Foreign direct investments are controversial since their hold on strategic port facilities may imply a loss of sovereignty and go against long-term national interests.
In 1997 HPH was awarded concessions on container facilities on both sides of the Panama Canal (Balboa and Cristobal). The reaction by some was that China was now controlling the canal even if the canal itself is under the full jurisdiction of the Panama Canal Commission. This even prompted statements by the CEO of Hutchinson Whampoa, Li Ka-Shing, reassuring the United States that this purchase was strictly a commercial venture fitting the strategies of the holding and that it had nothing to do with the operations of the canal itself.
Another salient example took place in 2006. The controversy pertained to management contracts of major American ports to the United Arab Emirates state-owned company DP World. The contracts had already been foreign-owned by Peninsular and Oriental Steam Navigation Company (P&O), a British firm. DP World acquired the terminal assets of P&O, further consolidating its global holdings and managing terminals in major American ports (including New York, Baltimore, Miami, New Orleans, and Philadelphia). In a post-September 11 setting where security issues had become highly controversial, the deal stirred a public debate, particularly since Middle Eastern interests control DP World. President George W. Bush argued for approval of the agreement, claiming that the delay was sending the wrong message. Legislation was introduced to the US Congress to delay the sale, and the US House Committee on Appropriations voted 62–2 to block the deal. The settlement involved DP World delegating the American terminal assets of P&O to an American entity. American Insurance Group (AIG) holding purchased assets that included five port terminals and 16 freight handling facilities, which were incorporated in the portfolio of Ports America.
Australia overhauled its foreign investment laws in late 2020, giving the government the retrospective power to impose new conditions or even force divestment on deals that had already been approved. Ports were among the first sectors to gain attention. In Spring 2021, the government decided to review the lease of Port Darwin to Landbridge Group, which is owned by a Chinese billionaire. Landbridge won a 99 years bid in 2015 to operate the port, the centerpiece of the government’s plan to develop its remote north. The Australian government decided to review whether to force the company to give up its ownership due to national security concerns, focusing on its alleged ties to the Chinese military. The news came only weeks after the Australian government’s decision to cancel a BRI agreement signed in 2018 between China and the state of Victoria.
In Europe, the potential geopolitical advantage of the Piraeus port offer led the Chinese government to pursue ownership of the port via its state-owned shipping conglomerate COSCO Pacific. Following bilateral discussions, the two governments agreed in the mid-2000s to the involvement of COSCO in Piraeus port operations. When the Greek PM announced the decision during an official trip to China, European institutions sent a reminder of the need for an open tender to secure a level playing field for all parties. In 2008, a 35+5 year container terminal concession was given to COSCO, making Piraeus its port of entry into southern Europe and the Mediterranean.
China realized a window of opportunity in a financially struggling country and actively sought to control the port. Successive Chinese leaders started official trips in Greece, advocating the importance of gaining control of the major Greek port as part of China’s efforts to help Greece overcome its debt crisis. In 2016, an international tender for selecting the preferable investor for PPA SA gave COSCO Shipping Corporation majority share ownership of the Piraeus Port Authority and all operations. Although six parties expressed an initial interest, only COSCO placed a bid at the final stage. The Greek Parliament endorsed the agreement in 2016.
The arrival of COSCO Pacific has been catalytic. Piraeus experienced an increase in container throughput due to additional transshipment traffic and moved from the 17th largest container port in Europe in 2007 to the 4th by 2020. This was a political process balancing the geopolitical interest of a Chinese government developing a presence in the region and Greek interests to ease the pressures posed by the accelerated economic crisis. The public port authority has been replaced by a Chinese entity acting as owner-manager and operator of the whole port.
The Greek case also highlights the importance of politics in port development. At the beginning of the 2010s, the structural reforms program was accompanied by disagreements between a Troika of international organizations on the desired model. The International Monetary Fund (IMF) favored selling the shares of Greek port authorities. The European Commission and the European Central Bank preferred concessioning to third parties, with the port authorities remaining under public control. Lawsuits followed Piraeus’ concession, while COSCO’s first arrival in Greece was met with a month-and-a-half-long dockworkers’ strike.