Growing Concerns Around Chinese Investments in European Seaports, Especially Piraeus

The Greek Port of Piraeus was acquired by the Chinese state-owned company, China Ocean Shipping Company (COSCO), in 2016. COSCO initially purchased a 51% stake in the port and later increased its ownership to 67% in 2021. This acquisition has made Piraeus one of the largest ports in the Mediterranean and a key hub in China’s Belt and Road Initiative. Piraeus, the 14th-largest port in Europe, specialises in handling large containers and is the largest trans-shipment hub in the Eastern Mediterranean.

Chinese investment has significantly boosted the Piraeus’s capacity and efficiency but has also raised concerns about China’s growing influence in Europe. There have been concerns about illegal activities at Piraeus Port, particularly involving Chinese-owned firms.

Reports suggest that some of these firms, allegedly run by criminal groups, have been smuggling goods, including counterfeit clothing and footwear, and understating their value to avoid import duties. Additionally, the port has faced scrutiny over environmental regulations.

There have been accusations that COSCO’s control over the Port of Piraeus has led to monopolistic practices in Greece. COSCO’s significant influence over the port’s operations and its expansion plans has limited competition and given the company undue control over maritime trade in the region.

These issues are part of broader debates about the implications of foreign investments in critical infrastructure and the balance between economic benefits and national interests.

Labelling the Port its ‘Gateway to Europe’, China has made huge investments in and around the port city that have brought immediate financial benefits, albeit with similar concerns that accompany any Chinese investment with a financially weaker nation.

The increased activity at the port has led to congestion and changes in the local landscape, which some residents find disruptive. COSCO’s expansion plans have faced legal challenges due to environmental regulations, reflecting the Greek local community’s pushback against unchecked development.

For instance, there have been reports of illegal dumping of dredged waste in nearby fishing grounds, which has raised significant environmental concerns. Greece’s highest administrative court blocked the expansion due to the lack of an environmental assessment, which was required by national and EU regulations.

There have also been allegations of smuggling and the import of counterfeit goods through the port. The types of goods being smuggled through the Port of Piraeus primarily include counterfeit clothing and footwear.

These items are often imported in large quantities, and their value is massively understated to evade customs duties. Various other goods are also smuggled by undervaluing them to avoid paying the appropriate taxes.

Smuggling electronic items, which are often undervalued, has occurred. These activities have led to significant financial losses for the EU due to unpaid taxes and duties.

The smuggling of illegal goods through the Port of Piraeus negatively impacts the local economy. The evasion of customs duties and taxes has resulted in significant revenue losses for the government, reducing the funds available for public services and infrastructure development.

Local businesses have suffered because they cannot compete with the lower prices of smuggled goods. This has reduced sales, lower profits, and even business closures.

The influx of counterfeit and undervalued goods distorts the market, making it difficult for legitimate businesses to operate fairly. Smuggled goods do not meet safety and quality standards, posing risks to consumers and potentially leading to additional costs for healthcare and safety enforcement.

Chinese involvement in illicit narcotics trafficking has been a growing concern globally, including in Greece. Chinese pharmaceutical and chemical companies have been implicated in producing and smuggling synthetic drugs like fentanyl. These drugs often find their way into various EU countries, including Greece, through complex trafficking networks.

The Piraeus port’s exclusion from the EU’s new European Ports Alliance, which aims to combat drug trafficking, underscores the security concerns associated with Chinese ownership.

There have been issues related to both legal and illegal Chinese immigrants in Greece. The Golden Visa program, which grants residence permits in return for investment, has seen significant participation from Chinese citizens. However, allegations of illegal transactions, tax evasion, and money laundering have been associated with this scheme.

Some Chinese nationals have taken advantage of Greece’s relatively low threshold for obtaining legal status.

Concerns about labour conditions and practices at Piraeus Port under COSCO’s management have also been raised, which affect local workers and unions. These incidents have contributed to the disrepute of Chinese activities in Greece.

All this has led to public and political debate about the implications of Chinese investments and ownership of ports in European countries. There are worries that Chinese control over key ports could give China significant geopolitical leverage, potentially influencing European policies and decisions.

The potential for espionage and surveillance is a major concern. Chinese companies could theoretically use their access to ports to gather sensitive information. Increased Chinese investment in critical infrastructure could lead to economic dependency, making European countries vulnerable to economic coercion.

Control over major ports could allow China to alter the flow of goods, impacting European trade routes and logistics. Concerns about Chinese companies’ labour practices and environmental standards, which may not align with European norms, also exist.

These concerns reflect the broader apprehension about China’s growing influence in Europe through its Belt and Road Initiative.

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