one hand, and mutually beneficial economic cooperation between Greece and China on the other hand. Thus, Sino-Greek ties are not being downgraded, but are being recalibrated and brought down-to-earth. While the scope of bilateral cooperation will keep expanding, from now on relations between the two countries will be relieved of the burden of unwarranted expectations, and will focus on what is attainable and politically expedient.
Greece will seek to make the most of its membership in 17 +1, the format that the Tsipras government endorsed last April for no comprehensible reason and without informing parliament. Mitsotakis will keep the country in this platform, as long as he sees it as an opportunity to claim back Greece’s role in Southeast Europe and particularly in the Western Balkans, a region riddled with uncertainty and angst about its future. But, by and large, Sino-Greek relations will be more and more about business rather than politics.
Athens eyes the huge Chinese market and, indeed, Greek exports have been on the rise. Greece’s trade deficit has come down to a 4:1 ratio, €900m vs €3.6bn last year, while it used to be more than 10:1 in favour of China in the past. Boosting Greek FDI in China is also one of the priorities set by prime minister Mitsotakis, who attended the opening ceremony of a Greek elevator producer in Shanghai.
China, in turn, will continue to invest in Piraeus as an increasingly important transshipment hub and gateway to the European market. President Xi will visit the COSCO-controlled port and the approval of a fourth pier, which has not been granted by Greek authorities to date, will most probably be on the list of his talking points. Greece would definitely like to see more Chinese investment projects, preferably in the sectors of agriculture and industry, but Beijing seems to prioritise transport, logistics and renewable energy sources. China is the biggest producer of solar panels and, now that state subsidies have been slashed, Chinese companies are desperate to tap overseas markets. During his visit to Athens Xi may pull a rabbit or two out of his hat, but another Chinese project as large and visible as the one in Piraeus is unlikely to be on the cards.
Shipping, of course, cannot be omitted, as a strategically important area of bilateral cooperation, with Greece and China owning the first and third biggest commercials fleets, respectively. In Shanghai, Mitsotakis referred to 1,000-odd Greek-owned ships, worth some €50bn, built in China over the last 15 years. Chinese banks have been active in the provision of loans to Greek ship owners, which may be part of the rationale behind the decision of the Bank of China to open an office in Greece. At the same time, the Greek prime minister ruffled some feathers by pointing out that China should remain open to Greek suppliers of shipping equipment and services – there are reports about newly added obstacles to the provision of maritime services by foreign companies to vessels in Chinese waters.
Cultural diplomacy is yet another area of cooperation cherished by both countries, fiercely proud of their historical heritage. In an interview to Xinhua prior to his trip to Shanghai, the Greek PM mentioned the ten-strong Ancient Civilizations Forum held in Athens in 2017 and Bogota a year later, though the membership and practical value of this platform remain questionable at best. Currently, there are two Confucius Institutes in Greece, one at the Economic University of Athens and another one at the Aristotle University in Thessaloniki. Reportedly, an MoU is to be signed by the Greek state television and the National Radio and Television Administration (NRTA), a ministry-level executive agency directly under the State Council of China.
Furthermore, the Chinese are eager to promote film co-production, starting from a blockbuster about the large-scale evacuation of Chinese workers from Libya in 2011, with Greek commercial ships coming to their rescue. In doing so, the Chinese studios may have been encouraged by the appeal, though mostly at home, of the action movie Operation Red Sea about the evacuation of Chinese nationals from war-torn Yemen in 2015. According to some spoilers, the one on Libya will be spiced up with a love story about a Chinese guy and a Cretan girl, so it may well look like a Sino-Greek repeat of the Captain Corelli’s Mandolin movie.
Greece certainly expects large cohorts of Chinese tourists, thanks to the direct flight between Athens and Beijing three times a week, and a new air link to Shanghai that should be launched next summer. Meanwhile, some 60% of the Golden Visa holders in Greece are Chinese nationals and their share is rising. However, Athens may have to rethink its Golden Visa policy, as Greece has the lowest threshold, at €250,000, in all of the EU. Greek authorities may have to tread carefully on this issue for yet another reason – growing concerns in Brussels about foreign citizens buying EU residency or citizenship through investment in real estate.
Mitsotakis states he will be back in China next April, trying to attract Chinese FDI and promote Greek presence in the Chinese market. Greece badly needs both. But, on the whole, it is time for Greece and China to start talking turkey, by debunking some of the myths flying around during the ‘romance’ period. So far, China’s presence in Greece has been driven by its self-interest, which is quite understandable and entirely legitimate. It’s time Greece displayed an equally acute – and healthy – sense of self-interest as well.
*Plamen Tonchev is Head of Asia Unit, Institute of International Economic Relations, Athens, Greece
