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Greek port deal paves way for privatization: Minister

Piraeus privatization is starting: Greek shipping minister

The latest deal with China over Greece's largest container shipping port signals strong investor confidence in the country and could open the door to more privatization, the Greek shipping minister told CNBC.

"It's the single, biggest foreign direct investment in Greece since the crisis erupted, "Miltiadis Varvitsiotis, told CNBC's "Worldwide Exchange" on Tuesday. "It's very, very important and important that Greece is accumulating new investments and this investment is crucial."

China's state-owned shipping giant Cosco and the Piraeus Port Authority closed a deal for the expansion of Greece's largest port this month. As part of the agreement, Cosco will invest 230 million euros ($311 million) to create a fourth pier in the terminal, which will guarantee that 4.75 million containers come into the port annually.

"The port of Piraeus is becoming one of the biggest ports in the Mediterranean and [with this deal] will be doubling its capacity. It will also double the number of ships that call in our port and of course, will increase jobs in Piraeus."

(Read more: Shipping industry not outof danger yet: Analyst)

The deal, which has yet to be approved by the European Union (EU), is the latest business relationship between Greece and China, which took over one of the container terminals in the port at the height of Greece's economic crisis in 2010, and turned it into a commercial success.

Varvitsiotis expected the EU to approve the deal and said he hoped it would approve it fast, "we really need investments like this in Greece," he added. If approved, he said the government would move to privatise the whole of the port of Piraeus, as well as other Greek ports.

"For the first time, we are using our geographical location in order to attract investments in our ports, in our railway system and our transportation system as a whole," he said.

(Read more: Worst is over, butso are the glory days: Maersk CFO)

Greece's ports, including Pireaus, are commercially strategic assets in the Mediterranean and are crucial for sea trade routes with Asia.

Varvitsiotis said that the shipping industry had an important part to play in the country's recovery as it was worth more than 7 percent of Greek gross domestic product and created more than half a million jobs in Greece – a moot point for a country with unemployment of 27.3 percent in July.

"The most important thing is that throughout this period of crisis, Greek shipping hasn't lost its position and therefore we can say we are the European champion in one economic sector."

Despite its apparent success, the move to privatize Greek state assets is not entirely voluntary, however.

Greece was the country hit hardest by the euro zone crisis and has required a 240 billion euro bailout from international lenders. As part of the bailout, the government was required to impose strict austerity measures on the populace and to privatise state-owned assets, including transport networks, property and even islands.

(Read more: For Sale: Greek Islands, Marinas and Tax Offices)

The bailed-out country's economic outlook appears to be improving, analysts say, and the latest shipping deal is a further reason for optimism.

Greek Finance Minister Yannis Stournaras said this week that the country was near to agreement with international lenders over a 2014 budget gap, which could determine whether the country receives a further tranche of aid.

"The progress has recently been quite impressive," Stephane Deo, global Head of Asset Allocation at UBS, told CNBC on Tuesday. "We're starting to see the results of all the efforts in the past and this kind of investment shows that we're near to the bottom now and we're probably seeing the economy recovering."

"In the last few months we've seen a rise in employment, and I can't say that everything has changed but the trend has stabilized," Varvitsiotis added. "Now we want to facilitate investments and we want to attract a lot of money to the country."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt