Portugal: Dangerous port concession?

“We are grateful that your group of companies is investing in Portugal,” said Portugal’s Minister of Infrastructure Pedro Nuno Santos last month when he announced the Turkish port operator Yilport will expand and modernize the Lisbon container port for a further 124 million euros. “Invest, invest even more,” he asked company boss Robert Yuksel Yildirim. But much more is probably not possible, because the Yildirim Holding now controls almost all ports in Portugal. And not everyone finds that as good as the minister.

Yilport operates seven ports in Portugal, including the largest and most important container port in Porto/Leixões and that of Lisbon. The company, which belongs to the Yildirim Group, received the concession in 2016 from the previously unsuccessful Portuguese operator tertiary Bought. Yilport has promised to put almost half a billion into the ports and will receive a concession from the Portuguese state until 2038. Only Robert Yuksel Yildirim, the CEO, is what one would disparagingly call an oligarch if he were a Russian: close friends with the Turkish head of state Recep Tayyip Erdogan, a billionaire who has turned his small family business into a corporation that is now one is the largest player in the transport and logistics sector worldwide. Yilport operates 21 ports worldwide, and the company is virtually unrivaled in Portugal.

Economic reasons in the foreground

“The decision to license almost all of the country’s ports to a Turkish company was probably only made for economic reasons,” criticizes José Pedro Teixeira Fernandes of IPRI, the Portuguese Institute for International Relations. “It was quite simply the best offer financially. It didn’t matter whether it was strategic or not.” The expert in international relations and geostrategy doubts whether that was wise: “Economically things are going well so far. Money has been invested in the ports and new know-how. But ports are also strategic objects and can become a means of political pressure. And I don’t think the government has protected itself well enough against that.”

Indeed, under Yilport management, Portugal’s ports have become more competitive, with the Porto/Leixões container terminal even becoming the most efficient on the Iberian Peninsula. Before that, the country’s ports were rather insignificant, usually only making the headlines because of endless dockworker strikes and hopelessly inferior to Spanish competition. That should change now. Yilport would like to make Lisbon attractive for large container ships from America and also modernize the smaller ports under his control.

Dangerous addiction

On the other hand, Portugal has become increasingly dependent on rather dubious foreign partners. Since it was saved from state bankruptcy only by the euro rescue package in 2011, the country has sold large parts of its energy supply to Chinese state-owned companies, and Turkey is now controlling the ports. There have never been any public discussions, not even a dispute between the government and the opposition.

Because Portugal’s politicians simply don’t think their decisions through enough, the academic and researcher Teixeira Fernandes believes: “Geopolitics means thinking ahead and recognizing possible problems in the future. In Portugal, that doesn’t play a role in many decisions. All decisions have been made on the basis of economic aspects not according to geopolitical ones. It remains to be seen whether this will have unpleasant consequences for the state in the future.” In addition, there is quite simply naivety and ignorance, as the concession for the ports to Turkey has shown once again: “At least until the coup d’état in 2016, Turkey was considered an exotic, friendly country that nobody had any concerns about. The government never saw it as a threat to the strategic interests of Portugal.”

Lack of strategic thinking

Portugal’s politicians are of the opinion that the contracts that have been concluded would guarantee the state enough security and, in the worst case, could be terminated in the event of non-compliance. Nobody would think that this could bring the country into unpleasant political dependencies. There is a consensus that Portugal is a small country that gets along well with everyone and that no one wants harm. But of course, according to Teixeira Fernandes, in the case of the port concessions it would have been strategically better to focus on diversification, to grant the concessions to several companies. And if there were no domestic financially strong interested parties, one should have looked for them in as many other countries as possible with which Portugal maintains friendly political and economic relations.

Instead, the government is celebrating what it believes to be a successful economic policy. At the ceremony last month, where the Yilport investment of a further 134 million for the port of Lisbon was announced, Infrastructure Minister Pedro Nuno Santos emphasized: “When a major company like Yildirim Holding invests here, it proves that we are also in have to have confidence in our country and in our economy.”

The geopolitical researcher Teixeira Fernandes, however, sees it differently: “Of course we can say that we are at the western end of Europe, far away from all problems. But it is a risk that we are taking and that one day could cause us problems.”