China is Buying Up Ports and Influence Across Europe

The MV Maersk Mc-Kinney Moller, the world's biggest container ship, arrives at the harbour of Rotterdam August 16, 2013. The 55,000 tonne ship, named after the son of the founder of the oil and shipping group A.P. Moller-Maersk, has a length of 400 meters and cost $185 million. A.P. Moller-Maersk raised its annual profit forecast for the business on Friday, helped by tighter cost controls and lower fuel prices. Maersk shares jumped 6 percent to their highest in 1-1/2 years as investors welcomed a near-doubl

Europeans need to pay some attention to the costs of Chinese port investments as a part of their Maritime Silk Road.

Observers of China’s intertwined economic and strategic actions point to the fate of Hambantota in Sri Lanka as a cautionary tale for Europe. After one government there borrowed and spent to have China build shipping and rail facilities, the promised traffic did not follow. A new government was then obliged to make a (partial) debt-for-equity swap, giving China a 99-year lease. Thus, Sri Lanka is left with nearly $6 billion in debt, to pay for an underperforming port they do not control. The Italians need not look far for such an example. Taranto, once a major steel producer and key port in the south, suffered a similar fate. Though observers, including the EU’s own Court of Auditors, point to internal planning and execution problems, the port was essentially “traded in” by China for Piraeus. Such a concern—and the fear of the resulting public debt—has led some, like Pino Musolino, the Director of the Venice Port Authority, to be quite skeptical about the promised benefits of Chinese investments in the port of Venice. Nor is he persuaded of the gains that more cruise ships might bring to the delicate ecology of Venice.       

Even so, the Italians, like virtually all countries with crucial seaports, are eager to attract and keep Chinese investment. They have proposed a Five-Port Alliance for the Mediterranean leg of the Maritime Silk road with Venice part of an Adriatic port system that would include Trieste and Ravenna in Italy, as well as Koper in Slovenia and Fiume in Croatia. Italy has already begun investing in this plan, and it is unlikely that the new Euroskeptic Italian government will find any EU worries against such investment persuasive. Where such a plan would leave deeply leveraged partners like the Port Authority of Piraeus is unclear. Every port cannot be "the gateway to Europe." If the Europeans are to avoid a "race to the bottom" of the Maritime Silk Road, there will need to be some attention paid to the costs of Chinese investment and some cooperative mechanisms implemented.

RONALD H. LINDEN is Professor of Political Science at the University of Pittsburgh and a former Director of the European Studies Center at Pitt, a National Resource Center and Jean Monnet European Union Centre of Excellence, and the Center for Russian and East European Studies there. From 1989 to 1991 he served as Director of Research for Radio Free Europe in Munich, Germany. Research on this topic has been conducted at the Instituto Affari Internazionali (IAI) in Rome under the auspices of a Fulbright-Schuman fellowship.

Image: The MV Maersk Mc-Kinney Moller, the world's biggest container ship, arrives at the harbour of Rotterdam August 16, 2013. The 55,000 tonne ship, named after the son of the founder of the oil and shipping group A.P. Moller-Maersk, has a length of 400 meters and cost $185 million. A.P. Moller-Maersk raised its annual profit forecast for the business on Friday, helped by tighter cost controls and lower fuel prices. Maersk shares jumped 6 percent to their highest in 1-1/2 years as investors welcomed a near-doubling of second-quarter earnings at container arm Maersk Line, which generates nearly half of group revenue and is helping counter weakness in the company's oil business. REUTERS/Michael Kooren

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