China’s Maritime Silk Road Initiative, Africa, and the Middle East: Feats, Freezes, and Failures [1st ed.] 9789813340121, 9789813340138

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PALGRAVE STUDIES IN ASIA-PACIFIC POLITICAL ECONOMY

China’s Maritime Silk Road Initiative, Africa, and the Middle East Feats, Freezes, and Failures Edited by Jean-Marc F. Blanchard

Palgrave Studies in Asia-Pacific Political Economy

Series Editor Jean-Marc F. Blanchard Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations Los Gatos, CA, USA School of Advanced International and Area Studies East China Normal University Shanghai, China

The series aims to publish works, which will be meaningful to academics, businesspeople, and policymakers and broaden or deepen their knowledge about contemporary events or significant trends, or enable them to think in new ways about the interaction of politics and economics in the APR. Possible candidates for the series include topics relating to foreign direct investment, bilateral investment treaties, multinational corporations, regional economic institutions, technology policy, economic globalization, corporate social responsibility, economic development strategies, and labor movements.

More information about this series at http://www.palgrave.com/gp/series/15638

Jean-Marc F. Blanchard Editor

China’s Maritime Silk Road Initiative, Africa, and the Middle East Feats, Freezes, and Failures

Editor Jean-Marc F. Blanchard Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations Los Gatos, CA, USA School of Advanced International and Area Studies East China Normal University Shanghai, China

Palgrave Studies in Asia-Pacific Political Economy ISBN 978-981-33-4012-1 ISBN 978-981-33-4013-8 (eBook) https://doi.org/10.1007/978-981-33-4013-8 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover credit: owngarden This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

This book is dedicated to Professors Gregory Moore, May Tan-Mullins, and Suisheng Zhao who have been instrumental in the success of this project, the third and final book in a widely acclaimed three-part series on China’s Maritime Silk Road Initiative, as well as valued friends.

Preface and Acknowledgments

In November 2017, the Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations (Wong MNC Center), a California-based think tank focusing on the political economy of multinational corporations in/from East Asia, orchestrated the third in a three-part conference series on China’s Maritime Silk Road Initiative (MSRI). The conference, which focused on the MSRI in Africa as well as the Middle East and North Africa (MENA), was co-sponsored and hosted by East China Normal University’s School of Advanced International and Area Studies (SAIAS) and drew upon the expertise of analysts from mainland China, Hong Kong, Iran, Kenya, the United Kingdom, and the United States (US) who gathered to discuss the MSRI’s situation in Africa and MENA, the factors affecting its implementation, and its ramifications. The 2017 event built upon and supplemented conferences in 2016 and 2015, which contemplated, respectively, China’s MSRI and Southeast Asia and China’s MSRI and South Asia. The first conference led to the publication of an edited volume entitled China’s Maritime Silk Road and South Asia (Palgrave, 2018) while the second yielded an edited book entitled China’s Maritime Silk Road and Southeast Asia (Palgrave, 2019). There are many that deserve acknowledgment for their contribution to the aforementioned conference and this book. At the institutional level, I would like to thank East China Normal University (ECNU) and, above all, ECNU SAIAS where I currently serve as Distinguished Professor, for their backing of the event and this multi-year project. Beyond this,

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I would like to thank the Wong MNC Center for its critical managerial, financial, and administrative support for this and other books in the series. Finally, I would like to thank Mr. Jacob Dreyer (Palgrave) for his support of this multi-year book project and the Palgrave Studies in Asia-Pacific Political Economy series for which I serve as series editor. In terms of individuals, Professor Liu Jun, ECNU SAIAS Dean, has been a key supporter of the conference series and has provided important financial and administrative resources to ensure its success. I also would like to thank my colleagues Professor Zang Shumei and Ms. Chen Jing who efficiently handled numerous conference matters. I would like to express my appreciation to all the participants in the November 2017 conference, many who submitted chapters that eventually were incorporated into this book. Dr. Ding Yifan, China State Council Development Research Center, Dr. Zhou Yunxuan (ECNU), and Professor Suisheng Zhao deserve appreciation for taking time out of their busy schedules to participate in the 2017 event. Special thanks are due to Dr. Ding for delivering a very informative keynote speech. Professor Gregory Moore and Jeffrey Payne deserve special thanks for their efforts to provide feedback on all the 2017 conference papers. Professor Zhao also warrants special thanks for his guidance on a select number of papers that later would serve as the basis for a special issue of the Journal of Contemporary China (entitled China’s Maritime Silk Road Initiative: Africa and the Middle East ) published in January 2020. Professor May Tan-Mullins deserves thanks for her support of an event at the University of Nottingham-Ningbo, China that facilitated the publication of the aforementioned special issue. Finally, I would like to express my sincere appreciation to (now Dr.) Pippa Morgan and Courtland Johnson for their extremely useful research assistance and Ms. Xu Jing for her hard work conforming this book to publisher style requirements. Los Gatos, USA/Shanghai, China

Jean-Marc F. Blanchard

Contents

China’s MSRI in Africa and the Middle East: Political Economic Realities Continue to Shape Results and Ramifications Jean-Marc F. Blanchard The Maritime Silk Road Initiative: Connecting Africa Cliff Mboya The Maritime Silk Road Initiative and Ethiopia: Transforming Policies, Institutions, and Politics in Expected and Unexpected Ways Jean-Marc F. Blanchard and Edson Ziso

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Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations David Styan

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Tanzania in China’s MSRI: The “Chinese Dream” Awaits Alignment with the African One Conrad John Masabo

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CONTENTS

Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise Manochehr Dorraj and Jean-Marc F. Blanchard The Missing MSRI in Iraq: The Southern Opportunity Jeffrey Payne

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The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation Jonathan Fulton

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Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities Mordechai Chaziza

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Index

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Notes on Contributors

Jean-Marc F. Blanchard, Ph.D. is Founding Executive Director of the Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations and Distinguished Professor, School of Advanced International and Area Studies, East China Normal University. He has authored, coauthored, or co-edited almost 20 books/special academic journal issues and more than 60 book chapters and journal articles on topics relating to Chinese foreign economic policy, foreign investment in China, Chinese outward investment, and China and the WTO. Prior to his career in academia, Dr. Blanchard worked for various United States Government banking sector regulatory agencies and Kelling, Northcross, & Nobriga. Mordechai Chaziza, Ph.D. is Senior Lecturer with the Department of Politics and Governance at Ashkelon Academic College (Israel), with a specialization in Chinese foreign and strategic relations. He is the author of China’s Middle East Diplomacy and China and the Persian Gulf and has published numerous articles on topics ranging from China’s relations with specific Middle East countries to its policy toward the region to China’s non-intervention policy. He earned his Ph.D. from Bar-Ilan University. Manochehr Dorraj, Ph.D. is Professor of Political Science, Texas Christian University (USA). He is an expert on China’s relations with the Middle East, China and Iran, and energy. He is the author, co-author,

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editor, or co-editor of 7 books and more than 75 articles and book chapters, many relating to China-Middle East, especially China–Iran ties. He is a Senior Research Fellow with the Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations. Jonathan Fulton, Ph.D. is Assistant Professor of Political Science at Zayed University (UAE) and Nonresident Senior Fellow at the Atlantic Council (USA). He has written widely on China–Middle East relations for both academic and popular publications and is frequently interviewed by international media. He is the author of China’s Relations with the Gulf Monarchies and Regions in the Belt and Road Initiative. He received his Ph.D. in International Relations from the University of Leicester, UK. Conrad John Masabo is a Ph.D. Candidate in Political Theory with the Department of Politics, East China Normal University (China) and an Assistant Lecturer of Political Science, Department of History, Political Science and Development Studies at Dar es Salaam University College of Education, a Constituent College of the University of Dar es Salaam (Tanzania). He researches Sino-Africa (Tanzania) relations. He is the author of Regional Organizations and Sustainable Governance of Mineral Resources in Tanzania (2016). Cliff Mboya, Ph.D. is an independent researcher on China–Africa relations. He has experience in diplomacy and international relations combined with Journalism. He worked at the Chinese Embassy in Kenya as Information and Public affairs officer before starting his Ph.D. He has published pieces in Kenyan and international media. His research interests include China’s Public diplomacy in Africa, China’s Belt and Road Initiative, and China in International institutions. He earned his Ph.D. from Fudan University (China). Jeffrey Payne is Research Fellow/Academic Affairs Manager with the National Defense University’s Near East South Asia Center for Strategic Studies (NESA) (USA). He presently serves as the NESA Center’s lead for engagements in China. He also serves as the director of the Next Generation Seminar, an ongoing NESA program. His writings have appeared in various peer-reviewed journals, edited volumes, and various mass market publications such as The Diplomat, China File, and War on the Rocks.

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David Styan, Ph.D. is Lecturer with the Department of Politics, Birkbeck College, University of London (UK). His has published extensively on topics such as the MSRI and the Horn of Africa, the MSRI and Djibouti, and French and comparative foreign policy in Africa and the Middle East. His research interests include international political economy, foreign policy analysis, and development. His Ph.D. was obtained from the Department of International Relations, London School of Economics (UK). Edson Ziso, Ph.D. is a Visiting Research Fellow at the University of Adelaide, South Australia. He completed his Ph.D. at the same university and currently teaches International Political Economy at the University of South Australia. He is the author of A Post State-Centric Analysis ChinaAfrica relations: Internationalization of Chinese Capital in Ethiopia. He is interested in South-South relations, North-South relations, and Africa in global affairs.

List of Figures

The Maritime Silk Road Initiative: Connecting Africa Fig. 1

Fig. 2

China’s trade with Kenya, Ethiopia and Djibouti, 2013–2016 (Amounts in USD Billions) (Source Author’s calculations using various sources [Sources used include Trading Economics, “China Imports by Country,” https:// tradingeconomics.com/china/imports-by-country; Trading Economics, “China Exports by Country,” https://tradin geconomics.com/china/exports-by-country; China-Africa Research Initiative, School of Advanced International Studies, Johns Hopkins University. “Data: China-Africa Trade,” http://www.sais-cari.org/data-china-africa-trade; and “UN Comtrade,” https://comtrade.un.org/db/ce/ceS earch.aspx]) Kenya’s trade with China, Ethiopia, and Djibouti in 2013 and 2017 (Amounts in USD Billions) (Source Author’s calculations using various sources [Sources used include Trading Economics, “China Imports by Country,” https:// tradingeconomics.com/china/imports-by-country; Trading Economics, “China Exports by Country,” https://tradin geconomics.com/china/exports-by-country; China-Africa Research Initiative, School of Advanced International Studies, Johns Hopkins University. “Data: China-Africa Trade,” http://www.sais-cari.org/data-china-africa-trade; and “UN Comtrade,” https://comtrade.un.org/db/ce/ceS earch.aspx])

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Fig. 3

Ethiopia’s trade with China, Kenya, and Djibouti, 2013–2016 (Amounts in USD Billions) (Source Author’s calculations using various sources [Sources used include Trading Economics, “China Imports by Country,” https:// tradingeconomics.com/china/imports-by-country; Trading Economics, “China Exports by Country,” https://tradin geconomics.com/china/exports-by-country; China-Africa Research Initiative, School of Advanced International Studies, Johns Hopkins University. “Data: China-Africa Trade,” http://www.sais-cari.org/data-china-africa-trade; and “UN Comtrade,” https://comtrade.un.org/db/ce/ceS earch.aspx])

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Tanzania in China’s MSRI: The “Chinese Dream” Awaits Alignment with the African One Fig. 1

Fig. 2

Tanzania-Chinese general trade volume, 2008–2018 (amounts in USD $millions) (Source Author’s compilation from various sources [Tanzania Revenue Authority (TRA), https://www.tra.go.tz/index.php/113-statistics/94-tradestatistics; The United Republic of Tanzania, Ministry of Finance and Planning (MoFP), https://www.mof.go.tz/ index.php; Tanzanian National Bureau of Statistics (NBS), https://www.nbs.go.tz/index.php/sw/machapisho/patola-taifa; and Ministry of Industry and Trade (MIT), “Speeches,” https://www.mit.go.tz/speeches]) Sectoral distribution of COFDI in Tanzania, 2007–2018 (Source AEI CGIT)

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The Missing MSRI in Iraq: The Southern Opportunity Fig. 1 Map 1

Distribution of ethnoreligious groups and major tribes in Iraq (Source US Central Intelligence Agency, 1992)

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Key Iraqi energy resources and port facilities (Source Base Map—Central Intelligence Agency, 1996; Map Icons—Author Generated)

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List of Tables

The Maritime Silk Road Initiative: Connecting Africa Table 1 Table 2

List of African MSRI Participants Connectivity Projects in Kenya, Ethiopia, and Djibouti

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The Maritime Silk Road Initiative and Ethiopia: Transforming Policies, Institutions, and Politics in Expected and Unexpected Ways Table 1 Table 2

Ethiopia’s Trade with China, 2001–2018 (amounts in USD millions) COFDI in Ethiopia, 2010–2018 (amounts in USD millions)

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Tanzania in China’s MSRI: The “Chinese Dream” Awaits Alignment with the African One Table 1

China’s engagement in infrastructure development in East Africa

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Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise Table 1 Table 2

Iran’s oil exports to China and the World, 2000–2018 (select years) (amounts in United States/USD millions) Iran’s natural gas exports to China and the World, 2000–2018 (select years) (amounts in USD millions)

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Table 3 Table 4 Table 5 Table 6 Table 7

Global oil reserves-top five countries as of 2018 List of World’s major natural gas producers, 2015–2018 (amounts in millions of tons oil equivalent) Iran–China trade, 2010–2018 (amounts in USD millions) Chinese OFDI in Iran (amounts in USD millions) Chinese contracting projects in Iran, 2005–2013 (amounts in USD millions)

171 171 172 173 175

The Missing MSRI in Iraq: The Southern Opportunity Table 1 Table 2 Table 3 Table 4

Major Chinese arms sales in the 1980s Iraq oil and gas reserves vs. select other energy rich nations (as of the end of 2018) Iraq exports to and imports from China, 2005–2018 (select years) (all amounts in USD millions) Iraq’s contracts with and FDI from China, 2005–2013 (amounts in USD millions)

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The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation Table 1 Table 2

China–GCC trade, 2005–2017 (amounts in USD millions) Contracting and COFDI in GCF states, 2005–2017 (all amounts in USD millions)

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Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities Table 1

Egypt-China Trade, FOB, 2005–2018 (select years) (Amounts in USD Millions)

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China’s MSRI in Africa and the Middle East: Political Economic Realities Continue to Shape Results and Ramifications Jean-Marc F. Blanchard

Introduction According to one observer, the People’s Republic of China (PRC/China)’s Maritime Silk Road Initiative (MSRI), one of two components of its larger Belt and Road Initiative (BRI), is “All about Africa.”1 Another analyst asserts, more ominously, that the MSRI in Africa is an integral part of a Chinese attempt to build a new Sinocentric system and consolidate China’s position as a global superpower.2 Looking northward, the Middle East and North Africa (MENA), which is the “physical heart of the BRI” will “play a decisive role in the building of” China’s ambitious venture.3 Similar to the case of Africa, China’s aims to exploit its initiative in MENA to “expand its reach and influence”

The author wishes to thank Courtland Johnson for his invaluable research assistance and Xu Jing for her help conforming this chapter to Palgrave style requirements. J.-M. F. Blanchard (B) Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations, Los Gatos, CA, USA e-mail: [email protected] © The Author(s) 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8_1

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and reshape the “economic balance.”4 Aside from the issues raised above about China’s true motivations, the relevance of Africa and MENA to the MSRI and its cousin the Silk Road Economic Belt (SREB), and the geopolitical impact of China’s scheme, two other critical empirical questions are what is the actual progress of the MSRI and what are the net benefits of MSRI projects. After all, it is hard to envision the MSRI transforming country behaviors and regional orders (much less the global one), if projects are not completed and/or fail to deliver the desired outcomes. The existing literature has a limited ability to shed light on these issues partly because it is relatively scant.5 This defect, however, is not the biggest one. One noteworthy issue is the tendency to analyze the entire BRI, rather than to research just the MSRI or the SREB.6 A second is the failure to delve into a specific region or country, problematic given the experiences of individual countries can be quite heterogeneous.7 A third is that analyses of the MSRI and SREB in Africa and MENA that stress an individual country often deliver a review of the relevant country’s overall ties with China instead of a genuine MSRI study. A fourth is the tendency to equate headlines, official communiqués, or Memoranda of Understanding (MoU) with concrete action or outcomes. A fifth is the dearth of systematic studies of the net benefits of MSRI projects. A sixth is the failure to unpack carefully the factors driving host country domestic and foreign policy decisions, which too often are associated exclusively with the economic stimuli flowing from the MSRI or a participant country’s broader economic ties with China. To address some of these issues, this book concentrates solely on the MSRI and, beyond this, select countries within the Africa and MENA regions. In addition, contributors emphasize analysis of the MSRI. Furthermore, chapter writers evaluating the drivers of particular country’s policies contemplate multiple factors, not just economic ones.8 Some question the payoff of exploring the MSRI in Africa and MENA. One set of scholars asserted, “Africa’s inclusion in the Belt and Road Initiative is minute.”9 A MENA specialist wondered about the wisdom of academics “dancing to the Chinese tune,” devoting so much time studying something so vague.”10 While these points are well taken, Africa deserves attention because of China’s significant presence there, the prominence given to the MSRI and SREB in Africa-Chinese institutions such as the Forum on China-Africa Cooperation (FOCAC), and the existence of major MSRI projects in many African countries. MENA

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warrants attention because it is central in global energy affairs, strategically located, and becoming China’s “most important region” outside the Asia-Pacific Region (APR).11 Aside from this, individual MENA MSRI countries such as Iran significantly influence regional and global political and security dynamics. From a conceptual standpoint, study of the MSRI in Africa and MENA can enhance our knowledge of how politics and economics interact to shape participant country attitudes towards the MSRI, its implementation, and its political and economic effects. The business case for studying the MSRI in Africa and MENA is to develop a richer understanding of the non-market environment as well as the business opportunities (or not) flowing from MSRI as well as SREB projects. This book offers several findings. First, the MSRI appears to have advanced more in Africa than MENA and major land projects (e.g., railways) seem to have progressed more than maritime ones. Second, the MSRI is far from being realized, with some projects canceled (e.g., in Tanzania), nonexistent (e.g., Iraq), and many in-progress (e.g., Kenya, Ethiopia, Egypt, Gulf Cooperation Council/GCC states, and Iran). Third, as shown by case studies of Egypt, Iraq, and Tanzania, history, good relations, and/or economic need do not ensure MSRI project implementation. Fourth, the MSRI is promoting connectivity, but this connectivity may not be “win-win,” but asymmetric or negative. Fifth, the economic attractions of the MSRI and broader economic links with China do not suffice to explain the stance countries such as Djibouti, Egypt, Ethiopia, GCC states, Iran, and Tanzania have taken toward the MSRI, China, or China-favored positions such as the “One China policy.” Also relevant are the domestic political needs and national interest perceptions of leaders, internal security imperatives, development ideologies, external security threats, China’s interests and situation, and the availability (or not) of appealing alternatives such as international financial institutions (IFIs) or the United States (US).12 The next (second) section of this chapter supplies background on the MSRI in its entirety. The third gives an overview of Africa-China and MENA-China ties and their drivers from 1949 through the present, focusing on the period prior to the birth of the MSRI in 2013. The fourth turns to examining the MSRI in Africa before providing an indepth treatment of the MSRI in MENA. Among other themes, the fourth section reflects on China’s objectives as well as the goals of MSRI participants in Africa and MENA. It also identifies some of the issues—e.g.,

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neocolonialism—that have come up in connection with discussions of the MSRI. The fifth consists of focused summaries of the contributions in this volume. The sixth and final part offers summary remarks, details some implications of the introduction and book chapters, and identifies several areas for future research.

The MSRI This part of the chapter provides a primer on the MSRI broadly speaking (the MSRI in Africa and MENA receives extensive coverage below), though it is abbreviated since the MSRI has been covered extensively elsewhere. This section initially offers a basic overview of the MSRI. Following this, it identifies some of the purposes of the MSRI. Next, it notes a number of the features of the MSRI, focusing on hard infrastructure.13 The financing of the MSRI is tackled in the sub-section entitled “Issues associated with the MSRI in Africa and MENA” later in this chapter. The fourth component of this section is a review of some of the issues frequently raised in connection with the MSRI. The fifth piece delivers some thoughts about the prospects for the MSRI which, for some of the more pessimistic writers, are encountering endless potholes, have been derailed, or are on life support.14 The route of the MSRI is illustrated in numerous maps. While they lack official imprimatur and often are vague, it remains clear that the MSRI aims to link China with the Europe through a, primarily but not exclusively, maritime route. In its general form, the MSRI originates from China’s east coast, runs southward through the South China Sea, and then transverses through the Indian Ocean. After this, it branches westward to the east coast of Africa and northwestward through the Arabian Sea before connecting to the Mediterranean and ultimately the European landmass, where it will merge with the SREB. Countries involved in the MSRI, some to be discussed later, include Cambodia, Malaysia, Myanmar, Pakistan, Sri Lanka, Tanzania, Kenya, Egypt, Oman, and Iran. The MSRI draws attention not only because its length runs several thousand kilometers and the populations involved run into the billions, but also because hundreds of billions of dollars of trade—especially precious energy cargos—cross the MSRI route annually.15 For China, the MSRI has manifold purposes, domestic and international, spanning the economic and political realms. On the economic

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front, it aims inter alia to boost exports, yield new money-making opportunities for Chinese multinational corporations (MNCs), and improve China’s access to resources. It further seeks to help China make better use of its immense foreign currency reserves as well as advance the development of interior subnational actors.16 On the political front, China hopes to leverage the MSRI to build relationships, bolster its soft power, and fight terrorism and political instability. It further seeks to reduce internal parochialism and establish a legacy for China’s current paramount leader Xi Jinping.17 Beijing continues to emphasize its positive objectives: “building a community of shared future,” “shared growth and development,” and providing a development solution that fits the needs of developing countries.18 Of note, many MSRI projects may advance multiple objectives. For instance, seaports can facilitate trade, bolster contracting, foreign direct investment (FDI), and service opportunities for Chinese MNCs, enhance Chinese energy security, strengthen political ties with participants, and increase prospects for seaports in China. Since there is no publicly available, definitive official list of MSRI projects, analysts must make their own judgments regarding the suitability of deeming an individual project an MSRI project.19 Projects having to do with seaports, quite logically, are commonly deemed MSRI projects. Projects connecting the sea with the land—e.g., railways, roads, and certain pipelines—also have been labeled MSRI projects. Aside from this, given connectivity (with a maritime flavor) rather than the sea itself is the core of the MSRI, projects that “connect” such as airports, bridges, and power transmission lines have been designated MSRI projects. Finally, projects that advance MSRI goals such as unobstructed trade, financial integration, and people-to-people exchange have been viewed as MSRI projects. Illustrations include airports, power generation projects, and special economic zones (SEZs).20 Since its birth in 2013, the MSRI has engendered much controversy. Some of the worries mirror those associated with the SREB, but others are different partly because participants as well as affected regions and countries are different. To illustrate, India and Japan are much more concerned about the changes that might flow from the MSRI in places such as South and Southeast Asia than they are about the SREB’s ramifications in Central Asia. In any event, anxieties relate to a gamut of potential political and economic outcomes. One concern is that China’s MSRI and the larger BRI will change power orders regionally and/or globally. A second is that countries will find themselves locked into a Chinese order

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or under China’s sway. A third is that China will displace non-Chinese goods, MNCs, and so on in regions and as participant nations. A fourth is that China’s MSRI will displace extant international standards such as technical or lending standards. A fifth is that China’s MSRI will results in excessive debt burdens, authoritarianism, and environmental and social dislocation in participant states.21 These anxieties are unwarranted in the minds of Chinese officials and many Chinese academics, however. Among other things, they counter that the MSRI is an economic (not a political scheme), that the initiative is not exclusive or closed, and that the “debt trap” accusation is baseless.22 In 2017, Sri Lanka gave a Chinese company a long lease on its Hambantota seaport in exchange for debt relief. The next year, Malaysia canceled various MSRI projects such as the East Coast Rail Link (ECRL), deriding them as a “new colonialism.”23 These events triggered a wave of skepticism about the future of the MSRI with some forecasting its demise and others predicting a major retrenchment. Since then, the atmosphere of pessimism only has grown. There is no doubt the MSRI is under pressure. Culprits include China’s slowing growth, the excessive debts of some MSRI participants, anxieties about the implications of the MSRI, increased Chinese caution, and most recently the Covid-19 pandemic. The MSRI, however, is far from dead, with diverse projects continuing. More generally, participants direly need connectivity infrastructure. Relatedly, China continues to be one of the only plausible sources of FDI, loans, and contracting. Beyond this, the purposes motivating the MSRI have not disappeared. Most probably, the MSRI will be reconfigured, refocused, and relaxed. Projects will be downsized as was the ECRL. More emphasis will be given to connectivity projects such as the Digital Silk Road that were not stressed before. The implementation of some projects will be slowed.24 As the studies here and elsewhere show, the MSRI’s implementation was never going to be smooth as silk, but this hardly means it will cease.

A Primer on Africa-China and MENA-China Ties This section surveys Africa and MENA’s ties with China from 1949 through the 2010s, parsed into five periods: 1949–1979, the 1980s, the 1990s, the 2000s, and the 2010s. It aims to provide background on Africa-China and MENA-China political and economic interactions and highlight some of the factors that have shaped these dynamics. Given the

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size and political, economic, cultural, ethnic, and religious diversity of Africa and MENA, country-specific nuance undoubtedly is lost through a discussion stressing ties between regions and China. Nonetheless, there are regional patterns and readers favoring country-specific treatments can, among other things, turn to the chapters herein for richer details. 1949 Through the 1970s Africa had relatively stunted political dealings with China for most of the 1950s despite the hype surrounding the PRC’s involvement in the 1955 Afro-Asian Conference (also called the “Bandung Conference”). During the 1960s and 1970s, interactions grew dramatically. Yet, the many countries had relations with China that were cool or even hostile because of the PRC’s promotion of revolution, often against established governments, throughout the African sub-continent, Chinese frictions with the Soviet Union (a key partner for many African countries), the close relations of some countries like Ethiopia with the US China’s backing for the “wrong” groups such as the Pan Africanist Congress in South Africa, and the PRC’s inward focus for much of these two periods. Nevertheless, between the 1960s and 1970s, several African states such as Ghana, Kenya, Tanzania, Uganda, and Zambia established diplomatic relations with China. Moreover, Ghana, Guinea, Kenya, Sudan, and Tanzania signed commercial agreements and so-called Friendship Treaties with China.25 Africa countries ultimately would be key players in the PRC successful campaign to assume the Republic of China (Taiwan)’s place in the United Nations (UN) at the beginning of the 1970s.26 Africa’s economic dealings with China from 1949 through the 1970s were trivial. Looking at trade, total exports for the entire 1970s did not even top $1.5 billion (up from a miniscule $15 million in the 1950s) with imports slightly topping $3.5 billion for the period versus $21 million for the 1950s. Available statistics indicate that Nigeria, Sudan, Tanzania, Zambia, and Ghana had the largest trade relations with China from 1949 to 1979.27 African countries did not receive meaningful amounts of Chinese outward FDI (OFDI) during this period, though there nevertheless were some marquee investment projects such as the TanZam (Tanzania and Zambia) railway, which was an economic and political endeavor.28 For a portion of this period, Africa drew relatively notable amounts of foreign aid and loans from China, which sought to compete against the Soviet Union and secure support for its effort to reenter the

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UN.29 1949–1979 further witnessed Ghana, Kenya, Nigeria, Tanzania, and Zambia striking a variety of economic accords with China, benefitting from the dispatch of Chinese experts, receiving trade credits and loans, and obtaining Chinese industrial equipment and help in completing factories and diverse development projects.30 Turning to MENA, Egypt, Syria, and Yemen all established diplomatic relations with China in 1956.31 Two years later, Algeria recognized China. Despite this, from 1955 through the 1970s, there were many MENA countries such as Egypt, Iran, and Iraq that had troubled relations with China because of disagreements over domestic and foreign policies, though the degree to which such policies impeded ties with Beijing had much to do with these countries’ roles in China’s struggle against the Soviets. For instance, the conservative, anti-Communist Shah of Iran found it possible to deal with Beijing due to his strong antiSoviet stance.32 Yet others such as Saudi Arabia completely shunned the PRC.33 In the 1960s, MENA-China ties intensified (though the situation varied by country) due to Beijing’s efforts to strengthen the PRC’s position in this part of the world and counter the Soviets. The unwillingness of MENA countries to abandon the Soviet Union coupled with China’s inward turn and China’s meddling in the internal affairs of MENA countries during the Cultural Revolution severely undercut this intensification. The volte face of many MENA countries against the Soviet Union and China’s reduced support for revolution later would provide a basis for resuming or bolstering relations.34 As with the case of Africa, MENA’s economic linkages with China between 1949 and 1979 were relatively trivial despite the proliferation of trade and other economic arrangements that occurred following Bandung and Premier Zhou Enlai’s visit to the region in 1965. Whereas MENA’s exports to China ran $225.50 million for the 1950s, they only reached $1.22 billion for the entire 1970s. MENA’s imports from China were $268.20 million for the 1950s and aggregated $4.6 billion for the 1970s. Trade data indicates that Egypt, Syria, and Kuwait had the most extensive ties with China.35 China acquired goods from MENA mainly to enhance political ties and indeed seems to have acted to maintain a trade balance in favor of MENA countries to facilitate better political ties. Regarding Chinese OFDI (COFDI), sources do not suggest any notable flows to MENA between 1949 and 1979. In any event, diverse MENA countries such as Egypt, Iraq, and Yemen entered into economic and technical

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cooperation accords, assistance and loan agreements, and industrial deals with China during the 1950s, 1960s, and 1970s.36 The 1980s For the bulk of the 1980s, Africa generally remained distant from China. There were diverse reasons for this, one which was China’s focus on the West which could provide it with the capital, markets, and expertise it needed to develop. In addition, improved relations between Beijing and Moscow reduced Africa’s value to China as a battleground for confronting the Soviet Union. Furthermore, there was lingering resentment in some African capitals over the support Beijing had given to revolutionary or opposition forces in the 1950s, 1960s, and 1970s because these forces were anti-Soviet.37 Even so, there were countries such as Ethiopia, Sudan, and Zambia that pursued closer ties with China to obtain economic goods (Ethiopia), political backing (Sudan or Zambia), or weapons (Sudan). The 1989 Tiananmen crackdown was a seminal moment for Africa–China political relations because it drove China to court African states and pushed some African states, long tired of Western human rights pressures, closer to China.38 African economic interactions with China in the 1980s were quite limited, though notably higher than 1949–1979. They were bounded because, as noted, China’s attention was directed at the West and China husbanded its resources for its own development. They grew because of growth of African and Chinese economies, the Soviet Union’s diminished reliability as an aid supplier, and country-level factors. In any event, total trade for the entire 1980s ran around $6.6 billion. Nigeria, Sudan, Ghana, Ivory Coast, and Mauritius maintained the largest trade relations with China, with oil-rich Nigeria dominant by far.39 Although COFDI was near unnoticeable and Chinese aid flows dropped, African countries still concluded economic cooperation, barter, and trade agreements with China, collaborated with it on agriculture and industrial projects, and welcomed Chinese involvement in a handful of infrastructure projects. They also obtained preferential loans and trade credits from China. Relevant states include Kenya, Mozambique, Tanzania, Zambia, and Zimbabwe.40 In the 1980s, MENA’s political relations with China broadened and deepened for a variety of reasons. One was Chinese arms sales such as missiles to countries such as Iran, Iraq, and Saudi Arabia. A second was

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intense Western pressures on certain MENA countries, particularly relevant in the case of Iran. A third was the need of MENA countries such as Iran and Iraq for FDI, infrastructure, and other economic assistance to recover from the devastation caused by war or internal strife. A fourth, particularly pertinent for GCC states was Saudi Arabia’s newfound willingness to maintain closer relations with China. Finally, China’s support for revolutionary groups in the Middle East had notably declined.41 MENA’s trade with China jumped considerably in the 1980s, with exports hitting $2.52 billion and imports reaching $12.17 billion. The countries having the largest trade with China feature countries with impressive energy endowments such as Saudi Arabia (the largest trader with China by far), Kuwait, and the United Arab Emirates (UAE), with Iraq and Morocco also having noteworthy trade ties with China.42 Sources do not indicate any meaningful amounts of COFDI going into MENA in the 1980s. Still, China was active in infrastructure in some countries. For instance, it built bridges, water reservoirs, and irrigation projects as well as a major hydroelectric dam in Iraq. States such as Egypt, Kuwait, and Saudi Arabia also concluded economic cooperation agreements with China that related to agriculture and health care, labor and service contracts, and trade.43 The 1990s The 1990s witnessed a flourishing of Africa’s relations with China. As mentioned, China sought closer ties with Africa countries to counter post-1989 pressures. It further hoped to weaken Taiwan’s position. Aside from this, it wanted to access to more natural resources and to improve its resource security. During this period, African countries hosted top Chinese leaders such as Presidents Yang Shangkun and Jiang Zemin who strongly supported policies favored by African decision-makers, offered unconditional FDI, grants, and loans and increased trade, and welcomed economic and technical cooperation agreements with Africa countries. All of this was immensely appealing to African states which needed new economic partners, disliked Western human rights demands and the conditions Western countries and financial institutions attached to their aid and loans, and sought new economic models to replace the Western economic development dogmas they rejected. While policymakers in countries such as Ethiopia, Kenya, Nigeria, South Africa, and Zambia had their own specific logics for embracing to China, attracting COFDI, aid,

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and loans generally were salient as was gaining more latitude from the West and securing their domestic political position.44 For the 1990s, Africa’s exports to China hit $5.68 billion while imports ran $13.09 billion. This was significantly higher than amounts witnessed in the 1980s, but paled in comparison to Africa’s trade with Europe and the US. Nigeria yet again was the country having the largest trade relationship with China, with South African, Angolan, and Sudanese trade also notable.45 As in the past, trade consisted of African countries sending resources to China in exchange for textiles and clothing, machinery and electronics, and processed metals.46 There is no good data on COFDI in Africa for this period. We do know, however, that Chinese firms made investments in energy in Angola and Sudan; mines in the Democratic Republic of Congo (DRC) and Zambia; and iron and steel ventures in Zimbabwe.47 In the 1990s, Africa won grants, loans, and various other forms of assistance from China which sought support after 1989, worked to isolate Taiwan further, and was increasingly interested in African resources. Of course, there were factors specific to individual African countries that drove them economically closer toward China such as the desire to diversify away from their metropoles or strengthen political relations.48 The 1990s also witnessed closer MENA–China relations. As in the case of Africa–China links, China’s rising natural resource demands as well as Tiananmen fueled closer MENA interactions with China. In addition, some countries such as Egypt viewed China as a partner in their efforts to boost their growth, infrastructure, and trade. Other such as Iran and Saudi Arabia found China a willing seller of weapons, while yet others found China pursuing warmer ties as part of its continuing effort to undermine Taiwan. Yet others such as Iran saw closer ties with China as a way to defend against serious pressures emanating from the US and its allies.49 China’s treatment of Muslims in Xinjiang did engender some tensions with MENA countries such as Iran and Saudi Arabia, but the available evidence indicates these tensions were neither long-standing nor serious. MENA’s trade with China exploded in the 1990s. Exports for the period ran $18.17 billion while imports totaled $40.33 billion. Still, MENA’s trade with China was a fraction of its economic dealings with Europe and the US. The countries having the largest trade dealings with China were the UAE, Saudi Arabia, and Iran, with Oman and Yemen’s trade relationships with China also quite large.50 MENA countries sent

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fuels and to a much lesser extent chemicals and metals to China and purchased textiles and clothing, machinery and electronics, and metals from china.51 It is not possible to provide any aggregate statistics on MENA’s receipt of COFDI during the period. We do see, however, Chinese investments in oil refineries in Algeria and aluminum in Egypt and Saudi Arabia, mines in Iran, and energy exploration and development in Algeria, Iran, Iraq, Oman, Saudi Arabia, and Yemen and infrastructure deals with Iran (e.g., subways), Iraq (e.g., power stations), and Saudi Arabia (e.g., petrochemicals). Not surprisingly, there were major oil and natural gas purchase agreements, too.52 The 2000s In 2000s, Africa–China political ties hit new heights, with a newly created institution—that is, FOCAC—becoming an integral part of bilateral dynamics. FOCAC meetings in 2000, 2003, 2006, and 2009 featured high-level attendees, statements of common principles, the establishment of mechanisms for various ongoing meetings, a plethora of economic programs, and efforts to synchronize Chinese programs with African development plans. FOCAC gatherings also witnessed dramatic Chinese promises: zero tariffs for least developed African states; ambitious trade targets; debt forgiveness; $5 billion (later boosted to $10 billion) in loans; donations of equipment and projects; and myriad training programs.53 In the 2000s, African countries repeatedly demonstrated strong support for China in international organizations and for the PRC’s “One China” policy.54 Individual Africa countries moved closer to China as specific political, military, and economic needs dictated. For instance, Chad and Liberia sought PRC support for the dispatch of UN peacekeepers; Sudan Zambia, and Zimbabwe’s ruling elites sought to secure their position at home; and South Africa and Zimbabwe sought economic benefits from closer China ties.55 In the 2000s, Africa’s trade with China grew impressively, with China becoming Africa’s largest trade partner in 2009.56 Whereas annual exports were $3.25 billion in 2000, they exceeded $29.81 billion in 2009. As for imports, they ran $2.54 billion in 2000 and reached $31.04 billion in 2009. Angola, South Africa, and Nigeria maintained the largest trading relationships with China.57 For the period, Africa exported fuel, minerals, and metals to China and purchased machinery, electronics, and textiles and clothing.58 UN Conference on Trade and Development (UNCTAD)

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data shows an increase in COFDI flows to Africa, albeit after 2007.59 It and AEI-Heritage Foundation China Global Investment Tracker (hereinafter AEI-Heritage Foundation CGIT ) statistics suggest the bulk of COFDI went to South Africa, with notable amounts going to Nigeria, too.60 Very large COFDI deals include Industrial and Commercial Bank of China’s 2007 purchase of a major stake in South Africa’s Standard Bank for $5.5 billion, Sinopec’s 2009 purchase of Addax Petroleum for $7.2 billion, and a $2.7 billion investment in Nigerian oil fields. China also invested in agriculture, manufacturing, mining, refineries, telecommunications, and utilities in places such as Angola, the DRC, Equatorial Guinea, Ethiopia, Nigeria, and Sudan. Contracting also was noteworthy with countries such as the DRC entering into billion-dollar deals with Chinese companies to construct dams, power generation and distribution systems, railways, and roads. Beyond the above, some countries like Angola found China a financial savior.61 In the 2000s, MENA–China relations continued to strengthen, featuring more interactions through regional organizations like the GCC and Arab League and FOCAC-like mechanisms such as the China-Arab States Cooperation Forum (CASCF). Broadly speaking, MENA countries viewed deeper relations with China as alluring politically and economically. Above all, China was an increasingly vital energy customer. In addition, states such as Iraq, Iran, Kuwait, Qatar, and Saudi Arabia viewed China as an important partner for diversifying their economies and energy mix, increasing their energy production, and boosting their infrastructure and access to FDI and loans. Politically, the US invasion of Iraq in 2003, Washington’s stance on the Israeli-Palestinian conflict, Western pressures for political liberalization, the chance to promote a less US/Westerncentric international order, and common political principles (e.g., respect for sovereignty) made it appealing to deepen ties with China. Furthermore, China offered a model that appealed to many MENA countries that wanted to develop economically without liberalizing their political sphere. Aside from this, while China was not seen as a protector akin to the United States, some GCC states believed better ties with China might help to reduce threats posed by Iran, among others. Lastly, some states like Qatar sought military cooperation with China.62 In the 2000s, a surge in fuel exports to China led to a situation where MENA registered trade surpluses every year of the decade. MENA exports to China were $18.01 billion in 2000 and surged to $61.50 billion by 2009. MENA imports from China were $7.37 billion at the

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start of the decade and totaled $54.54 billion in 2009. Saudi Arabia, Iran, and UAE had the largest trade with China.63 As for the composition of trade, we see MENA exporting large amounts of fuels and relatively smaller, but still significant, amounts of chemicals, plastics, and rubber to China and, in return, buying increasingly large amounts of machinery and electronics as well as notable amounts of textiles and clothing, metals, and transportation equipment.64 UNCTAD data on COFDI reflects relatively almost no COFDI going to MENA. The AEI-Heritage Foundation CGIT , though, indicates $10.72 billion went into the Middle East in 2009 alone with $7.05 billion flowing into MENA between 2005 and 2008. The bulk of this money appears to have gone into energy and metals with Iraq, Iran, and Syria garnering the largest share of COFDI.65

2010 to the Present FOCAC gatherings in 2012, 2015, and 2018 witnessed the transformation of the Africa–China ties into a comprehensive strategic partnership, rhetoric about stellar bilateral relations and the role of Africa in the BRI, and Chinese funding promises such as a pledge of $60 billion at the 2018 FOCAC. On top of this, African countries such as the DRC, Ethiopia, Kenya, Tanzania, South Africa, and Zimbabwe hosted Chinese leaders such as President Xi Jinping. African leaders heard Chinese policymakers pledge greater COFDI and trade flows, highlight synergies between China’s BRI and African development strategies such as the African Union’s Agenda 2063, and tout deeper cooperation on inter alia agriculture, industrialization, and poverty reduction. Beyond this, Africa began to work more directly with China on “peace and security matters.” During this period, Africa moved ever closer to China for economic and non-economic reasons. Regarding the former, African countries viewed China as a key market, fount of financial resources, a relevant development model, a pathway to industrialization, and a route to economic diversification. As for the latter, African states generally favored or were sympathetic to many Chinese political principles and China’s democratization of international relations. Moreover, African states or the regimes that ruled them benefitted from Chinese political support. Some countries like Nigeria obtained military assistance from China.66 In the 2010s, Africa’s trade with China continued to rise, reflecting significantly higher annual amounts than in the past. Its exports to China were $40.85 billion in 2010, $37.86 billion in 2015, and $48.76

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billion in 2017. Imports from China ran $37.02 billion in 2010, $58.02 billion in 2015, and $54.30 billion in 2017. The African countries having the most trade with China were resource-rich states like Angola, South Africa, and Nigeria.67 African oil and gas exports constituted the vast proportion of trade with minerals also significant. African countries purchased machinery and electronics, textiles and clothing, and metals from China.68 Data indicates China was one of Africa’s most important investors, with COFDI totaling $55 billion between 2010 and 2017. Major recipients include the DRC, Guinea, Mozambique, South Africa, and Uganda. On a sectoral basis, the moneys went into metals (mining) and energy in places like DRC, South Africa, Guinea, Nigeria, Sierra Leone, and Tanzania. African countries such as Djibouti, Ethiopia, Kenya, Namibia, and Tanzania contracted with China on major hydropower, logistics, railway, road, seaport, and other projects and, in many cases, received aid and loans from China to support these initiatives.69 Turning to MENA, structures such as the CASCF seemed to acquire greater prominence in MENA’s political relations with China over the course of the 2010s. The CASCF itself provided a venue for the creation of mechanisms to support regular MENA–China interactions in areas like economics, energy, and culture. CASCF meetings in 2012, 2014, 2016, and 2018 featured discussions of inter alia the BRI, the establishment of a strategic partnership, calls for coordination on regional and global affairs, the promulgation of development action plans, Chinese promises of tens of billions in loans, aid, and FDI, and Chinese support for MENA positions such as the Palestinian issue. A parade of GCC leaders from Bahrain, Kuwait, and Saudi Arabia voyaged to China while countries such as Egypt, Iran, and Saudi Arabia welcomed top Chinese leaders such as President Xi. Spurring greater MENA interest in China were factors similar to those in the 2000s that have been enumerated, worries emanating from the Arab Spring (which threatened authoritarian regimes), a sense that the US was no longer a reliable ally, and the desire for leverage against the US. On an individual country level, Algeria, Egypt, Iran, Iraq, and Saudi Arabia bolstered their ties with China and signed MoUs and agreements to lubricate the way for China to enhance their infrastructure, increase energy production while diversifying their economies, and obtain debt relief, FDI, and loans. They further established strategic or comprehensive strategic partnerships and strengthened military and security cooperation (e.g., weapons purchases or exercises) with China.70

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MENA–China economic interactions continued to grow dramatically over the 2010s. Indeed, in 2010, China replaced the US as the Arab world’s main trading partner.71 Whereas MENA exports to China were $91.87 billion in 2010, they jumped to $104.70 billion by 2015, and rose to $104.76 billion by 2017. MENA imports from China ran $68.07 billion in 2010, hit $111.89 billion in 2015, and reached $130.55 billion in 2017. Saudi Arabia, UAE, and Iran led the way in terms of trade with China.72 The composition of exports was dominated by fuels with chemicals and plastic and rubber also salient. Machinery and electronics constituted the largest import category with textiles and clothing as well as metals representing other notable imports.73 COFDI flows to MENA became more noticeable in the 2010s, in many years exceeding $2 billion and reaching almost $9.23 billion in 2016. The UAE and Egypt garnered the largest amount of COFDI, with most COFDI going into the energy, entertainment (software), and agricultural sectors.74 As detailed in the chapters herein by Dorraj and Blanchard (chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise”), Payne (chapter “The Missing MSRI in Iraq: The Southern Opportunity”), Fulton (chapter “The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation”), and Chaziza (chapter “Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities”), Iran, Iraq, various GCC states such as Oman and Saudi Arabia, and Egypt also received substantial investments from Chinese firms and/or signed major contracting deals for energy (e.g., refineries), power generation (e.g., nuclear and solar), railway, seaports, and telecommunications. Analysis Reflecting on the periods covered above, it is clear Africa and MENA’s political and economic bonds with China have continuously broadened and deepened, though the change has not been linear. In addition, it is indisputable that trade (not FDI or contracting) is the foundation of economic linkages between the vast majority of African and MENA states and China, with trade primarily equating to countries in these regions sending natural resources to China in exchange for manufactured goods. Even so, Chinese capital (FDI, aid, and contracting) have become increasingly important with the passage of time. Lastly, the historical record indicates that politics and/or security logics were in command from

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1949 until 1989 (roughly), with economics starting to become a more prominent component of the relationship in the 1990s. Indeed, for some periods and/or some countries economics has been the driver of relations. Regardless, politics has mattered greatly. For example, when China posed an internal threat such as occurred during the 1960s, African and MENA countries have proved willing to shun or oppose China. In contrast, when China has proven a protector against foes internal and/or external or viable alternatives are few or nonexistent, then decision-makers have strengthened links with Beijing. Of course, China can lubricate the process with political, military, and/or economic lures as it attempted to do in the late 1960s and did successfully post-1989. Noting this raises the issue of China’s priorities. African and MENA states may covet more interactions with China, but this may be to no avail if China’s attention is elsewhere as it was in the 1980s. Shared principles, common objectives, and bilateral institutions such as FOCAC and CASCF seem to facilitate better Africa–China and MENA–China ties, but it is not clear they are cause rather than consequence. There are various implications of the preceding points for thinking about the MSRI. One is that economics (the core of the MSRI) likely will have no unidirectional influence on the political behavior of African or MENA states. A second is that internal politics in African and MENA countries will shape how they approach China and Chinese “offerings.” A third is that what China does will matter greatly for the implementation of the MSRI and its ramifications.

The MSRI in Africa and MENA This section examines the MSRI in Africa as well as in MENA. It initially provides a primer on the MSRI in Africa before examining some of its manifestations. It then contemplates some of the objectives associated with the MSRI for China and participating African countries. The section next turns to the MSRI in MENA. It supplies background on the MSRI in MENA prior to describing some of its features. It then examines the aims of the MSRI in MENA for China and MENA countries. It concludes by exploring some of the issues that have been raised about the MSRI in Africa and MENA such “neocolonialism” and financing problems, which encompasses, but is a broader issue than, the “debt trap” issue.

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Africa The genesis of the MSRI in Africa is not entirely clear, though various analyses seem to situate it in 2015 when Chinese Foreign Minister Wang Yi visited Africa and expressed China’s interest in helping Africa realize the dream of linking all African capitals by HSR, which would sync nicely with one of the prominent features of China’s ambitious connectivity initiative.75 Looking at maps and MoUs, some early observers concluded very few African countries—and perhaps just one; that is, Kenya—were participants in the MSRI.76 Others, however, believed, while recognizing the centrality of East Africa, that many African countries have a prominent place in the MSRI. Indeed, various official PRC documents and statements about the BRI and MSRI clearly speak to China’s intent to involve all Africa, not just parts of Africa. While the contributions in this book emphasize East Africa (above all, Djibouti, Ethiopia, Kenya, and Tanzania), they make clear the MSRI also involves interior countries such as South Sudan, Rwanda, and Zambia.77 As shown in the contributions by Mboya (chapter “The Maritime Silk Road Initiative: Connecting Africa”), Blanchard and Ziso (chapter “The Maritime Silk Road Initiative and Ethiopia: Transforming Policies, Institutions, and Politics in Expected and Unexpected Ways”), Styan (chapter “Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations”), and Masabo (chapter “Tanzania in China’s MSRI: The “Chinese Dream” awaits Alignment with the African One”), seaports, not surprisingly, are a prominent feature of the MSRI in Africa. Relevant seaport projects include Lamu in Kenya, Bagamoyo and Dar el Salam in Tanzania, and the Doraleh Multipurpose Port (MPP) in Djibouti. One finds seaport developments a component of the MSRI in Madagascar, Mozambique, and Senegal, too. The book’s chapters and other studies identify numerous other MSRI projects where Chinese firms are involved as designer, contractor, operator, investor, or lender. These projects entail the following: power generation (e.g., hydro, solar, and biogas) and distribution projects in Ethiopia and Uganda; airports in Djibouti, Gabon, Togo; railway projects in Djibouti (the Ethiopia-Djibouti SGR), Ethiopia (the Ethio-Djibouti SGR and the Mekelle-Woldia-Hara-Gebeya project), Kenya (the Mombasa-Nairobi Standard Gauge Railway), Tanzania, Rwanda, South Sudan, and Rwanda; oil and water pipelines in Ethiopia, Kenya, and South Sudan; industrial parks/SEZs and Free Trade Zones in Djibouti and Ethiopia; highways;

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and telecommunication initiatives involving Chinese firms in Ethiopia and Tanzania.78 Analysts focused on Africa uniformly highlight that one payoff to China from the MSRI in Africa is opportunities for greater trade with and inside Africa. Given its major footprint in global maritime affairs as, e.g., a port operator, shipper, and servicer, it has the potential to “receive the lion’s share of income and resources” from increased maritime activity.79 Greater connectivity further will boost the volume of natural resources China can access, diversify its markets as well as suppliers, and help it limit its dependence on any particular routes or chokepoints such as the Strait of Malacca for commerce or energy trade. MSRI projects also profit Chinese companies since they garner opportunities as contractors, investors (e.g., if they produce in Africa, they obtain new distribution channels), lenders, operators, and suppliers and, of course, benefit from access to more, cheaper, and/or more reliable resource supplies. Regarding China’s potential political gains from the MSRI in Africa, for many, it advances China’s goal of becoming a great and/or global power. Relatedly, it can dilute the West’s position in the region while strengthening China’s position in the Indian Ocean Region (IOR). In addition, the MSRI improves China’s security because of its inter alia positive contribution to China’s resource situation. On the soft power front, the MSRI represents yet another signal of China’s commitment to Africa. It is a validation, too, at least in concept, of the “China Model” of development through infrastructure and trade. Finally, it can help China enhance its relations with diverse African states.80 As far as African policymakers are concerned, they seem most attracted to the COFDI inflows and loans as well as connectivity infrastructure, which is a related, but different issue, that are expected to flow from participation in the MSRI. Infrastructure is viewed as a path to integration internally and externally, to reducing transportation times and costs, and to establishing industrial zones. All of this, in turn, will promote growth, job creation, agricultural modernization, the development of natural resource sectors, tourism, industrialization, and, ideally, technology transfer, and trade. It also will fuel more COFDI and FDI from other countries, which will support more growth, job creation, agricultural modernization, industrialization, and technology transfer. Styan (chapter “Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations”) and Masabo (chapter “Tanzania in China’s MSRI: The “Chinese Dream” Awaits Alignment

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with the African One”) also highlight the importance of seaports and associated ventures like SEZs for boosting government revenues. To date, China’s ability and willingness to supply capital and FDI, with more acceptable or no conditions, only has added to the appeal of the MSRI given the immense capital needs of African countries, their inability to generate sufficient resources themselves, and the lack of suitable alternatives.81 The Middle East: The consensus appears to be that Chinese President Xi put both the MSRI and SREB on the MENA–China agenda during his address to the 6th China-Arab States Cooperation Forum in 2014. Indeed, one former Chinese diplomat described this deed as the “biggest highlight of the conference.”82 China’s desire to incorporate MENA into the MSRI as well as SREB also was made explicit during President Xi’s meetings with the Secretary General of the GCC in 2016 as well as in China’s 2016 Arab Policy Paper.83 MENA’s involvement deepened from 2016 onward with Algeria, Egypt, Iran, Jordan, Libya, the UAE, and other states signing BRI agreements, striking partnerships with Chinese financial institutions, speaking positively about China’s program, coordinating domestic development programs with the BRI, and participating in the 1st Belt and Road Forum held in 2017. Maps of the MSRI are not very useful in illuminating which MENA countries are MSRI participants and MENA receives scant mention in official MSRI/BRI documents.84 In any event, the chapters herein by Dorraj and Blanchard, Payne, Fulton, and Chaziza and various other materials suggest Egypt, all the GCC states, various states in the Levant, Iraq, and Iran are involved, albeit in different degrees.85 Generally speaking, MENA–China cooperation is centered around China’s 1+2+3 cooperation scheme, which takes energy as the core, infrastructure and trade/FDI as two “wings,” and cooperation in aerospace, new energy, and nuclear power as three breakthroughs.86 MSRI projects in MENA relate to this framework, though they are not purely derivative of it. More specifically, they include seaports projects in Egypt, Iran, Oman, Qatar, and UAE. Chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise” (Dorraj and Blanchard), chapter "The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation" (Fulton), and chapter “Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities” (Chaziza) reveal that these projects entail port expansion and improvements (e.g., Qeshm, Neka, and Bandar Imam Khomeini in Iran,

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Ain Sokhna in Egypt, and Khalifa in UAE), the construction of logistics and warehousing facilities, and the development of SEZs and free trade zones (FTZs) in Iran, Egypt, Oman, and the UAE. The MSRI further entails energy infrastructure such as solar, oil pipelines, coal-fired power generation plants, refineries, petrochemical plants, and power distribution in Egypt, Iran, Oman, and the UAE. Transportation infrastructure also is part of mix of MSRI projects in MENA. We see railway initiatives in Egypt, Iran, and Kuwait; roads in Kuwait and bridges in Egypt; and airport projects in Kuwait. Aside from this, there is Chinese investment in its MENA industrial parks and SEZs in Egypt, Oman, and the UAE in areas like construction materials, aluminum production and recycling, energy exploration equipment, food processing, and tires.87 At an abstract level, the MSRI in MENA is a way to bond or link China and MENA, quite à propos at a time when China is looking “West” and MENA is looking East. It also is quite natural given MENA is one of the places where the MSRI and SREB come together.88 Observers uniformly stress that the MSRI in MENA is critical to China because of the region’s importance for China’s oil and gas supplies. Furthermore, trade with MENA is becoming increasingly significant to China—in large part due to its voracious energy appetite, but also because MENA offers increasing populations, growing middle classes, and rising wealth. Furthermore, the region has immense infrastructure requirements, which creates opportunities for Chinese firms. It should be noted in regard to trade that China is attracted to the region not only for its market, but also because of MENA’s location, which makes it a springboard for accessing Africa, Europe, and the IOR.89 On the political front, some believe China seeks to exploit the MSRI to become dominant or overturn the existing order in the region.90 For others, however, China has less grand aims. Specifically, the MSRI is an extension of its traditional economics first stance towards MENA as well as a way to project soft power, to strengthen relations with regional countries, to improve its position visà-vis the West, especially the US, and to combat extremism, terrorism, and separatism.91 Certain countries have their own specific attractions. For instance, GCC states appeal to China as MSRI participants because of their location, immense resource endowments, and importance within the Arab League.92 MENA countries have many reasons for participating in the MSRI.93 Not surprisingly, many mirror the aims of participating African countries. MENA states hope to secure and increase access to their biggest

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market, critical at a time when energy demand and/or prices are under pressure. Policymakers in MENA countries like Iran, Iraq, and Egypt also covet Chinese FDI, loans, and infrastructure construction capabilities. The GCC states, of course, are in a much better financial shape than other MENA participants such as Egypt, but they still welcome more capital given their immense infrastructure requirements, lower energy demand and prices, and China’s comparative advantages in infrastructure. As the works by Dorraj and Blanchard (chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise”), Payne (chapter “The Missing MSRI in Iraq: The Southern Opportunity”), Fulton (chapter “The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation”), and Chaziza (chapter “Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities”) show, the MSRI also promises infrastructure that can help MENA participants advance their development strategies, diversify their economies, free up energy for external sale rather than internal use, satiate internal energy production and distribution requirements, and enhance transportation networks. Chaziza points out job creation is a powerful motivation for some MENA MSRI participants like Egypt.94 Turning to political motivations, participation in the MSRI is a way for countries not just to strengthen links with China, but to gain protection (Iran) or increased bargaining leverage vis-à-vis other parties such as the US or international institutions (Iraq and Egypt).95 Fulton (chapter “The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation”) points out the GCC also views the MSRI as a potential tool to get China to play a more active security role in the region. Issues associated with the MSRI in Africa and MENA: This subsection delves into various issues associated with the MSRI in Africa and MENA. One set of issues focuses on the actual and potential negative political (e.g., loss of sovereignty), financial (e.g., excessive debt burdens), and social and environmental consequences of the MSRI for participants in these regions. Another set relates to factors that can affect the MSRI’s implementation in these two regions. Long before the birth of the MSRI, critics accused China of neocolonialism in connection with its involvement in Africa. From one vantage point, they were simply labeling the economic relationship between Africa and China, which was one where Africa sent primary goods to China in exchange for manufactured goods, a pattern witnessed during the period when African states were colonized and sent raw materials back to the

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“metropole” or colonizer which dominated their economic life. They, however, were further asserting African countries were sacrificing their sovereignty and policy autonomy to Beijing due to their economic dependencies. Such charges also have been raised in connection with the MSRI, albeit much more so in the case of African than MENA participants.96 None of the chapters herein refute the notion that the pattern of trade between MSRI participants and China is neocolonial in character. Indeed, chapter “The Maritime Silk Road Initiative: Connecting Africa” (Mboya) suggests Chinese infrastructure is tying participant countries ever closer to the metropole rather than to each other or others. Despite the above, it should be noted that the case studies in the book do not allow us to forecast if MSRI projects ultimately will put participant countries on the path to less neocolonial economic patterns. Regarding the political dimension of neocolonialism, the contributions herein uniformly show countries have warmed ties with China, with some like Ethiopia, Iran, and Egypt appearing, in varying degrees near proxies of Beijing. The chapters, however, show participant country stances towards China are hardly derivative of economics, but also relate to, numerous political factors. Financing issues have become part and parcel of the negative discourse about the MSRI. There are three specific charges.97 First, loans associated with MSRI projects such as the Mombasa-Nairobi Standard Gauge Rail (SGR) or Ethiopia-Djibouti SGR or prospective projects such as Bagamoyo in Tanzania are creating excessive debts for those involved in China’s initiative. Second, the projects comprising China’s MSRI are economically unviable which means that they will not generate the revenues needed to repay loans and will drain scarce resources from government budgets. Third, China is using generous (or costly) financing to ensnare borrowers in a “debt trap” from which they only can escape by giving up valuable assets to China. It is true that some MSRI countries have borrowed huge amounts for MSRI projects and that some like Kenya owe large sums of money to China. It is not clear, though, that these countries’ debt burdens can be blamed on China or China’s MSRI. Beyond this, Chinese loans often are the only or the best financing option for countries that need to borrow to finance their infrastructure activities.98 As for the economic viability of MSRI projects, it is a real issue. However, the evidence does not show China engaged in any kind of deception, but rather that participant countries may not have properly planned, implemented, or coordinated projects internally or with neighboring countries. Regardless, unless African and MENA countries

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involved in the MSRI resolve such issues, projects will neither deliver the anticipated benefits nor revenues. Focusing on the debt trap, this is a concern, but none of the chapters show any assets being turned over to China and indeed countries like Djibouti and Ethiopia had no problems renegotiating their debts.99 It is indisputable that MSRI ventures have caused various negative social and environmental externalities in African and MENA countries, though it is not readily apparent that they are worse than those produced by non-Chinese parties. Social problems typical relate to the relocation of people to create space for projects or the inadequate or tardy compensation of those that are relocated. In some cases, such as Ethiopia, relocation has led to or exacerbated ethnic conflict because of the populations that are being relocated. Environmental issues may tie to hydropower or resource exploitation endeavors which affect land and water, transportation infrastructure such as railways which disrupt wildlife (an issue in Kenya), and seaport projects which affect pristine environmental areas (a problem associated with Bagamoyo). On the whole, however, while acknowledging that problems exist, the contributions in this edited volume do not indicate negative social and environmental externalities are major issues, though they have caused delays or disruptions.100 Turning to challenges for MSRI implementation, we first look at financial issues. The majority of those studying the MSRI have identified five main funding channels. The first is Chinese policy institutions such as the China Development Bank. The second is the Silk Road Fund. The third are Chinese state-owned or -controlled financial entities such as the Industrial and Commercial Bank of China or the China Investment Corporation (CIC), a sovereign wealth fund.101 The fourth is regionally focused investment funds such as the China-Arab Investment Fund. The fifth is Chinese state-owned enterprises (SOEs) and PRC and non-PRC private companies. Many deem the Asian Infrastructure Investment Fund (AIIB) a funding vehicle for the MSRI and the SREB, but this is problematic. While things could change, the AIIB, to date, has provided little funding for BRI-related projects and indeed is providing an increasing number of non-infrastructure related loans. Until 2018 or so, there was little doubt about the sufficiency of funding given China is the world’s 2nd largest economy, has more than $3 trillion in foreign exchange reserves, and COFDI was growing rapidly.102 China’s slowing economic growth rate, the extreme debts and/or financial weakness of some MSRI participants, debt defaults, concerns about Chinese capital outflows, the

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backlash emanating from the debt trap debate, and caution from nonChinese policy bank lenders and MSRI participants, however, has called into question the MSRI’s funding situation generally as well as in countries like Kenya, Ethiopia, Djibouti, Iran, and Egypt. Many now expect China to lend less or to impose stricter lending criteria, or for projects to be suspended or terminated.103 The degree to which funding ultimately will decline, however, is quite uncertain at this point. It is well known that conflict and instability—resulting from interstate war, intrastate strife, regime change, shifts in leaders, political unrest, or terrorism—can delay or prevent the implementation of the MSRI or result in projects within, between, or among countries not reaching their full potential.104 As far as Africa and MENA are concerned, some of these types of issues, in diverse degrees and with varying impacts, have emerged in Kenya, Ethiopia, Somalia, South Sudan, Tanzania, Iraq, and Egypt as indicated in the contributions by Mboya (chapter “The Maritime Silk Road Initiative: Connecting Africa”), Blanchard and Ziso (chapter “The Maritime Silk Road Initiative and Ethiopia: Transforming Policies, Institutions, and Politics in Expected and Unexpected Ways”), Masabo (chapter “Tanzania in China’s MSRI: The “Chinese Dream” awaits Alignment with the African One”), Payne (chapter “The Missing MSRI in Iraq: The Southern Opportunity”), and Chaziza (chapter “Egypt in China’s Maritime Silk Road Initiative Relations Cannot Surmount Realities”). Beyond this, Dorraj and Blanchard (chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise”) and Fulton (chapter “The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation”) show that the beneficial effects of the MSRI/SREB for other countries can make participant countries such as Iran or GCC states less enamored of the MSRI or BRI writ large since it can increase competition, reduce leverage, and/or empower competitors. Conflict also has been festering over China’s demands for the use of Chinese contractors and equipment; the presence of Chinese workers (though the use of Chinese workers often is exaggerated); and corruption associated with some Chinese projects.105 The last potential obstacle to MSRI implementation and the full realization of MSRI benefits to be discussed is the role of third parties. In concept, third parties such as India, Japan, and the United States can affect the progress of the MSRI in three ways. One is to interfere directly such as by pressuring participant governments to terminate or redesign projects. A second is to offer competing infrastructure programs. A third

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is to avoid participation in China’s MSRI or to undermine its credibility through negative rhetoric, reporting, or actions in international venues. To date, there is no evidence of third parties adopting the first tack. India has embraced the second and third tacks in MENA as evidenced by its involvement in Chabahar port project in Iran. However, the intensity of its actions in MENA pale in comparison to its actions in South Asia, where they seem meaningfully impacted the MSRI’s progress. For a period of time, Japan raised criticisms about the MSRI/SREB. In April 2017, it also advanced a competing scheme called the Quality Infrastructure Initiative (QII), which promotes higher standards for lending and projects, and, the same year, partnered with India on the Asia-Africa Growth Corridor.106 For its part, the US, along with Japan and Australia, put forth the “Blue Dot Network” in late 2019. Like Japan’s QII, it stresses higher standards for project financing and projects.107 The US also has widely and strongly criticized the MSRI in Africa.108 While the chapters in this book do not show any evidence Japanese or American activities have affected adversely the MSRI in Africa or MENA, the possibility exists.

Chapter Summaries Chapter “The Maritime Silk Road Initiative: Connecting Africa” (Mboya) entitled “Connecting and Disconnecting Africa: The Maritime Silk Road Initiative’s Conflicting Effects on Eastern Africa” examines how much China’s MSRI is connecting Africa and which parties are gaining from the railways, roads, and other infrastructure China is constructing in Eastern Africa. After reviewing the state of various MSRI projects in Kenya, Ethiopia, and Djibouti, Mboya, tackling an issue that has not received sufficient attention, concludes the MSRI indeed seems to have boosted linkages and trade flows (“Connecting”)—as many touted the MSRI would do—but that the distribution of flows is not “win-win” with flows clearly skewed towards China rather than the region (“Disconnecting”). He also highlights a myriad of challenges—e.g., insufficient usage, high debts, competition with other projects, and poor coordination—that are hindering the implementation of MSRI projects or the realization of their objectives. Mboya recommends various steps China and African countries should follow to mitigate these obstacles. In toto, then, he addresses three issues of continuing interest to analysts: the state of the MSRI; the factors hindering the realization of the MSRI; and the effects of the MSRI.

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In Chapter 3 (“The Maritime Silk Road Initiative and Ethiopia: Transforming Policies, Institutions, and Politics in Expected and Unexpected Ways”), Blanchard and Ziso probe the MSRI in Ethiopia. They examine the progress of inter alia MSRI hydropower projects, railways, and SEZs in Ethiopia and find they have been advancing relatively smoothly because of Ethiopian and Chinese interests, the resources both states possess, and, to date, a supportive political environment in Ethiopia. Even so, the chapter reveals obstacles exist that may prevent these projects from reaching their full potential. Some contend Addis Ababa has become a Chinese client state because of its need for Chinese markets, FDI, and, loans and the MSRI’s economic allure. Blanchard and Ziso demonstrate, though, that the view Ethiopia has sacrificed political agency for economic goods is overly simplistic. More specifically, it has its own reasons for embracing China and the MSRI and many relate to politics. Moreover, Ethiopia’s participation in the MSRI and ties with China actually have given it greater agency. Overall, the chapter adds to our knowledge about the progress of the MSRI and impediments to it and the MSRI’s domestic and international political effects. Styan’s “Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations” (chapter “Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations”) also engages the debate about political agency. Delving into the case of Djibouti where China has located its first overseas military base and is deeply involved in infrastructure, Styan rejects the thesis that Djibouti is critically dependent on China. In his view, Djibouti actually possesses substantial agency as reflected in its ability to extract considerable basing fees and renegotiate its debts. The chapter also identifies quite clearly why China picked Djibouti for its military base. In his piece, Styan further argues China Merchants Group, the key Chinese investor in Djiboutian infrastructure, was driven by commercial, not political, considerations; that the debt trap argument is exaggerated; and that there currently is little evidence that China will embark on a naval port building spree elsewhere. Aside from enriching our knowledge about the MSRI in Djibouti, Styan enhances our understanding of the political effects of the MSRI. In “Tanzania in China’s MSRI: The ‘Chinese Dream’ Awaits Alignment with the African One” (Chapter 5), Masabo investigates why the Bagamoyo Port Complex (BPC), the marquee MSRI project in Tanzania, died despite the fact that Tanzania and China have had long and very

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close dealings. Indeed, Tanzania was one of the earliest African participants in China’s MSRI and many expected significant accomplishments. Masabo’s argument is that the unexpected turn of events was a function of economic problems associated with the project and Tanzania’s economic situation, the rise of a more nationalistic Tanzanian leader worried about the potentially negative sovereignty and economic independence risks associated with large infrastructure projects and associated loans, and the emergence of new actors in the Tanzania-China dynamic. The preferences of third parties and the existence of alternative economic options reduced the appeal of the BPC, too. In his chapter Masabo also offers several suggestions for improving the MSRI’s prospects in Tanzania. Beyond updating us on the MSRI’s situation in Tanzania, the chapter speaks to the factors shaping MSRI implementation, stressing the salience of individuals and political factors. Iran in the MSRI is the focus of “Iran in China’s Maritime Silk Road Initiative (MSRI): Flowing Forward Albeit Not at Full Speed” (chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise” by Dorraj and Blanchard). Iran’s needs, its broad and deep economic and political relationship with China, and its centrality in the MSRI in MENA implied that the MSRI would proceed along multiple fronts at a rapid pace. Dorraj and Blanchard’s chapter, however, indicates that reality does not track with such expectations. While Tehran greatly values its dealings with and needs China and its MSRI, there are political and economic issues on the Iranian side—e.g., concerns about sovereignty and Iranian centrality as well as weak energy prices—that have limited the progress of the MSRI. In addition, China and Chinese firms are cautious about moving forward aggressively on the MSRI in Iran given sanctions on Iran, the global energy situation, and China’s current economic challenges. In short, there is no automatic correspondence between extensive, positive relations and the MSRI’s realization. Overall, Chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise” details the state of the MSRI in Iran and identifies a variety of domestic and/or international political and economic factors that have hindered its rapid and extensive implementation. Payne’s “The Missing MSRI in Iraq: The Southern Opportunity” (Chapter 7) looks at Iraq. Payne notes that there is little sign of the MSRI in Iraq and that the focus to date has been on energy projects, first and

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foremost, and an assortment of rather unimpressive land-focused connectivity projects, many discussed rather than implemented. The former tracks with past Iraq–China relations. The latter has much to do with Iraq’s decade-long tumultuous political situation, especially the incursion of the Islamic State of Iraq and the Levant in 2013. It is the case that Iraqi needs, China’s value as an alternative partner, and Chinese endowments create prospects for the BRI in Iraq in the future, but Iraq’s economic condition, problematic business environment, and continuing sectarian divisions will constrain what can be achieved. Relevant for this volume, some of these problems actually may fuel the development of the MSRI, particularly the Port of Faw, since Iraq’s south, which adjoins the sea, is relatively more stable and proximate to growing regional connectivity schemes. Payne’s chapter, then, offers an angle not taken elsewhere in this volume because it makes us reflect on what actually might fuel the MSRI rather than obstruct it. Chapter 8 (Fulton) is entitled “The Gulf Cooperation Council’s ‘Visions’ of Maritime Silk Road Initiative Cooperation.” As Fulton demonstrates, GCC states have strongly embraced both China’s MSRI as well as its SREB. This has to do with the fact that the MSRI and BRI advance a variety of their domestic and international economic and political needs ranging from delivering the economic goods to their populaces to diversifying their economies to building new partnerships that advance their external security. Unlike some other states covered in this volume, the MSRI is progressing well in the GCC because of, among other things, the economic capacities of GCC states, the fact that some of the downsides associated with the MSRI are not relevant, and China’s strong interest in GCC states. The chapter shows, too, that the MSRI has different features in different GCC states due to the nature of projects, among other things. Ultimately, this chapter not only enhances our awareness of the MSRI progress in various GCC states, but also brings into relief how successful MSRI implementation requires a conducive environment on many fronts as well as that implementation results are contingent on country- and project-specific factors. The final chapter in the book is Chaziza’s “Egypt in the MSRI: Relations cannot Surmount Realities” (Chapter 9). The chapter provides rich information about the MSRI in Egypt, with which China has extensive ties. At present, the MSRI is manifest in Egypt in seaport projects, transportation initiatives, power generation projects, the massive Suez Canal Economic Zone, and manufacturing investments. Egypt has a strong

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interest in the MSRI because it covets Chinese capital (loans and FDI), needs to create jobs, and wants to improve its infrastructure. Politically, Egypt wants to diversify its political partners and political elites need to legitimate themselves by delivering the economic goods. The MSRI is progressing due to Egyptian and Chinese needs, Chinese resources, and the ruling regime’s ability to suppress dissent. Still, despite Egypt’s longstanding ties with China and China’s strong interest in Egypt, MSRI results are bounded. The causes of this include Egypt’s economic and political problems which limit Egypt’s ability to implement the MSRI as well as the desire of China and Chinese MNCs to allocate more resources to the MSRI. In the final analysis, chapter “Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities” illuminates the MSRI’s situation in Egypt plus the factors shaping the progress of the MSRI.

Conclusion This chapter serves three purposes. First, it lays a foundation for the rest of the contributions in the volume. It does this by providing background on the MSRI and related issues, Africa as well as MENA’s relations with China, and the MSRI in Africa and the MENA. This is not just a matter of providing facts, however. Second, it highlights some of the domestic and international political and economic variables driving dynamics in these areas, partly to sensitize readers to the broad universe of factors treated in the diverse pieces in the book. Third, it supplies a focused summary of the chapters in the book. This conclusion reiterates some of the main findings flowing from this chapter and the case studies in the book (and notes a couple of other findings), discusses their policy and theoretical implications, and notes several potentially fruitful areas for further study. In terms of findings, one, derived purely from this chapter, is that Africa and MENA’s relations with China are fluid. While the trend since the 1990s has largely been upward, the interactions of countries in these regions with China depends upon a myriad of factors, both political and economic, at multiple levels (national, regional, and global). In short, things can and do change. A second is that the MSRI is progressing in Africa and MENA, but not advancing as rapidly as or having the implications originally expected. A third, related to the second, is that the MSRI is moving forward despite China and Chinese companies’ economic and financial challenges. A fourth is that the allure of the MSRI coupled with

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the attractions of Chinese FDI, loans, aid, and trade have not enslaved MSRI participants in Africa and MENA. They retain agency; pursue warmer or pro-China policies for multiple reasons; and, in some cases, have been empowered by the MSRI and links with China. A fifth is that domestic politics weighs quite consequentially on the course of the MSRI. With respect to policy implications, decision-makers “outside” the MSRI should be far less anxious about the MSRI. There likely will be no dramatic transformations, though there may be noteworthy consequences if MSRI projects are completed and if they deliver the expected benefits, which the studies here and elsewhere show, cannot be automatically assumed.109 For those wishing to advance the MSRI, the contributions herein show that participant countries, China, and involved MNCs need to be attentive to internal dynamics in participant countries, though how and how much depend upon conditions in the relevant state. Those seeking to undermine the MSRI need to offer alternatives that meaningfully deliver what (political and/or economic) goods that African and MENA states seek to obtain from participating in the MSRI. As for conceptual implications, there are at least three. To start, political economic lenses provide one of the most fruitful analytical frameworks for thinking about the MSRI.110 In addition, it cannot be assumed that economic stimuli will automatically dictate political behaviors. Lastly, it is essential to take into account domestic politics to understand the ways MSRI participants react to and are affected by economic stimuli.111 One limitation (though it also is a strength) of this book is that it primarily analyzes the MSRI from the vantage point of African and MENA participants. Obviously, China as well as Chinese companies play a crucial role in the embrace of the MSRI, its implementation, and the reaction of 3rd parties. Thus, to obtain a comprehensive understanding of the MSRI, future studies of the MSRI need to delve into the actions and reactions of China and Chinese MNCs. Another shortcoming is that the book’s case studies are based almost entirely on the use of secondary sources, a necessity given restrictions on accessing key MSRI decisionmakers and obtaining internal documents and official studies. As the opportunity presents itself, analysts should try to exploit such materials. A final limitation to be noted is that the book emphasizes the “implementation” issue. The costs and benefits of MSRI projects need to be evaluated more systematically (albeit in a focused way), however, for observers to better analyze the ultimate ramifications of the MSRI.

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It is no longer too early to evaluate the MSRI.112 The studies in this volume make clear there is no “boom or bust” with respect to the MSRI and that only a systematic consideration of a myriad of political and economic variables at multiple levels can illuminate what has happened, what is happening, and what, likely, will happen. China’s MSRI may be “little more than…old wine in new bottles,” but it has an aroma that appeals to both China and participants alike and its complexity will never be fully appreciated unless one goes beyond the labels.113

Notes 1. Brian Eyler, “China’s Maritime Silk Road Is All About Africa,” East by Southeast, November 17, 2014, http://www.eastbysoutheast.com/chi nas-maritime-silk-road-africa. 2. Diego Pautasso, “The Role of Africa in the New Maritime Silk Road,” Brazilian Journal of African Studies 1, no. 2 (2016): 128. 3. Mordechai Chaziza, “China’s New Silk Road Strategy and the Middle East,” BESA Center Perspectives, no. 1473 (2020), https://besacenter. org/perspectives-papers/china-silk-road-middle-east. 4. Deborah Lehr, “The Middle East Is the Hub for China’s Modern Silk Road,” Middle East Institute, August 15, 2017, https://www.mei.edu/ publications/middle-east-hub-chinas-modern-silk-road. 5. Admittedly, it is expanding. Recent works include Thokozani Simelane and Lavhelesani Managa, eds., Belt and Road Initiative: Alternative Development Path for Africa (Pretoria: Africa Institute of South Africa, 2018); Anoushiravan Ehteshami and Niv Horesh, eds., China’s Presence in the Middle East: The Implications of the One Belt One Road Initiative (London: Routledge, 2018); and Mordechai Chaziza, China’s Middle East Diplomacy: The Belt and Road Strategic Partnership (Eastbourne: Sussex Academic Press, 2020). 6. This problem also afflicts analyses concentrating on Southeast Asia and South Asia. 7. David Dollar, “Understanding China’s Belt and Road Infrastructure Projects in Africa,” Global China, September, 2019, https://media.afr icaportal.org/documents/Understanding_Chinas_belt_and_road.pdf, 1. 8. Similar strategies are followed in Jean-Marc F. Blanchard, ed., China’s Maritime Silk Road Initiative and South Asia: A Political Economic Analysis of Its Purposes, Perils, and Promises (Singapore: Palgrave MacMillan, 2018); and Jean-Marc F. Blanchard, ed., China’s Maritime Silk Road Initiative and Southeast Asia: Dilemmas, Doubts, and Determination (Singapore: Palgrave MacMillan, 2019). A recent work that

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9.

10.

11.

12.

13.

14.

15.

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stresses the analysis of BRI regions is Jonathan Fulton, ed., Regions in the Belt and Road Initiative (London: Routledge, 2020). Muhammad Sabig Farooq, Nazia Feroze, and Yuan Tong Kai, “An Analysis of China and Africa Relations with Special Focus on ‘One Belt and One Road’,” India Quarterly 75, no. 3 (2019): 372. Dollar takes the view Africa is deeply involved (“Understanding China’s Belt and Road Infrastructure Projects in Africa,” 2). Yitzhak Shichor, “Vision, Revision, and Supervision: The Politics of China’s OBOR and AIIB and their Implications for the Middle East,” in China’s Presence in the Middle East: The Implications of the One Belt, One Road Initiative, ed. Anoushiravan Ehteshami and Niv Horesh (Abingdon: Routledge, 2018), 38–39. Jonathan Fulton, “The G.C.C. Countries and China’s Belt and Road Initiative (BRI): Curbing Their Enthusiasm,” Middle East Institute, October 17, 2017, https://www.mei.edu/publications/gcc-countriesand-chinas-belt-and-road-initiative-bri-curbing-their-enthusiasm. For related findings in regard to other MSRI contexts, see Blanchard, ed., China’s Maritime Silk Road Initiative and South Asia; Jean-Marc F. Blanchard, “China’s Maritime Silk Road Initiative (MSRI) and Southeast Asia: A Chinese ‘Pond’ Not ‘Lake’ in the Works,” Journal of Contemporary China 27, no. 111 (2018): 329–343; and Shaofeng Chen, “Regional Responses to China’s Maritime Silk Road Initiative in Southeast Asia,” Journal of Contemporary China 27, no. 111 (2018): 344–361. Soft infrastructure (trade accords, bilateral investment treaties, and aviation accords), which is an integral part of the MSRI (as well as the SREB), is covered further in Jean-Marc F. Blanchard and Colin Flint, “The Geopolitics of China’s Maritime Silk Road Initiative,” Geopolitics 22, no. 2 (2017): 227–228. “Why China Is Running into Political Potholes on Its ‘New Silk Road’,” South China Morning Post, January 11, 2018, https://www.scmp.com/ news/china/diplomacy-defence/article/2127792/why-china-runningpolitical-potholes-its-new-silk-road; James Griffiths, “Are the Wheels Coming off China’s Belt and Road Megaproject,” CNN , December 31, 2018, https://www.cnn.com/2018/12/31/asia/china-kenya-beltroad-bri-intl/index.html; and Nadege Rolland, “Reports of Belt and Road’s Death Are Greatly Exaggerated,” Foreign Affairs, January 29, 2019, https://www.foreignaffairs.com/articles/china/2019-01-29/rep orts-belt-and-roads-death-are-greatly-exaggerated. This paragraph draws upon Blanchard, ed., China’s Maritime Silk Road Initiative and South Asia, 4–6; Blanchard, ed., China’s Maritime Silk Road Initiative and Southeast Asia, 4; and Jean-Marc F. Blanchard,

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16.

17. 18.

19.

20.

21.

22.

“Problematic Prognostications About China’s Maritime Silk Road Initiative (MSRI): Lessons from Africa and the Middle East,” Journal of Contemporary China 29, no. 122 (2020): 161. Jean-Marc F. Blanchard, “Probing China’s Twenty-First Century Maritime Silk Road Initiative (MSRI): An Examination of MSRI Narratives,” Geopolitics 22, no. 2 (2017): 251–253. Ibid., 255–258. “China Offers Wisdom in Global Governance,” China Daily, October 4, 2017, http://www.chinadaily.com.cn/china/2017-10/04/content_3 2830475.htm; “Xi Says Belt and Road Initiative Is Not an Intrigue of China,” China Daily, April 11, 2018, http://www.chinadaily.com.cn/ a/201804/11/WS5ace28d1a3105cdcf6517ad3.html; and Chu Daye, “B&R Kindles Confidence, Inspiration Around World,” Global Times, August 26, 2018, http://www.globaltimes.cn/content/1117134.shtml. Since the MSRI came into being in 2013, it is reasonable to exclude projects, even maritime-oriented ones, that began before 2013. Even so, some projects that began before 2013 gained renewed vigor after the MSRI’s birth. Thus, analysts need to apply the 2013 “cut-off” in a flexible manner. For numerous concrete examples, see the relevant chapters in Blanchard, ed., China’s Maritime Silk Road Initiative and South Asia; and Blanchard, ed., China’s Maritime Silk Road Initiative and Southeast Asia. “Our bulldozers, Our Rules,” The Economist, July 2, 2016, http://www. economist.com/news/china/21701505-chinas-foreign-policy-could-res hape-good-part-world-economy-our-bulldozers-our-rules; David Tweed, “China’s Silk Road,” Bloomberg, September 8, 2016, https://www. bloomberg.com/quicktake/china-s-silk-road; “China’s ‘Silk Road’ Stirs Unease Over Its Strategic Goals,” New York Times, May 10, 2017, https://www.nytimes.com/aponline/2017/05/10/world/asia/ap-aschina-new-silk-road-abridged.html; Charles Parton, “Belt and Road Is Globalization with Chinese Characteristics,” Financial Times, October 3, 2018; and Dollar, “Understanding China’s Belt and Road Infrastructure Projects in Africa.” Many of these issues are discussed further below in the sub-section entitled “Issues associated with the MSRI in Africa and MENA.” Blanchard, “Probing China’s Twenty-First Century Maritime Silk Road Initiative (MSRI),” 249–251; Wang Cong, “B&R Accusations Groundless, But Problems Need to be Addressed: Analysts,” Global Times, August 27, 2018, http://www.globaltimes.cn/content/1117301.shtml; and Siviwe Fektha, “Chinese Envoy to SA Slams Suggestions China Belt, Road Initiative Seeks to Dominate Poor African Countries,” IOL, August 6, 2020, https://www.iol.co.za/news/africa/chinese-envoy-to-

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23.

24.

25.

26. 27. 28. 29. 30.

31. 32.

33. 34.

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sa-slams-suggestions-china-belt-and-road-initiative-seeks-to-dominatepoor-african-countries-bc3cea20-1a18-4d45-a977-879ab026efc2. Richard Javad Heydarian, “Malaysia’s Bold Play Against China,” Washington Post, November 14, 2018, https://www.washingtonpost.com/ news/theworldpost/wp/2018/11/14/Malaysia. For related points, see David Dodwell, “China’s Belt and Road Initiative Is Here to Stay, Whether the US Likes It or Not,” South China Morning Post, February 2, 2019, https://www.scmp.com/print/com ment/insight-opinion/united-states/article/2184602/chinas-belt-androad-initiative-here-stay; John Calabrese, “China’s Maritime Silk Road and the Middle East: Tacking Against the Wind,” Middle East Institute, May 19, 2020, https://www.mei.edu/publications/chinas-maritimesilk-road-and-middle-east-tacking-against-wind; and “The Pandemic Is Hurting China’s Belt and Road Initiative,” The Economist, June 4, 2020, https://www.economist.com/china/2020/06/04/the-pan demic-is-hurting-chinas-belt-and-road-initiative. Ian Taylor, China and Africa: Engagement and Compromise (Abingdon: Routledge, 2006), 17–34; Marcus Power, Giles Mohan and May TanMullins, China’s Resource Diplomacy in Africa: Powering Development? (Houndmills: Palgrave Macmillan, 2012), 40–43; and David H. Shinn and Joshua Eisenman, China and Africa: A Century of Engagement (Philadelphia: University of Pennsylvania Press, 2012), 30–41, 57–66. Taylor, China and Africa, 40. International Monetary Fund, “Direction of Trade Statistics,” https:// data.imf.org/regular.aspx?key=61013712 [hereinafter IMF, “DOTS.”]. For more on the TanZam railway, see Taylor, China and Africa, 38–40. Power, Mohan and Tan-Mullins, China’s Resource Diplomacy in Africa, 43–45. See, e.g., Jan S. Prybyla, “Communist China’s Economic Relations with Africa 1960–1964,” Asian Survey 4, no. 11 (1964): 1136–1142; Taylor, China and Africa; and Dele Seteolu and Abdul-Gafar Tobi Oshodi, “Oscillation of Two Giants: Sino-Nigeria Relations and the Global South,” Journal of Chinese Political Science 23, no. 3 (2018): 257–285. Muhamad S. Olimat, China and the Middle East Since World War II: A Bilateral Approach (Lanham: Lexington Books, 2014), 4–5. Prybyla, “Communist China’s Economic Relations with Africa 1960– 1964,” 1141–1142; Yitzhak Shichor, The Middle East in China’s Foreign Policy: 1949–1977 (Cambridge: Cambridge University Press, 1979); and various chapters in Olimat, China and the Middle East Since World War II . Olimat, China and the Middle East Since World War II , Chapter 12. Shichor, The Middle East in China’s Foreign Policy.

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35. IMF, “DOTS.” 36. Shichor, The Middle East in China’s Foreign Policy, 42–44, 113–114. 37. See, e.g., Anshan Li, “China and Africa: Policy and Challenges,” China Security 3, no. 3 (2007): 72–73; Power, Mohan and Tan-Mullins, China’s Resources Diplomacy in Africa, 50–51; and Shinn and Eisenman, China and Africa, 43–45, 111–114. 38. Taylor, China and Africa, 62–65, 121–123; Power, Mohan and TanMullins, China’s Resource Diplomacy in Africa, 53–54, 226; and Shinn and Eisenman, China and Africa, 45–46. 39. IMF, “DOTS.” 40. Taylor, China and Africa; Power, Mohan and Tan-Mullins, China’s Resource Diplomacy in Africa; and Shinn and Eisenman, China and Africa. 41. Geoffrey Kemp, The East Moves West: India, China, and Asia’s Growing Presence in the Middle East (Washington: The Brookings Institute Press, 2010), 80–84; Olimat, China and the Middle East Since World War II ; Andrew Scobell and Alireza Nader, China in the Middle East: The Wary Dragon (Santa Monica: RAND Corporation, 2016), Chapters 3–4; Niv Horesh, ed., Toward Well-Oiled Relations? China’s Presence in the Middle East Following the Arab Spring (London: Palgrave Macmillan, 2016), chapters 6, 9, and 12; and James M. Dorsey, China and the Middle East: Venturing into the Maelstrom (Cham: Palgrave Macmillan, 2019), 88–89, 93, 97–98. 42. IMF, “DOTS.” 43. Olimat, China and the Middle East Since World War II, chapters 7 and 12; Yasser M. Gadallah, “An Analysis of the Evolution of Sino-Egyptian Economic Relations,” in Toward Well-Oiled Relations? China’s Presence in the Middle East Following the Arab Spring, ed. Niv Horesh (London: Palgrave Macmillan, 2016), 95; and Scobell and Nader, China in the Middle East, 26. 44. Richard J. Payne and Cassandra R. Veney, “China’s Post-Cold War African Policy,” Asian Survey 38, no. 9 (1998): 876–879; Taylor, China and Africa, chapters 4, 7–9; Robert G. Sutter, Chinese Foreign Relations: Power and Policy Since the Cold War (Lanham: Rowman & Littlefield, 2012), 312–314; Shinn and Eisenman, China and Africa, 45–47, 71– 75; and Cheng Aiqin and Cai Jianhong, “China’s Energy Diplomacy Towards Africa from the Perspective of Politics,” in China and Africa: A New Paradigm of Global Business, ed. Young-Chan Kim (Cham: Palgrave Macmillan, 2017), 128–129; and Seteolu and Oshodi, “Oscillation of Two Giants.” 45. IMF, “DOTS.” 46. World Bank, “World Integrated Trade Solutions,” http://wits.worldb ank.org/WITS [hereinafter World Bank, “WITS.”].

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47. Payne and Veney, “China’s Post-Cold War African Policy,” 877; Sutter, Chinese Foreign Relations, 313; and Shinn and Eisenman, China and Africa, chapters 9–11. 48. Taylor, China and Africa, chapters 4, 6–7, and 9; Jeremy Youde, “Why Look East? Zimbabwean Foreign Policy and China,” Africa Today 53, no. 3 (2007): 3–19; and Shinn and Eisenman, China and Africa, chapters 9–11. 49. John Calabrese, “Peaceful or Dangerous Collaborators? China’s Relations with the Gulf Countries,” Pacific Affairs 65, no. 4 (1993): 471–485; Olimat, China and the Middle East Since World War II (2014); and Scobell and Nader, China in the Middle East, chapters 3–4. 50. IMF, “DOTS.” 51. World Bank, “WITS.” 52. Calabrese, “Peaceful or Dangerous Collaborators?” 480; Chris Alden, “China in Africa,” Survival 47, no. 3 (2005): 148; Mo Chen, “Exploring Economic Relations Between China and the GCC States,” Journal of Middle Eastern and Islamic Studies (in Asia) 5, no. 4 (2011): 95–98; Olimat, China and the Middle East Since World War II . See also Manochehr Dorraj and Jean-Marc F. Blanchard’s piece on Iran (chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise”), Jeffrey Payne’s Iraq case (chapter “The Missing MSRI in Iraq: The Southern Opportunity”), and Mordechai Chaziza’s discussion of Egypt (chapter “Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities”) in this volume. 53. Taylor, China and Africa, 68–69; Shinn and Eisenman, China and Africa, chapters 2, 5; and Anja Lahtinen, China’s Diplomacy and Economic Activities in Africa: Relations on the Move (Cham: Palgrave Macmillan, 2018), 20–21. 54. See, e.g., Shinn and Eisenman, China and Africa, 96–97. 55. Taylor, China and Africa, 124–126; Shinn and Eisenman, China and Africa, 71–75; and Lahtinen, China’s Diplomacy and Economic Activities in Africa, 26–27. 56. Shinn and Eisenman, China and Africa, 52. 57. IMF, “DOTS.” 58. World Bank, “WITS.” 59. UNCTAD, “Bilateral FDI Statistics,” https://unctad.org/en/Pages/ DIAE/FDI%20Statistics/FDI-Statistics-Bilateral.aspx. 60. The AEI-Heritage Foundation CGIT is available at https://www.aei. org/china-global-investment-tracker. 61. Sutter, Chinese Foreign Relations, 321–322; Shinn and Eisenman, China and Africa, chapters 9–11; and Lahtinen, China’s Diplomacy and Economic Activities in Africa, 40–43.

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62. Jinglie Wang, “Review and Thoughts Over the Relationship Between China and the Middle East,” Journal of Middle Eastern and Islamic Studies (in Asia) 4, no. 1 (2010): 25–26; and Olimat, China and the Middle East Since World War II . See also the contributions by Payne (chapter “The Missing MSRI in Iraq: The Southern Opportunity”) and Jonathan Fulton (chapter “The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation”) in this volume. 63. IMF, “DOTS.” 64. World Bank, “WITS.”. 65. Further details on COFDI and contracting activities in Iran and Iraq can be found in, respectively, chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise” (Dorraj and Blanchard) and chapter “The Missing MSRI in Iraq: The Southern Opportunity” (Payne) herein. 66. Useful sources include Hany Besada and Ben O’Bright, “Maturing SinoAfrican Relations,” Third World Quarterly 38, no. 3 (2017): 655–677; Chris Alden, Abiodun Alao, Zhang Chun and Laura Barbers, eds., China and Africa: Building Peace and Security Cooperation on the Continent (Cham: Palgrave Macmillan, 2018), chapters 1–3; and Olayiwola Abegunrin and Charity Manyeruke, China’s Power in Africa: A New Global Order (Cham: Palgrave MacMillan, 2020), chapters 2–3. 67. IMF, “DOTS.” 68. World Bank, “WITS.” 69. AEI-Heritage Foundation CGIT . For more on specific Chinese investments and contracting endeavors, see Chapter “The Maritime Silk Road Initiative: Connecting Africa” (Cliff Mboya), chapter “The Maritime Silk Road Initiative and Ethiopia: Transforming Policies, Institutions, and Politics in Expected and Unexpected Ways” (Jean-Marc F. Blanchard and Edson Ziso), chapter “Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations” (David Styan), and chapter “Tanzania in China’s MSRI: The “Chinese Dream” awaits Alignment with the African One” (Conrad John Masabo). 70. For discussion of the political links of some of these and other MENA countries with China, see the pieces in this book by Dorraj and Blanchard (chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise”), Payne (chapter “The Missing MSRI in Iraq: The Southern Opportunity”), Fulton (chapter “The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation”), and Chaziza (chapter “Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities”). Also useful are Olimat, China and the Middle East Since World War II ; Neil Quilliam, “China and the Gulf Co-operation Council: The

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71. 72. 73. 74. 75.

76.

77.

78.

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Rebound Relationship,” in Toward Well-Oiled Relations? China’s Presence in the Middle East Following the Arab Spring, ed. Niv Horesh (London: Palgrave Macmillan, 2016), 148–161; and Xuming Qian and Jonathan Fulton, “China-Gulf Economic Relationship Under the ‘Belt and Road’ Initiative,” Asian Journal of Middle Eastern and Islamic Studies 11, no. 3 (2017): 12–21. Olimat, China and the Middle East Since World War II , 13. IMF, “DOTS.” World Bank, “WITS.” AEI-Heritage Foundation CGIT . See, e.g., Atul Aneja, “China Steps Up Drive to Integrate Africa with Maritime Silk Road,” The Hindu, January 19, 2015, https://www. thehindu.com/news/international/world/china-steps-up-drive-to-int egrate-africa-with-maritime-silk-road/article6802385.ece; and Shannon Tiezzi, “‘China’s Maritime Silk Road’: Don’t Forget Africa,” The Diplomat, January 29, 2015, http://thediplomat.com/2015/01/chi nas-maritime-silk-road-dont-forget-africa. Tiezzi, “China’s Maritime Silk Road”; Julia Breuer, “Two Belts, One Road? The Role of Africa in China’s Belt & Road initiative,” Stiftung Asienhaus Blickwechsel, July, 2017, http://crossasia-repository.ub.uniheidelberg.de/4092/1/Breuer-2017.pdf, 2–3; and Farooq, Feroze and Kai, “An Analysis of China and Africa Relations with Special Focus on ‘One Belt and One Road’,” 368–369. See, e.g., Eyler, “China’s Maritime Silk Road Is All About Africa”; Shannon Tiezzi, “Where Is China’s Silk Road Actually Going?” The Diplomat, March 30, 2015, https://thediplomat.com/2015/03/ where-is-chinas-silk-road-actually-going; and PRC, Ministry of Foreign Affairs, “Full Text of President Xi’s Speech at Opening of Belt and Road Forum,” May 15, 2017, https://www.fmprc.gov.cn/mfa_eng/wjdt_6 65385/zyjh_665391/t1465819.shtml. Mboya (chapter “The Maritime Silk Road Initiative: Connecting Africa”) argues many Western African countries including Senegal, Ghana, and Nigeria also are part of the MSRI. Alvin Cheng-Hin Lim, “Africa and China’s 21st Century Maritime Silk Road,” The Asia-Pacific Journal 13, no. 3 (2016): 1–5; Pautasso, “The Role of Africa in the New Maritime Silk Road”; Yunnan Chen, “Silk Road to the Sahel: African Ambitions in China’s Belt and Road Initiative,” China Africa Research Initiative Policy Brief , no. 23 (2018): 3–4; Farooq, Feroze and Kai, “An Analysis of China and Africa Relations with Special Focus on ‘One Belt and One Road’,” 369–371; and Paul Nantulya, “Implications for Africa from China’s One Belt One Road Strategy,” Africa Center for Strategic Studies,

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79. 80.

81.

82.

83.

84. 85.

March 22, 2019, https://africacenter.org/spotlight/implications-for-afr ica-china-one-belt-one-road-strategy. Eyler, “China’s Maritime Silk Road Is All About Africa.” Tiezzi, “China’s Maritime Silk Road”; Lim, “Africa and China’s 21st Century Maritime Silk Road,” 3; Pautasso, “The Role of Africa in the New Maritime Silk Road,” 126–129; Breuer, “Two Belts, One Road?” 2–5; Chen, “Silk Road to the Sahel,” 3; Farooq, Feroze and Kai, “An Analysis of China and Africa Relations with Special Focus on ‘One Belt and One Road’,” 369–375; and Nantulya, “Implications for Africa from China’s One Belt One Road Strategy.” See Blanchard and Ziso (chapter “The Maritime Silk Road Initiative and Ethiopia: Transforming Policies, Institutions, and Politics in Expected and Unexpected Ways”) and Masabo (chapter “Tanzania in China’s MSRI: The “Chinese Dream” Awaits Alignment with the African One”). Also useful are Michael Mitchell Omoruyi Ehizuelen, “More Africa Countries on the Route: The Positive and Negative Impacts of the Belt and Road Initiative,” Transnational Corporations Review 9, no. 4 (2017): 342–356; Chen, “Silk Road to the Sahel,” 1, 4; “Belt & Road Initiative Promotes Transformation and Upgrading of ChinaAfrica Trade,” Xinhua, September 14, 2018, http://en.silkroad.news. cn/2018/0914/109373.shtml; Farooq, Feroze and Kai, “An Analysis of China and Africa Relations with Special Focus on ‘One Belt and One Road’,” 372–373; and Nantulya, “Implications for Africa from China’s One Belt One Road Strategy.” Sike Wu, “The Strategic Docking Between China and Middle East Countries Under the ‘Belt and Road’ Framework,” Journal of Middle Eastern and Islamic Studies (in Asia) 9, no. 4 (2015): 11. Min Wei, “China-Middle East Cooperation in the Field of Infrastructure Under the Framework of the ‘Belt and Road’ Initiative,” Asian Journal of Middle Eastern and Islamic Studies 11, no. 3 (2017): 23; Wang Jian, “‘One Belt One Road’: A Vision for the Future of China-Middle East Relations,” Al Jazeera Centre for Studies, May 9, 2017, https://studies.aljazeera.net/en/reports/2017/05/belt-road-vis ion-future-china-middle-east-relations-170509102227548.html, 3; and Liu Li and Wang Zesheng, “Belt and Road Initiative in the Gulf Region: Progress and Challenges,” China Institute of International Studies, November 9, 2017, http://www.ciis.org.cn/english/2017-11/09/con tent_40063037.htm. The China Institute of International Studies is a PRC Ministry of Foreign Affairs think tank. Shichor, “Vision, Revision, and Supervision,” 47. Qian and Fulton, “China-Gulf Economic Relationship Under the ‘Belt and Road’ Initiative,” 18–19; “China’s Belt and Road Initiative: An Opportunity for Iraq,” Al-Bayan Center for Planning and Studies,

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86.

87.

88.

89.

90. 91.

92. 93.

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April 4, 2018, https://www.bayancenter.org/en/wp-content/uploads/ 2018/04/867563522.pdf; Shichor, “Vision, Revision, and Supervision,” 47–48; and Mordechai Chaziza, “The Chinese Maritime Silk Road Initiative: The Role of the Mediterranean,” Mediterranean Quarterly 29, no. 2 (2018): 54–69. Shannon Tiezzi, “Revealed: China’s Blueprint for Building Middle East Relations,” The Diplomat, January 14, 2016, https://thediplomat.com/ 2016/01/revealed-chinas-blueprint-for-building-middle-east-relations. For more on Oman, see Mordechai Chaziza, “The Significant Role of Oman in China’s Maritime Silk Road Initiative,” Contemporary Review of the Middle East 6, no. 1 (2019): 44–57. Wu, “The Strategic Docking Between China and Middle East Countries Under the ‘Belt and Road’ Framework,” 2–5; Wang, “‘One Belt One Road’,” 3; and Lehr, “The Middle East is the Hub for China’s Modern Silk Road.” Wang, “‘One Belt One Road’”; “Belt and Road Initiative to Strengthen China-Kuwait Ties: Chinese Envoy,” China Daily, August 21, 2017, http://www.chinadaily.com.cn/business/2017-08/21/con tent_30913532.htm; Lehr, “The Middle East Is the Hub for China’s Modern Silk Road”; Liu and Wang, “Belt and Road Initiative in the Gulf Region”; Wei, “China-Middle East Cooperation in the Field of Infrastructure under the Framework of the ‘Belt and Road’ Initiative,” 23–24, 26–28. Also relevant are chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise” (Dorraj and Blanchard), chapter “The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation” (Fulton), and chapter “Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities” (Chaziza). Lehr, “The Middle East is the Hub for China’s Modern Silk Road.” Wu, “The Strategic Docking between China and Middle East Countries under the ‘Belt and Road’ Framework,” 9; Liu and Wang, “Belt and Road Initiative in the Gulf Region”; and the contributions by Dorraj and Blanchard (chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise”) and Chaziza (chapter “Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities”). On China’s traditional economics first strategy, see Degang Sun and Yahia H. Zoubir, “China’s Economic Diplomacy Towards the Arab Countries: Challenges Ahead?” Journal of Contemporary China, 24, no. 95 (2015): 903–921. Liu and Wang, “Belt and Road Initiative in the Gulf Region.” Wu, “The Strategic Docking between China and Middle East Countries under the ‘Belt and Road’ Framework,” 9.

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94. Related points appears in Wu, “The Strategic Docking between China and Middle East Countries Under the ‘Belt and Road’ Framework,” 7–9; Wang, “‘One Belt One Road’,” 4; and Wei, “China-Middle East Cooperation in the Field of Infrastructure Under the Framework of the ‘Belt and Road’ Initiative,” 23–26. 95. See the chapters by Dorraj and Blanchard (chapter “Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise”), Payne (chapter “The Missing MSRI in Iraq: The Southern Opportunity”), and Chaziza (chapter “Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities”). 96. Farooq, Feroze and Kai, “An Analysis of China and Africa Relations with Special Focus on ‘One Belt and One Road’,” 367. 97. This paragraph draws upon chapter “The Maritime Silk Road Initiative: Connecting Africa” (Mboya), chapter “The Maritime Silk Road Initiative and Ethiopia: Transforming Policies, Institutions, and Politics in Expected and Unexpected Ways” (Blanchard and Ziso), chapter “Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations” (Styan), and chapter “Tanzania in China’s MSRI: The “Chinese Dream” awaits Alignment with the African One” (Masabo). It also makes use of Chen, “Silk Road to the Sahel”; Anzetse Were, “Debt Trap? Chinese Loans and Africa’s Development Option,” South Africa Institute of International Affairs Policy Insights, no. 66 (2018); “Double Debt Risk for African Countries that Turn to China,” DW , July 25, 2018, https://www.dw.com/en/double-debt-risk-for-african-countriesthat-turn-to-china/a-44819336; Nantulya, “Implications for Africa from China’s One Belt One Road Strategy”; and Dollar, “Understanding China’s Belt and Road Infrastructure Projects in Africa.” 98. Dollar, “Understanding China’s Belt and Road Infrastructure Projects in Africa,” 4–5. 99. Fulton (chapter “The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation”) argues the debt trap is a non-issue for GCC states. 100. Breuer, “Two Bests, One Road?”; “China’s Belt and Road Initiative: An Opportunity for Iraq”; and Farooq, Feroze and Kai, “An Analysis of China and Africa Relations with Special Focus on ‘One Belt and One Road’,” 376–377. Most studies typically highlight the same episodes and there do not seem to be any systematic studies of the social and/or environmental impact of the MSRI in these two regions. 101. Shu Zhang and Matthew Miller, “Behind China’s Silk Road Vision: Cheap Funds, Heavy Debt, Growing Risks,” Reuters, May 15, 2017, http://www.reuters.com/article/us-china-silkroad-financeidUSKCN18B0YS; and Kane Wu and Julie Zhu, “Exclusive: China’s

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102.

103.

104.

105.

106.

107.

108.

109.

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‘Big Four’ Banks Raise Billions for Belt and Road Deals-Sources,” Reuters, August 21, 2017, https://www.reuters.com/article/us-ccb-fun draising-idUSKCN1B20ER. For background on the CIC, see Jean-Marc F. Blanchard, “The China Investment Corporation: Power, Wealth, or Something Else,” China: An International Journal 12, no. 3 (2014): 155–175. COFDI trends are covered in Jean-Marc F. Blanchard, “Chinese Outward Foreign Direct Investment (COFDI): A Primer and Assessment of the State of COFDI,” in Handbook on the International Political Economy of China, ed. Ka Zeng (Cheltenham: Elgar, 2019), 76–97. See, e.g., James Kyne, “China’s Belt and Road Projects Drive Overseas Debt Fears,” Financial Times, August 8, 2018; “The Perils of China’s ‘Debt-Trap Diplomacy’,” The Economist, September 6, 2018, https://www.economist.com/asia/2018/09/08/the-perils-ofchinas-debt-trap-diplomacy; and “The Pandemic is Hurting China’s Belt and Road Initiative.” See the discussion in various chapters in Blanchard, ed., China’s Maritime Silk Road Initiative and South Asia; and Blanchard, ed., China’s Maritime Silk Road Initiative and Southeast Asia. A recent illustration is David Green, “Renewed Conflict in Myanmar Slows China’s Belt and Road Projects,” Nikkei Asian Review, October 6, 2019, https://asia.nikkei.com/Spotlight/Belt-and-Road/Renewed-con flict-in-Myanmar-slows-China-s-Belt-and-Road-projects. Aside from the chapters herein, discussion can be found in Wei, “ChinaMiddle East Cooperation in the Field of Infrastructure Under the Framework of the ‘Belt and Road’ Initiative,” 30–31; Breuer, “Two Bests, One Road?”; and Dollar, “Understanding China’s Belt and Road Infrastructure Projects in Africa,” 7. Andreea Brinza, “Japan’s Belt and Road Balancing Act,” The Diplomat, November 8, 2018, https://thediplomat.com/2018/11/japans-beltand-road-balancing-act. Matthew P. Goodman, Daniel F. Runde and Jonathan E. Hillman, “Connecting the Blue Dots,” CSIS Commentary, February 26, 2020, https:// www.csis.org/analysis/connecting-blue-dots. Abdi Latif Dahir, “The Trump Administration’s Africa Policy Is All About Countering China’s Influence,” Quartz, December 14, 2018, https://qz.com/africa/1495859/bolton-unveils-trump-africa-str ategy-to-counter-china-russia. Blanchard, ed., China’s Maritime Silk Road Initiative and South Asia; and Blanchard, ed., China’s Maritime Silk Road Initiative and Southeast Asia.

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110. Examples of works stressing political economic lenses include Blanchard and Flint, “The Geopolitics of China’s Maritime Silk Road Initiative”; Jean-Marc F. Blanchard, “Brazil’s Samba with China: Economics Brought Them Closer, But Failed to Ensure Their Tango,” Journal of Chinese Political Science 24, no. 4 (2019): 583–603; and Bas Hooijmaaijers, Unpacking EU Policy-Making Towards China: How Member States, Bureaucracies, and Institutions Shape its China Economic Policy (Singapore: Palgrave MacMillan, 2021 forthcoming). 111. Jean-Marc F. Blanchard and Norrin M. Ripsman, Economic Statecraft and Foreign Policy: Sanctions, Incentives, and Target State Calculations (London: Routledge, 2013). 112. This charge was made several years ago in Shichor, “Vision, Revision, and Supervision,” 48. 113. The quote is from David H. Shinn, “Forum on China-Africa Cooperation Meets the Belt and Road,” East Asia Forum, October 17, 2018, http://www.eastasiaforum.org/2018/10/18/forum-on-china-africacooperation-meets-the-belt-and-road.

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Blanchard, Jean-Marc F. “The China Investment Corporation: Power, Wealth, or Something Else.” China: An International Journal 12, no. 3 (2014): 155– 175. Blanchard, Jean-Marc F. “Probing China’s Twenty-First Century Maritime Silk Road Initiative (MSRI): An Examination of MSRI Narratives.” Geopolitics 22, no. 2 (2017): 246–268. Blanchard, Jean-Marc F., ed. China’s Maritime Silk Road Initiative and South Asia: A Political Economic Analysis of Its Purposes, Perils, and Promises. Singapore: Palgrave MacMillan, 2018. Blanchard, Jean-Marc F. “China’s Maritime Silk Road Initiative (MSRI) and Southeast Asia: A Chinese ‘Pond’ Not ‘Lake’ in the Works.” Journal of Contemporary China 27, no. 111 (2018): 329–343. Blanchard, Jean-Marc F., ed. China’s Maritime Silk Road Initiative and Southeast Asia: Dilemmas, Doubts, and Determination. Singapore: Palgrave MacMillan, 2019. Blanchard, Jean-Marc F. “Brazil’s Samba with China: Economics Brought Them Closer, But Failed to Ensure Their Tango.” Journal of Chinese Political Science 24, no. 4 (2019): 583–603. Blanchard, Jean-Marc F. “Chinese Outward Foreign Direct Investment (COFDI): A Primer and Assessment of the State of COFDI.” In Handbook on the International Political Economy of China, edited by Ka Zeng, 76–97. Cheltenham: Elgar, 2019. Blanchard, Jean-Marc F. “Problematic Prognostications About China’s Maritime Silk Road Initiative (MSRI): Lessons from Africa and the Middle East.” Journal of Contemporary China 29, no. 122 (2020): 159–174. Blanchard, Jean-Marc F., and Colin Flint. “The Geopolitics of China’s Maritime Silk Road Initiative.” Geopolitics 22, no. 2 (2017): 223–245. Blanchard, Jean-Marc F., and Norrin M. Ripsman. Economic Statecraft and Foreign Policy: Sanctions, Incentives, and Target State Calculations. London: Routledge, 2013. Breuer, Julia. “Two Belts, One Road? The Role of Africa in China’s Belt & Road initiative.” Stiftung Asienhaus Blickwechsel, July, 2017. http://crossasia-reposi tory.ub.uni-heidelberg.de/4092/1/Breuer-2017.pdf. Brinza, Andreea. “Japan’s Belt and Road Balancing Act.” The Diplomat, November 8, 2018. https://thediplomat.com/2018/11/japans-belt-androad-balancing-act. Calabrese, John. “Peaceful or Dangerous Collaborators? China’s Relations with the Gulf Countries.” Pacific Affairs 65, no. 4 (1993): 471–485. Calabrese, John. “China’s Maritime Silk Road and the Middle East: Tacking Against the Wind.” Middle East Institute, May 19, 2020. https://www.mei. edu/publications/chinas-maritime-silk-road-and-middle-east-tacking-againstwind.

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Dollar, David. “Understanding China’s Belt and Road Infrastructure Projects in Africa.” Global China, September, 2019. https://media.africaportal.org/doc uments/Understanding_Chinas_belt_and_road.pdf. Dorsey, James M. China and the Middle East: Venturing into the Maelstrom. Cham: Palgrave Macmillan, 2019. “Double Debt Risk for African Countries That Turn to China.” DW , July 25, 2018. https://www.dw.com/en/double-debt-risk-for-african-countriesthat-turn-to-china/a-44819336. Ehizuelen, Michael Mitchell Omoruyi. “More Africa Countries on the Route: The Positive and Negative Impacts of the Belt and Road Initiative.” Transnational Corporations Review 9, no. 4 (2017): 342–356. Ehteshami, Anoushiravan, and Niv Horesh, eds. China’s Presence in the Middle East: The Implications of the One Belt One Road Initiative. London: Routledge, 2018. Eyler, Brian. “China’s Maritime Silk Road Is All About Africa.” East by Southeast, November 17, 2014. http://www.eastbysoutheast.com/chinas-maritime-silkroad-africa. Farooq, Muhammad Sabig, Nazia Feroze, and Yuan Tong Kai. “An Analysis of China and Africa Relations with Special Focus on ‘One Belt and One Road’.” India Quarterly 75, no. 3 (2019): 366–379. Fektha, Siviwe. “Chinese Envoy to SA Slams Suggestions China Belt, Road Initiative Seeks to Dominate Poor African Countries.” IOL, August 6, 2020. https://www.iol.co.za/news/africa/chinese-envoy-to-sa-slams-suggestionschina-belt-and-road-initiative-seeks-to-dominate-poor-african-countries-bc3 cea20-1a18-4d45-a977-879ab026efc2. Fulton, Jonathan. “The G.C.C. Countries and China’s Belt and Road Initiative (BRI): Curbing Their Enthusiasm.” Middle East Institute, October 17, 2017. https://www.mei.edu/publications/gcc-countries-and-chinas-beltand-road-initiative-bri-curbing-their-enthusiasm. Fulton, Jonathan, ed. Regions in the Belt and Road Initiative. London: Routledge, 2020. Gadallah, Yasser M. “An Analysis of the Evolution of Sino-Egyptian Economic Relations.” In Toward Well-Oiled Relations? China’s Presence in the Middle East Following the Arab Spring, edited by Niv Horesh, 94–114. London: Palgrave Macmillan, 2016. Goodman, Matthew P., Daniel F. Runde, and Jonathan E. Hillman. “Connecting the Blue Dots.” CSIS Commentary, February 26, 2020. https://www.csis. org/analysis/connecting-blue-dots. Green, David. “Renewed Conflict in Myanmar Slows China’s Belt and Road Projects.” Nikkei Asian Review, October 6, 2019. https://asia.nikkei.com/ Spotlight/Belt-and-Road/Renewed-conflict-in-Myanmar-slows-China-s-Beltand-Road-projects.

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Griffiths, James. “Are the Wheels Coming off China’s Belt and Road Megaproject.” CNN , December 31, 2018. https://www.cnn.com/2018/12/31/ asia/china-kenya-belt-road-bri-intl/index.html. Heydarian, Richard Javad. “Malaysia’s Bold Play Against China.” Washington Post, November 14, 2018. https://www.washingtonpost.com/news/thewor ldpost/wp/2018/11/14/Malaysia. Hooijmaaijers, Bas. Unpacking EU Policy-Making Towards China: How Member States, Bureaucracies, and Institutions Shape Its China Economic Policy. Singapore: Palgrave MacMillan, 2021 forthcoming. Horesh, Niv, ed. Toward Well-Oiled Relations? China’s Presence in the Middle East Following the Arab Spring. London: Palgrave Macmillan, 2016. International Monetary Fund. “Direction of Trade Statistics.” https://data.imf. org/regular.aspx?key=61013712. Kemp, Geoffrey. The East Moves West: India, China, and Asia’s Growing Presence in the Middle East. Washington: The Brookings Institute Press, 2010. Kyne, James. “China’s Belt and Road Projects Drive Overseas Debt Fears.” Financial Times, August 8, 2018. Lahtinen, Anja. China’s Diplomacy and Economic Activities in Africa: Relations on the Move. Cham: Palgrave Macmillan, 2018. Lehr, Deborah. “The Middle East Is the Hub for China’s Modern Silk Road.” Middle East Institute, August 15, 2017. https://www.mei.edu/publications/ middle-east-hub-chinas-modern-silk-road. Li, Anshan. “China and Africa: Policy and Challenges.” China Security 3, no. 3 (2007): 69–93. Lim, Alvin Cheng-Hin. “Africa and China’s 21st Century Maritime Silk Road.” The Asia-Pacific Journal 13, no. 3 (2016): 1–14. Liu, Li, and Wang Zesheng. “Belt and Road Initiative in the Gulf Region: Progress and Challenges.” China Institute of International Studies, November 9, 2017. http://www.ciis.org.cn/english/2017-11/09/content_40063037. htm. Nantulya, Paul. “Implications for Africa from China’s One Belt One Road Strategy.” Africa Center for Strategic Studies, March 22, 2019. https://africa center.org/spotlight/implications-for-africa-china-one-belt-one-road-strategy. Olimat, Muhamad S. China and the Middle East Since World War II: A Bilateral Approach. Lanham: Lexington Books, 2014. “Our bulldozers, Our Rules.” The Economist, July 2, 2016. http://www.eco nomist.com/news/china/21701505-chinas-foreign-policy-could-reshapegood-part-world-economy-our-bulldozers-our-rules. Parton, Charles. “Belt and Road Is Globalization with Chinese Characteristics.” Financial Times, October 3, 2018. Pautasso, Diego. “The Role of Africa in the New Maritime Silk Road.” Brazilian Journal of African Studies 1, no. 2 (2016): 118–130.

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Payne, Richard J., and Cassandra R. Veney. “China’s Post-Cold War African Policy.” Asian Survey 38, no. 9 (1998): 876–879. People’s Republic of China (PRC), Ministry of Foreign Affairs. “Full Text of President Xi’s Speech at Opening of Belt and Road Forum.” May 15, 2017. https://www.fmprc.gov.cn/mfa_eng/wjdt_665385/zyjh_665391/t14 65819.shtml. Power, Marcus, Giles Mohan, and May Tan-Mullins. China’s Resource Diplomacy in Africa: Powering Development? Houndmills: Palgrave Macmillan, 2012. Prybyla, Jan S. “Communist China’s Economic Relations with Africa 1960– 1964.” Asian Survey 4, no. 11 (1964): 1135–1143. Qian, Xuming, and Jonathan Fulton. “China-Gulf Economic Relationship Under the ‘Belt and Road’ Initiative.” Asian Journal of Middle Eastern and Islamic Studies 11, no. 3 (2017): 12–21. Quilliam, Neil. “China and the Gulf Co-operation Council: The Rebound Relationship.” In Toward Well-Oiled Relations? China’s Presence in the Middle East Following the Arab Spring, edited by Niv Horesh, 148–161. London: Palgrave Macmillan, 2016. Rolland, Nadege. “Reports of Belt and Road’s Death Are Greatly Exaggerated.” Foreign Affairs, January 29, 2019. https://www.foreignaffairs.com/articles/ china/2019-01-29/reports-belt-and-roads-death-are-greatly-exaggerated. Scobell, Andrew, and Alireza Nader. China in the Middle East: The Wary Dragon. Santa Monica: RAND Corporation, 2016. Seteolu, Dele, and Abdul-Gafar Tobi Oshodi. “Oscillation of Two Giants: SinoNigeria Relations and the Global South.” Journal of Chinese Political Science 23, no. 3 (2018): 257–285. Shichor, Yitzhak. The Middle East in China’s Foreign Policy: 1949–1977 . Cambridge: Cambridge University Press, 1979. Shichor, Yitzhak. “Vision, Revision, and Supervision: The Politics of China’s OBOR and AIIB and Their Implications for the Middle East.” In China’s Presence in the Middle East: The Implications of the One Belt, One Road Initiative, edited by Anoushiravan Ehteshami, and Niv Horesh, 38–53. Abingdon: Routledge, 2018. Shinn, David H. “Forum on China-Africa Cooperation Meets the Belt and Road.” East Asia Forum, October 17, 2018. http://www.eastasiaforum.org/ 2018/10/18/forum-on-china-africa-cooperation-meets-the-belt-and-road. Shinn, David H., and Joshua Eisenman. China and Africa: A Century of Engagement. Philadelphia: University of Pennsylvania Press, 2012. Simelane, Thokozani, and Lavhelesani Managa, eds. Belt and Road Initiative: Alternative Development Path for Africa. Pretoria: Africa Institute of South Africa, 2018.

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The Maritime Silk Road Initiative: Connecting Africa Cliff Mboya

Introduction The official People’s Republic of China (hereinafter PRC/China) document about the Silk Road Economic Belt (SREB) and Maritime Silk Road Initiative (MSRI) entitled “Vision and Actions on Jointly building the Silk Road Economic Belt and the 21st Century Maritime Silk Road” emphasizes that China and Africa were integrated through the ancient Maritime Silk Road (MSR) and mentions some form of connectivity about 24 times in the text.1 Connectivity here is not limited to hard infrastructure, but also encompasses flows like trade, soft infrastructure such as customs coordination, cooperation in inspections, and the removal of barriers to trade and investment, and financial cooperation such as currency swaps, the issuance of renminbi-denominated bonds, and financial regulation.2 It was in 2013 that Beijing released details about the routes and corridors intended to kick start the revival of the ancient Silk Road. Unlike the

The author would like to express his appreciation to the editor for his invaluable guidance and editorial assistance. He also would like to thank Xu Jing for assistance conforming this chapter to publisher style requirements. C. Mboya (B) Fudan University, Shanghai, China © The Author(s) 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8_2

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ancient Silk Road that marginally contacted Africa at the East coast, the contemporary MSRI makes forays into several African countries along the Indian Ocean as it seeks to boost sea trade from Southeast Asia through Africa to Europe.3 While the general configuration of the MSRI’s route is clear, the list of participant countries remains unclear as fears of exclusion by and the suspicions of other countries led Chinese officials to declare that its scheme is open to all countries interested in doing business with China. In Africa, the following countries are believed to be part of the MSRI based on ongoing and planned MSRI projects as well as official declarations from Chinese leaders (see Table 1). As the MSRI takes shape in Africa, increased connectivity continues to materialize with huge investments in infrastructure projects such as railways, seaports, airports, pipelines, highways, logistics hubs, export processing zones, and information and communication technology (ICT) underway. To date, a raging debate has ensued among scholars and observers interested in various aspects of the MSRI with most of the debate focused on economic, political and geostrategic aspects. Some argue that the MSRI has the potential to establish a new world order and define a new financial and geostrategic architecture. Others, emphasizing the geo-political aspects, have argued that it is a political economic project having potentially multi-level and multi-sectoral territorial consequences.4 While such works are useful, there has been insufficient investigation of concrete projects, the regional and global connectivity they actually produce, and their implications for the volume and distribution of economic flow such as trade between MSRI participants and China and among MSRI participants themselves. This chapter investigates how much connectivity the MSRI is promoting in Africa and assesses who is benefitting from the connectivity emanating from this grand project. More specifically, it undertakes Table 1 List of African MSRI Participants

Angola

Ghana

Senegal

Djibouti Cameroon Egypt Ethiopia Gabon

Kenya Madagascar Mozambique Nigeria Rwanda

Seychelles Tanzania Tunisia South Sudan Uganda

Source Author analysis

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a country-level analysis of completed and ongoing MSRI infrastructure projects in Kenya, Ethiopia, and Djibouti to assess their impacts for connectivity as well as the economic activity flowing from these connections.5 As for specific projects, it offers an in-depth analysis of the completed Mombasa-Nairobi Standard Gauge Railway (SGR), which is planned to eventually link with Uganda’s Kampala-Malaba SGR and illustrates the regional connectivity aspect of the MSRI. It also delves into the completed Ethiopia-Djibouti Railway and Ethiopian industrial parks. These are parts of the Lamu Port-South Sudan-Ethiopia (LAPSSET) transport corridor linking Ethiopia’s industrial parks, agricultural hinterlands, and the capital Addis Ababa to the Lamu port in Mombasa.6 Lastly, it considers the ongoing Doraleh multipurpose port (MPP) development in Djibouti. The case studies show that the MSRI has brought regional and continental integration back into mainstream development plans in Africa while the cases of Ethiopia and Djibouti reveal that physical connectivity coupled with “proper” investment and trade policies can boost trade between African countries and integrate them into the global economy. Still, despite the MSRI’s promise to boost connectivity at the regional and continental level, projects are still facing headwinds linked to poor logistics and policy coordination, security challenges, debt sustainability, and project viability. Moreover, the balance of rewards seems to be heavily tilted in favor of China. Related to this, the ever-increasing trade imbalances between China and MSRI countries suggest that more needs to be done in terms of boosting the MSRI’s payoffs for African participant countries. The chapter begins with an overview of the debate about the MSRI’s purposes in Africa, looking at the arguments of both supporters and critics. It then examines a number of MSRI projects to highlight the regional orientation of these MSRI projects. A country-level analysis is then used to shed light on challenges and opportunities in relation to physical connectivity in Kenya, Ethiopia, and Djibouti. It then addresses the question of “connectivity for whom?” by assessing the impact of MSRI connectivity projects and the balance of interest between a connected China and a connected region through an examination of trade statistics from 2013 and 2017. This is followed by a conclusion and various policy recommendations.

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The MSRI in Africa-Polemics and Projects The MSRI in Africa is mostly manifest in infrastructure development and aid that have played a key role in bringing Africa and China together and continues to drive closer ties. Through this initiative, China has targeted a wider range of countries in Africa for infrastructure development projects and the export of goods and machinery that are creating opportunities for Chinese companies involved in high-speed rail, communications, and other infrastructure. It is believed that without this initiative, it would be more challenging for China to locate markets for future trade growth and that African economies would be limited in their ability to buy China’s exports.7 This thinking has led to accusations of imperial, neocolonial, and mercantilist schemes by critics who argue that the initiative solely serves China’s economic model which requires new markets and privileged access to resources.8 Optimists retort that the MSRI is a futuristic, cooperative, and altruistic endeavor that serves the common development needs of both China and Africa.9 Chinese officials and proponents of the MSRI maintain that by building much needed infrastructure across the MSRI route and enhancing connectivity into the African hinterland, China is working for common prosperity rather than unilateral gains. Moreover, either by chance or design, the MSRI seems to fit seamlessly into the African Union (AU)’s connectivity plans. Of note in this regard, in January 2015, during the AU’s 24th annual meeting in Addis Ababa, Ethiopia, China signed a Memorandum of Understanding (MoU) to construct Africa’s transport system and industrialization infrastructure in what the then deputy Chinese foreign minister Zhang Ming dubbed the “deal of the century.”10 These developments are at the center of the raging debate about MSRI in Africa and the impact of connectivity with the African continent. The central questions within this debate are “Connectivity for whom?” “Do all roads lead to China?” My analysis of MSRI projects sheds light on these questions.

MSRI Projects in Africa MSRI projects are concentrated in Eastern Africa due to the latter’s key geographical importance for connecting Africa with Asia, Europe, and the Middle East as well as East Africa’s proximity to the Indian Ocean

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Region (IOR). There is a clear regional focus in the East African region consisting of countries such as Djibouti, Ethiopia, Tanzania, Madagascar, and Mozambique that will play important roles in the MSRI in Africa through existing infrastructure and yet-to-be completed projects that include ports, railways, logistics hubs, and special economic zones (SEZs). Even so, according to one analysis, countries in the far west of Africa like Cameroon, Senegal, Nigeria, Gabon, and Ghana also are included in MSRI investment plans.11 As the MSRI takes shape and raises hopes for the realization of African connectivity, observers are keen to assess the impacts of MSRI projects on both regional and global connectivity. Within the East African region, the impacts of the MSRI can be seen and are already being felt in the transport and infrastructure connectivity undertaken by Chinese companies in various countries such as Ethiopia. A country-by-country analysis shows the true extent of the infrastructure projects in relation to connectivity both with China and other African countries. Table 2 lists and details major MSRI connectivity projects in the countries that are the focus of the case studies in this chapter. Kenya The historical significance of the ancient Silk Road to China–Kenya relations and Kenya’s proximity to the IOR explain Kenya’s role as focal entry point into Africa. During the Ming Dynasty (1368–1644), Chinese navigator and Ming envoy, Zheng He, sailed to the Kenyan coast during his voyages along the MSR. Chinese analysts have emphasized that in contrast to western explorers who colonialized and exploited, all Zheng He sought was friendship and trade.12 This narrative is important for the new MSRI because it counters skeptics and the negative perception that the initiative is a neocolonial and mercantile endeavor while validating China’s official position and the optimist view it constitutes the altruistic pursuit of a win-win relationship. Kenya has traditionally served as an important gateway to the East African region facilitating trade through the transportation of goods from its Mombasa port into landlocked countries such as Uganda, Rwanda, and Ethiopia. It has the largest economy in the region and has served as an important logistics hub for regional trade as well as a technological and financial hub.13 It is on this basis that the LAPSSET connectivity plan, discussed further below, was conceived. These characteristics together

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Table 2

Connectivity Projects in Kenya, Ethiopia, and Djibouti

Country

Project

Status

Funding

Companies

Kenya

Nairobi Mombasa SGR

Completed

China Road and Bridge Corporation (CRBC)

Nairobi Naivasha SGR

50% complete

$3.6 billion China Export Import Bank (China ExIm Bank) $400 million Kenya government $1.5 billion China ExIm Bank

Naivasha- Malaba

Planned

Lamu Port

42% complete

Oil Pipeline

Planned

Ethiopia-Djibouti (E-D) SGR

Complete

Hawassa

Complete

Ethiopia-Djibouti Water pipeline system

Complete

Ethiopia-Djibouti SGR Electrification

Complete

Ethiopia

$3.5 billion China ExIm Bank $24 billion Gov’t of Kenya $3.9 billion Gov’t of Kenya $3.4 billion China ExIm Bank

$250 million Gov’t of Ethiopia $340 million China ExIm Bank

$24 million China ExIm Bank

Communications Construction Company (CCCC) CCCC CCCC

China Rail Engineering Corporation (CREC) China Civil Engineering Construction Corporation (CCECC). CCECC CGC Overseas Construction Co Ltd (CGCOC). Shanghai Electric Corp.

(continued)

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Table 2

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(continued)

Country

Project

Status

Funding

Companies

Djibouti

Doraleh Multipurpose port

Complete

China Merchant Holding Company (CMHC)

Ghoubet port

Complete

$590 million Djibouti Ports and Free Zones Authority (DPFZA) China Merchant Holding (CMHC) $64 million China ExIm Bank

China Harbour Engineering Corp

a Except as noted, all amounts in this chapter are in United States dollars (USD)

Source Author’s compilation from various sources (Kaled Abdallah Inssaf, Fu Weizhong and Raul Jorge Duarte Soule, “Research on the Present Situation and Countermeasures of Chinese Companies Investment in Djibouti ‘Under One Belt One Road’,” International Journal of Engineering Research and Management 6, no. 5 (2019): 1–6; Erica Downs, Jeffrey Becker and Patrick deGategno, “China’s Military Support Facility in Djibouti: The Economic and Security Dimensions of China’s First Overseas Base,” CNA, July, 2017, https://www.cna.org/cna_files/pdf/DIM-2017-U-015308Final3.pdf; and Embassy of the Republic of Djibouti in Washington, DC, “Commercial Operations Under Way on Djibouti-Ethiopia Railway,” November 27, 2017, https://www.djiboutiembassyus. org/in-the-news/commercial-operations-under-way-on-djibouti-ethiopia-railway)

with its geographic position make it an important entry point for opening up markets in eastern and central Africa and in turn for the MSRI in Africa. It has been described as a “historic stop and natural extension of the MSR, making it the first stop for Chinese enterprises that “Go into Africa.”14 While the LAPSSET connectivity plan existed prior to the MSRI, its implementation has paralleled the MSRI as the two connectivity plans fit seamlessly together. The LAPSSET is among the top infrastructure projects championed under the AU’s Presidential Infrastructure Championship Initiative (PICI). It also is Eastern Africa’s largest and most ambitious infrastructure project because it aims to tie together Kenya, Ethiopia, and South Sudan as well as link them with their neighbors in Eastern and Central Africa.15 The LAPSSET connectivity plan consists of several key infrastructure projects that include a new 32 berth port at Lamu (Kenya) as well as interregional highways, an oil pipeline, and a railway linking Kenya, Ethiopia and South Sudan. It is also part of the larger trans-African corridor that is meant to connect the East African coast from Lamu port to the Douala port in West Africa.16 While not all LAPSSET projects have been explicitly incorporated into the MSRI,

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this is a possibility given the MSRI’s focus on port facilities, railways, and power projects.17 Kenya-Mombasa-Nairobi SGR (M-N SGR)–Completed: The completed M-N SGR is the first installment of Kenyan MSRI projects aimed at connecting the Eastern African region, knitting together swaths of the East African Community’s trading block. One of the biggest impacts of the project has been its positive impact on the local economy. Small towns along the road have been revitalized and construction activities are visible ever since the SGR was launched. Apart from direct employment for the locals, there has also been an influx of jobseekers and entrepreneurs from across the country lured to the towns by new employment and business opportunities there. CRBC, which built two factories in one of the towns along the M-N SGR route, has employed about 11,000 skilled and unskilled workers to staff its factories as well as the M-N SGR line.18 Nonetheless, while the aforementioned activities quickly yielded valuable benefits like job opportunities and reduced travel time, there was disappointment with the types of trains delivered—they were not as fast, efficient, or electrified as officials previously suggested they would be. These disappointments partly resulted from an exaggeration of the benefits that would flow from the project.19 Cargo costs and logistics are still posing challenges at the SGR line as importers have not yet fully embraced the SGR, citing inconveniences.20 Officials in Kenya have stated that Kenya has yet to enjoy the full benefits of the M-N SGR and comment that some benefits will be realized over the longer term and are dependent on other projects like the newly launched inland container terminal in Nairobi which will support the line and enhance its efficiency. Debt sustainability has emerged as a concern for Kenya as it implements the SGR project. According to the World Bank, Kenya borrowed $3.6 billion from China in the fourth quarter of the fiscal year 2013/2014 for the line, contributing to a sharp rise in Kenya’s public debt in the same period. Kenyan debt has continued to rise ever since as it has continued to implement other projects associated with LAPSSET and MSRI. This includes the second phase of the SGR line from Nairobi to Naivasha, also funded by China. In April 2016, Kenya announced China had agreed to extend a new loan of $5 billion to extend the SGR from the agricultural town of Naivasha to the Kenya-Uganda border town of Malaba. However, in April 2019, China declined to finance the final phase of the SGR. While the reasons have not been made public, experts suggest

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it relates to the fact that the M-N SGR is inefficient and lossmaking as well as problems with corruption and fiscal accountability. Kenya’s appetite for Chinese loans has resulted in a heavy debt burden that the World Bank has warned threatens to choke the economy and push its debt burdens to unsustainable levels. Kenya’s president has on several occasions defended his country’s borrowings and reiterated Kenya needs Chinese loans to develop.21 With respect to the M-N SGR, economic viability remains an issue of great concern as far as the future of regional connectivity is concerned. The SGR was done with other East African countries in mind. Ethiopia is an important partner in the LAPSSET project and a crucial stakeholder in the SGR project. However, the completion of the Ethiopia-Djibouti SGR line has raised a red flag whether the long Kenyan route makes it economically viable for Ethiopia to use the Lamu port for exports. The fact that the Doraleh MPP that will serve the Ethiopia-Djibouti SGR line is undergoing expansion and improvement by China complicates matters further. Recently, Ethiopia assured Kenya that it remains committed to the project and that the Kenya line is crucial for the southern agricultural part of Ethiopia which is undergoing industrialization through export processing zones established there under the MSRI program. Only the completion of the yet to begin second phase of the Doraleh MPP project and the completion of Kenya’s northern corridor line will confirm Ethiopia’s commitment to the Kenyan line and the Lamu port. The southern corridor of LAPSSET targets the landlocked countries of Eastern Africa consisting of Uganda, Rwanda, Burundi, Congo, and Malawi. This, too, is under threat as reports emerged that Rwanda and Uganda would rather build an alternative railway through Tanzania that would link to a refurbished section of the TAZARA railway. These reports sent Kenya into frenzy as it quickly announced a new counter plan of re-routing the railway to Kisumu (Kenya) on the shores of Lake Victoria instead of the intended Kenya-Uganda border town of Malaba. This came soon after Uganda canceled plans for an oil pipeline going through Kenya to the port of Lamu one month earlier. China declined to fund Uganda’s new proposed SGR route, insisting that the Malaba-Kenya route is the economically viable route. Therefore, Uganda and Rwanda’s exit together with Ethiopia’s alternatives pose serious challenges to the cost–benefit calculus of the M-N SGR project in Kenya, the LAPSSET project, and the MSRI.22

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A World Bank cost–benefit analysis of the M-N SGR estimates that cargo freight traffic would reach 14.4 million tons per year by 2030 for the entire East African community rail network, yet the M-N SGR requires a volume of 55.2 million tons per year to be economically viable. Now with the Tanzanian-Rwanda project in planning, with the possible inclusion of Uganda, and an alternative for Ethiopia, there will be several options in the region, casting further doubt on the economic viability of the project.23 This is particularly important as freight business is expected to be a major source of the funds needed to repay M-N SGR’s loans to China and will pose serious challenges to the Chinese company contracted to run the SGR for the first five years. Freight handlers have not been particularly enthusiastic about the new SGR, citing costs, inefficiencies, and inconveniences. The government’s attempts to force them to utilize the SGR led to protests that ended up in court as the SGR is still not economically competitive with road transport.24 The MSRI has opened a new chapter of China–Kenya development cooperation. Most of Kenya’s new flagship projects, complete and ongoing, are related to this initiative. The projects offer greater hope of unlocking the much needed regional and intra-continental connectivity. However, this is yet to be achieved and it remains to be seen if it will be achieved given the considerable local and regional challenges completed projects face. Ethiopia Ethiopia and China have established a special relationship in recent years making Ethiopia a top destination for Chinese investment and regional engagement. It was selected to be a pilot country for Chinese projects in Africa, including the BRI.25 While it is a landlocked country, it plays a crucial role in the implementation of MSRI in Africa. It relies on the Doraleh MPP and the LAPSSET corridor to access Kenya’s Mombasa and soon-to-be-completed Lamu port, hence aligning itself strategically with the connectivity plans under the MSRI. Ethiopia-Djibouti SGR (E-D SGR)–Completed: China has financed and facilitated the construction of the E-D SGR from Addis Ababa to the Red Sea port of Djibouti. This line was essentially the first part of the East African railway infrastructure master plan being managed by the East African Community under LAPSSET. It is expected to link up with the second part of the project in Kenya through the LAPSSET

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northern corridor.26 It has been described as a game changer because it provides quick and efficient access to the sea, much needed for Ethiopian industrial parks and farms. On top of this, the E-D SGR would increase freight capacity and improve business at the Doraleh MPP, which is currently being expanded by CMHC.27 Djibouti Ambassador to Ethiopia Mohamed Idriss Farah said the railway project would contribute significantly to connecting his country and Ethiopia as well as the region economically.28 The new railway faces several challenges relating to cost overruns as well as the repayment of the massive loans used to finance it. Regarding the former, it has been reported that the total cost of construction exceeded the original budget by at least half a billion dollars, bad news for the Ethiopian Railway Corporation (ERC) which faced financial issues even before the project finished. Regarding the latter, it is believed the ERC had $3.7 billion in debt as of the end of 2016.29 As of now, the railway is failing to meet its original capacity goals which has alarming financial implications. As well, there are rampant delays occasioned by collisions with animals on the way as well as occasional power cuts. Trains which were supposed to reduce transportation times from two days to 10 hours are operating at around half speed.30 For passengers, it remains inconvenient to get to train stations as well as buy tickets.31 The above is problematic because it is critical this project operates at full capacity in order to generate income needed for loan repayment. As its part of the LAPSSET project, Ethiopia has a three-phase plan to further extend the E-G SGR line from Addis Ababa to Moyale (a border town linking Kenya and Ethiopia). The first phase linking Addis Ababa and Modjo is complete. Feasibility studies and preliminary engineering designs for the second phase between Modjo and Hawassa are complete. This part is crucial for the MSRI as Chinese companies have already invested heavily in the Hawassa and Adama industrial parks and their success relies heavily on the full implementation of the LAPSSET corridor projects and their connectivity to the Lamu port for exports. The government of Ethiopia has already contracted the CCECC to undertake the construction of this section as a matter of urgency and Ethiopia is banking on the completion of the construction of the first three berths of Lamu ports to enable them to justify the financing of the third phase, which runs from the Hawassa to Moyale town.32 The aforementioned industrial parks will house major textile and apparel industries relocating from different parts of the globe, especially China, and hence are a crucial component

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of the MSRI. This new line complements the LAPSSET corridor since it serves the northern part of Ethiopia while the LAPSSET serves the Southern part.33 Ethiopia’s industrial parks: Ethiopia is vigorously developing industrial parks along key MSRI economic corridors and ports to expand its export sector and promote development, points also highlighted in Blanchard and Ziso’s piece in this volume. It is implementing policies and investment incentives similar to China’s SEZs to attract companies engaged in the processing of agricultural products, textiles, garments, and leather products.34 China is playing a key role not only in building the parks, but also investing in them. Despite some delays, Chinese companies have already finished five of the 15 planned industrial zones with ten more currently are under construction. These industrial parks together with favorable investment policies are contributing to Ethiopia’s development as it pursues the goal of becoming a middle-income country by 2025 by attracting foreign investment to its growing manufacturing sector.35 There are a number of issues relating to Ethiopian industrial parks that threaten the country’s industrial transformation and its full participation in the MSRI. Local transportation logistics and security provide the greatest source of threats. Regarding the former, some parks are too far and isolated which constrains their ability to send their products to ports. For instance, Hawassa industrial park is 170 miles from Addis Ababa and 600 miles from the nearest shipping port in Djibouti. Economists have theorized the reason for such cases is that the ruling party has spread parks around the country in an effort to try to please everybody. Power failures also have caused problems and it is difficult to source supplies domestically forcing manufacturers to import materials incurring extra costs. Work ethic and labor issues also abound in the parks.36 With respect to security issues, ethnic and regional tensions have interrupted and interfered with the operations of industrial parks. For example, in June 2018, there were three days of violent unrest in Hawassa region, home to Hawassa industrial park, after ethnic Sidama protestors went on rampage demanding their own regional state.37 The Sidama charge the government with land grabs, with some claiming they were tricked into leaving their farms for the development of the Hawassa industrial park.38 Until existing tensions are resolved, the occasional eruption of violence will continue to be a hindrance to effective implementation of industrial parks and MSRI projects in Ethiopia. The brewing tensions following the successful Sidama referendum for self-autonomy at the end of 2019

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possess the greatest challenge to Ethiopia’s ethnic cohesion and peaceful coexistence going forward. It has sparked calls for autonomy by other minority ethnic groups demanding their own exclusive states. Djibouti Djibouti’s strategic location makes it very important for connecting China with Africa as well as Djibouti’s neighbors. Right off the country’s coast is one of the busiest shipping lines in the world where dozens of ships head for the ports of Europe and Asia daily. It is for this reason that Djibouti happens to be part of the MSRI.39 China through the MSRI is playing an important role in Djibouti’s economy and has, to date, provided $1.4 billion in infrastructure loans, equivalent to 75% of Djibouti’s GDP.40 MSRI projects in Djibouti include a new port, an airport, and the E-D SGR. Concurrently, China established a military base. As noted, the E-D SGR provides Ethiopia with access to the port of Djibouti and further enhances the infrastructure connectivity in the region that links not only to the LAPSSET connectivity corridor through Ethiopia but through the trans-Africa rail network that will link the Red Sea with the Atlantic Ocean.41 Djibouti’s economy is highly dependent on its port’s activities and over 80% of port traffic comes from Ethiopia, signifying the importance of the E-D SGR line. Currently, the fate of the railway and port are dependent on Ethiopia’s industrialization drive and agricultural productivity in the coming years. With this in mind, Djibouti seeks to diversify its economy and attract investors and has begun marketing the country as a regional gateway as well as logistics hub, competing with countries like Kenya, Egypt, and Tanzania.42 Doraleh MPP: DMP was launched in 2015 and is one of four new mega ports co-financed by the Djibouti Ports and Free Zones Authority (DPFZA) and CMHC to establish Africa’s largest free trade zone in Djibouti. Phase one of the project was officially opened in May 2017 has greatly enhanced the ports capacity increasing the amount of cargo the port can handle by 138%. Phase 2 of the project will further enhance its capacity to 29 metric tons annually. Once complete, it is expected to handle $7 billion worth of goods every year making Djibouti an important trade and logistics hub in Africa.43 Major issues relating to Djibouti’s MSRI projects include fears of debt bondage and dependence. Experts warn that by relying too much on Chinese infrastructure projects, Djibouti, which does not possess

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immense natural resources, could become overly indebted and be forced to give up land to China for debt relief as happened in the case of Sri Lanka’s Hambantota port.44 Djibouti has been identified as one of the countries under risk of debt distress with its external debt increasing from 50% of GDP in 2014 to an estimated 85% in 2016, which will increase as more projects are being implemented. Moreover, the loan for the Djibouti section of the E-D SGR was the most expensive loan for an infrastructure project in Djibouti. When the Djibouti government could not meet the capital requirements for the railway project, it had to cede a 10% equity stake to the joint venture company that will run the railway.45 Djibouti must manage these infrastructure projects efficiently so that they are able to generate enough funds to repay the loans. Livestock exporters have stated that the Djibouti port is not fully utilized and asked Djibouti to speed up its logistics process and reconsider export tariff for livestock that are so expensive that they are forced to utilize informal trade routes at other ports in Somaliland and Puntland. The president of the Ethiopian textile and garment association complained of high port handling charges and warned that if that is not corrected, they will be forced to look for alternative ports. Despite the port of Djibouti relying heavily on Ethiopia for majority of its business, there is a difference in business days as Djibouti’s work week is from Sunday to Thursday meaning the two countries are only working four days, negatively impacting their business.46 Djibouti also faces external risks and competition from other MSRI countries in the region like Kenya, Tanzania, and Egypt that are also vying to be gateways to Africa and logistic hubs in the region. These countries are also building ports, railways, SEZs, and other infrastructure projects to service the same regional and international market. The ongoing LAPSSET project that will connect Ethiopia to the new port of Lamu in Kenya will be the biggest test for Djibouti’s new port. Moreover, Djibouti’s ports are heavily tied to Ethiopia’s industrialization drive and any slowdown in Ethiopia’s economy would spell doom for Djibouti by decreasing traffic through its ports.47

Connectivity for Whom? There is no doubt that China stands to benefit a lot from the MSRI. First, the financial institutions that China has established to fund connectivity projects in Africa—e.g., the Asian Infrastructure Investment Bank and

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the Silk Road Fund—and state-owned banks that will provide construction loans give China a channels for investing its enormous $3 trillion foreign currency reserves, internationalizing its currency, the RMB, and restructuring its economy.48 Second, in relation to China’s energy and resource security, China will benefit from quick and reliable access to current and future energy and resource sources through the MSRI. According to the Africa Outlook magazine, “East Africa is becoming a hotbed for energy related investments not only for its robust economic growth, but also for its potential to become one of the largest producers and exporters of oil and natural gas in the world”49 Multiple oil and gas discoveries in the last few years exceed those of any other region in the world and the recent discoveries in Kenya, Uganda and Tanzania have made the prospects even better.50 Third, the construction of port facilities in the Indian Ocean and the establishment of a Chinese military base in Djibouti will favor China’s naval capabilities and safeguarding of China’s political and commercial interests in the region. Chinese officials have already stated that the military base with be crucial in safeguarding the MSRI, signaling China’s strong determination and commitment to implement the MSRI.51 Fourth, the MSRI helps to address China’s excess industrial capacity problem and safeguard jobs in key industries such as steel and cement industries. Relatedly, China improves its ability to tap Africa’s burgeoning consumer market and growing middle class and support emerging Chinese brands such as Huawei, Hisense, Xiaomi, and Haier. These factors suggest the MSRI is all about making all roads lead to China so China can gain access to new markets, goods, generate work for Chinese companies, and realize geostrategic objectives. Large trade imbalances and the composition of trade between China and Africa have reinforced these perceptions, justifiably so. African countries are already flooded with Chinese products and concerns have been raised about counterfeits and dumping practices in Africa. Evidencing concern about these issues during the 2017 Belt and Road Forum (BRF) in Beijing, Kenya’s President Uhuru Kenyatta stated emphatically, “if Beijing’s “winwin strategy is going to work, it must mean that, just as Africa opens up to China, China must also open up to Africa.”52 It has been counter-argued that the MSRI is not only enhancing connectivity between China and Africa, but with Europe and the Middle East where markets still exist for African products. For example, most of Ethiopia’s textile and apparel exports are destined for Europe and the

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United States (US). Djibouti’s port will serve various military installations from the US, France, Japan, Saudi Arabia, and so on as well the various shipping lines operating along its marine waters. Moreover, proponents insist that it enhances Africa’s connectivity and industrialization and has the potential to set Africa on the path to sustainable development and entrenchment into the global market.53 An analysis of the trade patterns between China and this chapter’s East African country cases as well as these East African cases trade with each other studied herein from 2013, after the MSRI was established, should shed light on the MSRI’s true trade impact regionally. Figure 1 shows that since the year 2013 when the MSRI was established, China’s exports to Kenya, Ethiopia, and Djibouti have increased while its imports from these countries have remained relatively the same over the same period. China continues to dominate trade and the trade CHINA 2013

2014

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7 6 5 4 3 2 1 0 IMPORT

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Fig. 1 China’s trade with Kenya, Ethiopia and Djibouti, 2013–2016 (Amounts in USD Billions) (Source Author’s calculations using various sources [Sources used include Trading Economics, “China Imports by Country,” https://tradingeconomics.com/china/imports-by-country; Trading Economics, “China Exports by Country,” https://tradingeconomics.com/china/exports-bycountry; China-Africa Research Initiative, School of Advanced International Studies, Johns Hopkins University. “Data: China-Africa Trade,” http://www. sais-cari.org/data-china-africa-trade; and “UN Comtrade,” https://comtrade.un. org/db/ce/ceSearch.aspx])

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KENYA 2013

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4 3.5 3 2.5 2 1.5 1 0.5 0 IMPORT

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Fig. 2 Kenya’s trade with China, Ethiopia, and Djibouti in 2013 and 2017 (Amounts in USD Billions) (Source Author’s calculations using various sources [Sources used include Trading Economics, “China Imports by Country,” https://tradingeconomics.com/china/imports-by-country; Trading Economics, “China Exports by Country,” https://tradingeconomics.com/china/exports-bycountry; China-Africa Research Initiative, School of Advanced International Studies, Johns Hopkins University. “Data: China-Africa Trade,” http://www. sais-cari.org/data-china-africa-trade; and “UN Comtrade,” https://comtrade.un. org/db/ce/ceSearch.aspx])

imbalance between China and the MSRI participating countries in East Africa continues to widen in favor of China despite the completion of several MSRI projects. Figure 2 shows that between 2013 and 2017, Chinese imports to Kenya have increased significantly while exports from Kenya remain low. It also shows that apart from China, Kenya’s trade with its neighbors in the region who are participants in both the LAPSSET connectivity corridor and the MSRI remains insignificant compared to China. This suggests that, in terms of trade, the MSRI has connected Kenya more to China than to its regional neighbors. Figure 3 shows that Ethiopia’s trade with China prior to 2016, unlike other countries in the MSRI, favored Ethiopia until 2016 when Chinese exports grew sharply. It also shows that Ethiopia’s exports to Djibouti

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ETHIOPIA 2013

2014

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2016

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Fig. 3 Ethiopia’s trade with China, Kenya, and Djibouti, 2013–2016 (Amounts in USD Billions) (Source Author’s calculations using various sources [Sources used include Trading Economics, “China Imports by Country,” https://tradingeconomics.com/china/imports-by-country; Trading Economics, “China Exports by Country,” https://tradingeconomics.com/china/exports-bycountry; China-Africa Research Initiative, School of Advanced International Studies, Johns Hopkins University. “Data: China-Africa Trade,” http://www. sais-cari.org/data-china-africa-trade; and “UN Comtrade,” https://comtrade.un. org/db/ce/ceSearch.aspx])

have increased significantly in 2016 suggesting that the completed ED railway and the expansion of the capacity of the Doraleh MPP and the completion of several SEZs in Ethiopia have had a positive effect on not only the physical connectivity between the two countries, but also in terms of trade facilitation and connectivity.

Conclusion The purpose of this analysis has been twofold. First, it has sought to shed light on the progress of MSRI projects in Eastern Africa, a topic tackled from different angles in, respectively, the Blanchard and Ziso and Styan chapters in this volume. In this vein, it has provided extensive information about the MSRI in Kenya, Ethiopia, and Djibouti, looking at various railway, seaport, and other projects, and also explored the diverse political and economic challenges facing MSRI projects. Second, it has

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aimed to evaluate the trade impact of this connectivity in terms of export and import volumes as well as the distribution of trade between Kenya, Ethiopia, Djibouti, and China as well as among the three East African countries. Looking at MSRI projects, this analysis reveals some noteworthy connectivity achievements. But it also makes clear that there exist significant obstacles to surmount—such as inadequate regional and local policy coordination—before projects can reach their full potential. As for the results of the connectivity that has been achieved to date, my research shows that so far, despite offering participant countries opportunities to bridge their infrastructure gaps and moving Africa’s interregional connectivity up the agenda, the balance of gains is still heavily tilted toward China. Trade imbalances between China and MSRI countries continue to widen despite the completion of some key mega projects. The former set of findings speaks to the implementation issue or the problematic propensity of many MSRI (and BRI) analysts to comment on the implications of the MSRI and SREB without fully considering the political and economic impediments to its implementation.54 The latter set speaks to the frequently ignored issue of what are the benefits of connectivity and who is receiving these benefits. This is important for a third debate which is about the domestic and foreign policy implications of the MSRI and SREB.55 Infrastructure such as ports, railways, and roads may have immediate benefits for the local populations, but may not be that valuable in the long run for Africa if it fails to facilitate the continent’s integration into the global economy. The bigger picture in trade policies, industrial capacity, dependence, and foreign influence must be taken into account. This should be followed up by China opening up its market for African products to narrow the trade imbalance as requested by Kenyan President Kenyatta at the 2017 BRF in Beijing.56 Ports, railways roads, industrial parks, and other infrastructure projects have the capacity to unlock the development potential of Africa and the countries and regions involved. The critical benefits of connectivity are increased efficiency and time savings. These will be the deciding factors of the MSRI’s success in Africa. Africa must not let this be a Chinese project only serving Chinese interests in Africa. The MSRI presents the continent with an opportunity to connect with itself and trade more with itself. This is much needed. Intra-regional trade in Africa is currently the lowest in the world accounting for a paltry

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18%. This has been blamed on poor infrastructure and lack of connectivity.57 Worth noting is that increasing intra-regional trade will not only require more physical integration, but also market integration through trade facilitation initiatives like eliminating tariffs and a range of nontariff barriers within regional communities that raise transaction costs and limit the movement of goods, services and people across borders throughout Africa.58 Beyond this, lessons must be drawn to correct and prevent the perennial problem of lack of African agency in development cooperation with other countries. This is particularly crucial since the benefits of connectivity are contingent upon if the MSRI projects eventually connect the regions and facilitate greater economic and political integration within the continent. For that to happen, African countries need to take greater responsibility and work together to ensure their policies, plans, and actions are complimentary and mutually beneficial.

Notes 1. Diego Pautasso, “The Role of Africa in the New Maritime Silk Road,” Brazilian Journal of African Studies 1, no. 2 (2016): 121. 2. On the connectivity features of the MSRI, see Jean-Marc Blanchard and Colin Flint, “The Geopolitics of China’s Maritime Silk Road Initiative,” Geopolitics 22, no. 2 (2017): 223–245. 3. For background on the MSRI, see the introduction to this volume; Jean-Marc F. Blanchard, “Probing China’s 21st Century Maritime Silk Road Initiative (MSRI): An Examination of MSRI Narratives,” Geopolitics 22, no. 2 (2017): 246–268; and Jean-Marc F. Blanchard, ed., China’s Maritime Silk Road Initiative and South Asia: A Political Economic Analysis of its Purposes, Perils, and Promise (Singapore: Palgrave, 2018). 4. For treatment of these debates, see Pautasso, “The Role of Africa in the New Maritime Silk Road,” 118–130; Blanchard and Flint, “The Geopolitics of China’s Maritime Silk Road Initiative”; and Blanchard, “Probing China’s 21st Century Maritime Silk Road Initiative (MSRI).” 5. Kenya, Ethiopia, and Djibouti have been selected as cases for several reasons. One is that there are completed or well-advanced MSRI projects in these countries. Another is that there is an evident emerging pattern of connectivity in the region. Both conditions need to obtain to make conclusions about the impact of MSRI-related connectivity. 6. For further analysis of the Ethiopia-Djibouti SGR, Ethiopian industrial parks, and the Doraleh MPP in Djibouti, see Jean-Marc F. Blanchard and Edward Ziso’s and David Styan’s respective chapters in this volume.

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7. Binhong Shao, ed., Looking for A Road: China Debates Its and the World’s Future (Leiden: Brill, 2017). 8. See, e.g., Anne-Marie Brady, China as A Polar Great Power (New York: Cambridge University Press, 2017), 242. 9. Pautasso, “The Role of Africa in the New Maritime Silk Road,” 126. 10. Silvio Beretta, Axel Berkofsky, and Lihong Zhang, Understanding China Today (Switzerland: Springer International Publishing, 2017), 139. 11. Roygit, “What Impact Could the 21st Century Maritime Silk Road Have on South Africa?” Fahamu Network for Social Justice, August 3, 2015, http://www.fahamu.org/ep_articles/what-impact-could-the-21stcentury-maritime-silk-road-have-on-south-africa. 12. Yuan Wu, China and Africa (Beijing: China Intercontinental Press, 2006), 23. 13. Mwangi S. Kiemenyi and Josephine Kibe, “Africa’s Powerhouse,” Brookings, January 6, 2014, https://www.brookings.edu/opinions/africas-pow erhouse. 14. Kenya China Economic and Trade Association, “2017 Chinese Enterprises in Kenya Social Responsibility Report,” 2017, https://www.tralac. org/images/News/Reports/2017%20Chinese%20Enterprises%20in%20K enya%20Social%20Responsibility%20Report%20KCETA.pdf. 15. Lapsset Corridor Development Authority, “Brief on LAPSSET Corridor Project,” July, 2016, http://vision2030.go.ke/inc/uploads/2018/05/ LAPSSET-Project-Report-July-2016.pdf. 16. Ibid., 1. 17. “Kenya Has Bright Future in Economic Development: Chinese Diplomat,” China Daily, June 17, 2017, https://www.chinadaily.com. cn/business/2017-06/17/content_29783172.htm. 18. Moses Wasamu, “Standard Gauge Railway Project A Mixed Bag for Mtito Andei Residents in Kenya,” WITS Journalism Africa-China Reporting Project, April 18, 2017, http://africachinareporting.co.za/2017/04/ standard-gauge-railway-project-a-mixed-bag-for-mtito-andei-residents-inkenya/. 19. Oxford Business Group, “The Report: Kenya 2016,” https://oxfordbus inessgroup.com/kenya-2016, 121. 20. Victor Juma, “Forced Ferrying of Imports Raises Fresh Queries on Viability of SGR,” Daily Nation, February 5, 2018, https://www.nation. co.ke/business/Forced-use-of-new-railway-raises-queries-among-import ers/996-4292988-a13p27z/index.html. 21. Kenya National Bureau of Statistics (KNBS), Economic Survey 2016 (Nairobi: Kenya National Bureau of Statistics, 2016), http://www.ke. undp.org/content/dam/kenya/docs/IEG/Economic%20Survey%202 016.pdf. 22. Ibid., 6.

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23. Ibid., 12. 24. Juma, “Forced Ferrying of Imports Raises Fresh Queries on Viability of SGR”; and Uwe Wissenbach and Wang Yuan, “African Politics Meets Chinese Engineers: The Chinese-built Standard Gauge Railway Project in Kenya and East Africa,” Johns Hopkins University-SAIS Working Paper, no. 13 (2017): 12. 25. Chapter “The Maritime Silk Road Initiative and Ethiopia” (Jean-Marc F. Blanchard and Edson Ziso) herein provides a rich political economic analysis of Ethiopia-China relations and the MSRI there. 26. Bryonie Guthrie, “Africa’s Infrastructure-Connectivity Means Business,” China Plus, January 18, 2018, http://chinaplus.cri.cn/opinion/ope dblog/23/20180118/79725.html. 27. Embassy of the Republic of Djibouti in Washington DC, “Commercial Operations Under Way on Djibouti-Ethiopia Railway.” 28. “Chinese-Built and Funded Ethiopia-Djibouti Electric Rail Line Begins Commercial Operations,” Smart Rail World, January 9, 2018, https:// www.smartrailworld.com/chinese-built-and-funded-ethiopia-djibouti-ele ctric-rail-line-begins-commercial-operations. 29. Istvan Tarrosy and Zoltán Vörös, “China and Ethiopia, Part 2: The Addis Ababa–Djibouti Railway,” The Diplomat, February 22, 2018, https://thediplomat.com/2018/02/china-and-ethiopia-part2-the-addis-ababa-djibouti-railway. 30. Adama, “Camel Trains Are Holding Up Ethiopia’s New Railway Line,’ The Economist, February 10, 2018, https://www.economist.com/news/ middle-east-and-africa/21736572-compensating-owners-camels-killed-tra ins-twice-their-market-value. 31. Tarrosy and Vörös, “China and Ethiopia, Part 2.” 32. Lapsset Corridor Development Authority, “Brief on LAPSSET Corridor Project.” 33. Ibid. 34. Aaron Maasho, “Ethiopia Bets on Clothes to Fashion Industrial Future,” Reuters, November 21, 2017, https://www.reuters.com/article/us-eth iopia-textiles/ethiopia-bets-on-clothes-to-fashion-industrial-future-idU SKBN1DL1VU. 35. Markos Berhanu, “Industrial Parks in Ethiopia Generate $248 Million from Export,” Ethiosports, September 16, 2017, http://www.ethiosports. com/2017/09/16/industrial-parks-in-ethiopia-generate-248-millionfrom-export. 36. Bill Donahue, “China Is Turning Ethiopia Into a Giant Fast-Fashion Factory,” Bloomberg Businessweek, March 2, 2018, https://www.blo omberg.com/news/features/2018-03-02/china-is-turning-ethiopia-intoa-giant-fast-fashion-factory; and Sonia Hoque, “Ethiopia’s Economic Transformation and Job Creation: The Role of Hawassa Industrial Park,”

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37.

38. 39.

40.

41.

42.

43.

44.

45. 46.

47.

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SET , August 24, 2017, https://set.odi.org/sonia-hoque-odi-ethiopiaseconomic-transformation-job-creation-role-hawassa-industrial-park. William Davison, “Deadly Violence Hits Hawassa as Protesters Call for Sidama State,” Ethiopia Observer, June 14, 2018, https://www.ethiop iaobserver.com/2018/06/14/deadly-violence-hits-hawassa-as-protesterscall-for-sidama-state. Donahue, “China Is Turning Ethiopia Into a Giant Fast-Fashion Factory.” Dietmar Pieper, “How Djibouti Became China’s Gateway to Africa,” Spiegel Online, February 8, 2018, http://www.spiegel.de/international/ world/djibouti-is-becoming-gateway-to-africa-for-china-a-1191441.html; David Styan, “China’s Maritime Silk Road and Small States: Lessons from the Case of Djibouti,” Journal of Contemporary China 29, no. 122 (2020): 191–206; and chapter “Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations” by Styan. Steve George and Brad Lendon, “‘Weaponizing Capital’: US Worries Over China’s Expanding Role in Africa,” CNN , March 14, 2018, https://www.cnn.com/2018/03/09/asia/djibouti-port-china-usintl/index.html. Adefolake Adeyeye, “China-Africa Relations: Musings from the Belt and Road initiative,” howwemadeitinafrica.com, March 9, 2017, https:// www.howwemadeitinafrica.com/china-africa-relations-musings-belt-roadinitiative/57787. Andualem Sisay Gessesse, “Djibouti Vows to Become Major East African Logistic Hub,” New Business Ethiopia, December 8, 2017, https://new businessethiopia.com/djibouti-vows-to-become-major-east-african-logist ic-hub. Downs, Becker and deGategno, “China’s Military Support Facility in Djibouti”; “Djibouti Opens $590m World Class Mega Port Co-funded by China,” Africa News, May 25, 2017, http://www.africanews.com/ 2017/05/25/djibouti-opens-590m-world-class-mega-port-co-fundedby-china; and Styan’s piece in this book. François Dubé, “China’s Experiment in Djibouti,” The Diplomat, October 5, 2016, https://thediplomat.com/2016/10/chinas-experiment-in-dji bouti. For a competing perspective, see Styan’s piece herein. Downs, Becker and deGategno, “China’s Military Support Facility in Djibouti,” 36. Muluken Yewondwossen, “Doraleh Ports Reduces Its Price, Task Force Formed to Reduce Logistics Costs,” Capital Ethiopia, February 5, 2018, http://capitalethiopia.com/2018/02/05/doraleh-ports-reducesprice-task-force-formed-reduce-logistics-costs/. Downs, Becker and deGategno, “China’s Military Support Facility in Djibouti,” 74.

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48. See Blanchard and Flint, “The Geopolitics of China’s Maritime Silk Road Initiative,” 223–245. 49. James Anyanzwa, “SGR: Kenyans Lose Out as Local Content Clause Not Legally Binding,” The East Africa, December 13, 2015, http://www.afr icaoutlookmag.com/news/east-africa-a-hot-bed-for-energy-related-invest ments. 50. Niyi Aderibigbe, “East Africa’s Fate as Oil Crisis Worsens,” Ventures, November 30, 2014, http://venturesafrica.com/what-declining-oil-pri ces-mean-for-east-africa/. 51. Benjamin Habib and Viktor Faulknor, “The Belt and Road Initiative: China’s Vision for Globalisation, Beijing-style,” The Conversation, May 16, 2017, https://theconversation.com/the-belt-and-road-initiativechinas-vision-for-globalisation-beijing-style-77705. 52. Lily Kuo, “There’s One Major Pitfall for African Countries Along China’s New Silk Road,” Quartz Africa, May 15, 2017, https://qz.com/983 581/chinas-new-silk-road-one-belt-one-road-project-has-one-major-pit fall-for-african-countries. 53. Cobus van Staden, “One Belt One Road and East Africa: Beyond Chinese Influence,” China Brief 17, no. 14 (2017), https://jamestown.org/pro gram/one-belt-one-road-east-africa-beyond-chinese-influence/. 54. Other chapters in this volume giving significant attention to MSRI implementation issues (or the lack thereof) include the ones by Conrad John Masabo, Manochehr Dorraj and Jean-Marc F. Blanchard, Jeffrey Payne, Jonathan Fulton, and Mordechai Chaziza. 55. Jean-Marc F. Blanchard, “China’s Maritime Silk Road Initiative (MSRI) and Southeast Asia: A Chinese ‘Pond’ Not ‘Lake’ in the Works,” Journal of Contemporary China 27, no. 111 (2018): 329–343. 56. David Pilling, and Adrienne Klasa, “Kenya President Urges Rebalance of China-Africa Trade,” Financial Times, May 15, 2017. https://www.ft. com/content/947ea960-38b2-11e7-821a-6027b8a20f23. 57. Jacqueline Musiitwa, “Africa Needs to Trade with Itself – Here’s How,” World Economic Forum Africa, April 8, 2016, https://www.weforum. org/agenda/2016/04/africa-needs-to-trade-with-itself. 58. Anabel Gonzalez, “Deepening African Integration: Intra-Africa Trade for Development and Poverty Reduction,” The World Bank, December 14, 2015, http://www.worldbank.org/en/news/speech/2015/12/14/ deepening-african-integration-intra-africa-trade-for-development-and-pov erty-reduction.

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References Adama. “Camel Trains Are Holding Up Ethiopia’s New Railway Line.” The Economist, February 10, 2018. https://www.economist.com/news/middleeast-and-africa/21736572-compensating-owners-camels-killed-trains-twicetheir-market-value. Aderibigbe, Niyi. “East Africa’s Fate as Oil Crisis Worsens.” Ventures, November 30, 2014. http://venturesafrica.com/what-declining-oil-prices-mean-for-eastafrica/. Adeyeye, Adefolake. “China-Africa Relations: Musings from the Belt and Road Initiative.” howwemadeitinafrica.com, March 9, 2017. https://www.howwem adeitinafrica.com/china-africa-relations-musings-belt-road-initiative/57787/. Anyanzwa, James. “SGR: Kenyans Lose Out as Local Content Clause Not Legally Binding.” The EastAfrican, December 13, 2015. http://www.theeas tafrican.co.ke/business/SGR-Kenya-lose-out-as-local-content-clause-not-leg ally-binding/2560-2995220-3hh80j/index.html. Beretta, Silvio, Axel Berkofsky, and Lihong Zhang. Understanding China Today. Switzerland: Springer International Publishing, 2017. Berhanu, Markos. “Industrial Parks in Ethiopia Generate $248 Million from Export.” Ethiosports, September 16, 2017. http://www.ethiosports.com/ 2017/09/16/industrial-parks-in-ethiopia-generate-248-million-from-export. Blanchard, Jean-Marc F. “Probing China’s 21st Century Maritime Silk Road Initiative (MSRI): An Examination of MSRI Narratives.” Geopolitics 22, no. 2 (2017): 246–268. Blanchard, Jean-Marc F., ed. China’s Maritime Silk Road Initiative and South Asia: A Political Economic Analysis of Its Purposes, Perils, and Promise. Singapore: Palgrave, 2018. Blanchard, Jean-Marc F. “China’s Maritime Silk Road Initiative (MSRI) and Southeast Asia: A Chinese ‘Pond’ Not ‘Lake’ in the Works.” Journal of Contemporary China 27, no. 111 (2018): 329–343. Blanchard, Jean-Marc F., and Colin Flint. “The Geopolitics of China’s Maritime Silk Road Initiative.” Geopolitics 22, no. 2 (2017): 223–245. Brady, Anne-Marie. China as A Polar Great Power. New York: Cambridge University Press, 2017. China-Africa Research Initiative, School of Advanced International Studies, Johns Hopkins University. “Data: China-Africa Trade.” http://www.sais-cari.org/ data-china-africa-trade. “Chinese-Built and Funded Ethiopia-Djibouti Electric Rail Line Begins Commercial Operations.” Smart Rail World, January 9, 2018. https://www. smartrailworld.com/chinese-built-and-funded-ethiopia-djibouti-electric-railline-begins-commercial-operations. Davison, William. “Deadly Violence Hits Hawassa as Protesters Call for Sidama State.” Ethiopia Observer, June 14, 2018. https://www.ethiopiaobserver.

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com/2018/06/14/deadly-violence-hits-hawassa-as-protesters-call-for-sid ama-state/. “Djibouti Opens $590m World Class Mega Port Co-funded by China.” Africa News, May 25, 2017. http://www.africanews.com/2017/05/25/djiboutiopens-590m-world-class-mega-port-co-funded-by-china/. Donahue, Bill. “China Is Turning Ethiopia Into a Giant Fast-Fashion Factory.” Bloomberg Businessweek, March, 2018. https://www.bloomberg.com/news/ features/2018-03-02/china-is-turning-ethiopia-into-a-giant-fast-fashion-fac tory. Downs, Erica, Jeffrey Becker, and Patrick deGategno. “China’s Military Support Facility in Djibouti: The Economic and Security Dimensions of China’s First Overseas Base.” CNA, July, 2017. https://www.cna.org/CNA_files/PDF/ DIM-2017-U-015308-Final2.pdf. Dubé, François. “China’s Experiment in Djibouti.” The Diplomat, October 5, 2016. https://thediplomat.com/2016/10/chinas-experiment-in-djibouti/. Embassy of the Republic of Djibouti in Washington, DC. “Commercial Operations Under way on Djibouti-Ethiopia Railway.” November 27, 2017. http://www.djiboutiembassyus.org/in-the-news/commercial-ope rations-under-way-on-djibouti-ethiopia-railway. George, Steve, and Brad Lendon. “‘Weaponizing Capital’: US Worries over China’s Expanding Role in Africa.” CNN , March 14, 2018. https://www. cnn.com/2018/03/09/asia/djibouti-port-china-us-intl/index.html. Gessesse, Andualem Sisay. “Djibouti Vows to Become Major East African Logistic Hub.” New Business Ethiopia, December 8, 2017. https://newbusinessethi opia.com/djibouti-vows-to-become-major-east-african-logistic-hub/. Gonzalez, Anabel. “Deepening African Integration: Intra-Africa Trade for Development and Poverty Reduction.” The World Bank, December 14, 2015. http://www.worldbank.org/en/news/speech/2015/12/14/deepen ing-african-integration-intra-africa-trade-for-development-and-poverty-red uction. Guthrie, Bryonie. “Africa’s Infrastructure-connectivity Means Business.” China Plus, January, 18, 2018. http://chinaplus.cri.cn/opinion/opedblog/23/201 80118/79725.html. Habib, Benjamin, and Viktor Faulknor. “The Belt and Road Initiative: China’s Vision for Globalisation, Beijing-style.” The Conversation, May 16, 2017. https://theconversation.com/the-belt-and-road-initiative-chinasvision-for-globalisation-beijing-style-77705. Hoque, Sonia. “Ethiopia’s Economic Transformation and Job Creation: The Role of Hawassa Industrial Park.” SET , August 24, 2017. https://set.odi. org/sonia-hoque-odi-ethiopias-economic-transformation-job-creation-rolehawassa-industrial-park.

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Inssaf, Kaled Abdallah, Fu Weizhong, and Raul Jorge Duarte Soule. “Research on the Present Situation and Countermeasures of Chinese Companies Investment in Djibouti ‘Under One Belt One Road’.” International Journal of Engineering Research and Management 6, no. 5 (2019): 1–6. Juma, Victor. “Forced Ferrying of Imports Raises Fresh Queries on Viability of SGR.” Daily Nation, February 5, 2018. https://www.nation.co.ke/bus iness/Forced-use-of-new-railway-raises-queries-among-importers/996-429 2988-a13p27z/index.html. “Kenya Has Bright Future in Economic Development: Chinese Diplomat.” China Daily, June 17, 2017. http://www.chinadaily.com.cn/business/201 706/17/content_29783172.htm. Kenya China Economic and Trade Association. “2017 Chinese Enterprises in Kenya Social Responsibility Report.” https://www.tralac.org/images/News/ Reports/2017%20Chinese%20Enterprises%20in%20Kenya%20Social%20Resp onsibility%20Report%20KCETA.pdf. Kenya National Bureau of Statistics (KNBS). Economic Survey 2016. Nairobi: Kenya National Bureau of Statistics, 2016. http://www.ke.undp.org/con tent/dam/kenya/docs/IEG/Economic%20Survey%202016.pdf. Kiemenyi, Mwangi S., and Josephine Kibe. “Africa’s Powerhouse.” Brookings, January 6, 2014. https://www.brookings.edu/opinions/africas-powerh ouse/. Kuo, Lily. “There’s One Major Pitfall for African Countries Along China’s New Silk Road.” Quartz Africa, May 15, 2017. https://qz.com/983581/chinasnew-silk-road-one-belt-one-road-project-has-one-major-pitfall-for-african-cou ntries/. Lapsset Corridor Development Authority. “Brief on LAPSSET Corridor Project.” July, 2016. http://vision2030.go.ke/inc/uploads/2018/05/LAPSSET-Pro ject-Report-July-2016.pdf. Maasho, Aaron. “Ethiopia Bets on Clothes to Fashion Industrial Future.” Reuters, November 21, 2017. https://www.reuters.com/article/us-ethiopiatextiles/ethiopia-bets-on-clothes-to-fashion-industrial-future-idUSKBN1D L1VU. Musiitwa, Jacqueline. “Africa Needs to Trade with Itself – Here’s How.” World Economic Forum Africa, April 8, 2016. https://www.weforum.org/agenda/ 2016/04/africa-needs-to-trade-with-itself/. Oxford Business Group. “The Report: Kenya 2016.” https://oxfordbusinessg roup.com/kenya-2016. Pautasso, Diego. “The Role of Africa in the New Maritime Silk Road.” Brazilian Journal of African Studies 1, no. 2 (2016): 118–130. Pieper, Dietmar. “How Djibouti Became China’s Gateway to Africa.” Spiegel Online, February 8, 2018. http://www.spiegel.de/international/world/dji bouti-is-becoming-gateway-to-africa-for-china-a-1191441.html.

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Pilling, David, and Adrienne Klasa. “Kenya President Urges Rebalance of ChinaAfrica Trade.” Financial Times, May 15, 2017. https://www.ft.com/con tent/947ea960-38b2-11e7-821a-6027b8a20f23. Roygit. “What Impact Could the 21st Century Maritime Silk Road Have on South Africa?” Fahamu Network for Social Justice, August 3, 2015. http://www.fahamu.org/ep_articles/what-impact-could-the-21stcentury-maritime-silk-road-have-on-south-africa/. Shao, Binhong, ed. Looking for A Road: China Debates Its and the World’s Future. Leiden: Brill, 2017. Staden, Cobus van. “One Belt One Road and East Africa: Beyond Chinese Influence.” China Brief 17, no. 14 (2017). https://jamestown.org/program/ one-belt-one-road-east-africa-beyond-chinese-influence. Styan, David. “China’s Maritime Silk Road and Small States: Lessons from the Case of Djibouti.” Journal of Contemporary China 29, no. 122 (2020): 191– 206. Tarrosy, Istvan, and Zoltán Vörös. “China and Ethiopia, Part 2: The Addis Ababa–Djibouti Railway.” The Diplomat, February 22, 2018. https://thedip lomat.com/2018/02/china-and-ethiopia-part-2-the-addis-ababa-djibouti-rai lway. Trading economics. “China Exports by Country.” https://tradingeconomics. com/china/exports-by-country. Trading Economics. “China Imports by Country.” https://tradingeconomics. com/china/imports-by-country. UN Comtrade. https://comtrade.un.org/db/ce/ceSearch.aspx. Wasamu, Moses. “Standard Gauge Railway Project A Mixed Bag for Mtito Andei Residents in Kenya.” WITS Journalism Africa-China Reporting Project, April 18, 2017. http://africachinareporting.co.za/2017/04/standard-gaugerailway-project-a-mixed-bag-for-mtito-andei-residents-in-kenya/. Wissenbach, Uwe, and Wang Yuan. “African Politics Meets Chinese Engineers: The Chinese-built Standard Gauge Railway Project in Kenya and East Africa.” Johns Hopkins University-SAIS Working Paper, no. 13 (2017). Wu, Yuan. China and Africa. Beijing: China Intercontinental Press, 2006. Yewondwossen, Muluken. “Doraleh Ports Reduces Its Price, Task Force Formed to Reduce Logistics Costs.” Capital Ethiopia, February 5, 2018. http:// capitalethiopia.com/2018/02/05/doraleh-ports-reduces-price-task-force-for med-reduce-logistics-costs.

The Maritime Silk Road Initiative and Ethiopia: Transforming Policies, Institutions, and Politics in Expected and Unexpected Ways Jean-Marc F. Blanchard and Edson Ziso

Introduction This chapter focuses on Ethiopia, a key player in the People’s Republic of China (PRC/China)’s Maritime Silk Road Initiative (MSRI) in Africa and one of the earliest African countries to sign Belt and Road Initiative (BRI) cooperation documents.1 For Ethiopia, the MSRI project serves its development strategies. For China, Ethiopia plays an important role as a “bridge and a link for jointly advancing” the MSRI/BRI in Africa.2 Two particularly noteworthy projects involving Ethiopia are the

The authors express their appreciation to Xu Jing for her work in conforming this chapter to Palgrave style requirements. J.-M. F. Blanchard (B) Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations, Los Gatos, CA, USA e-mail: [email protected] E. Ziso University of Adelaide, Adelaide, SA, Australia © The Author(s) 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8_3

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Ethiopia-Djibouti standard gauge railway (SGR) and the Multi-Purpose Port (MPP) at Doraleh in Djibouti.3 To date, almost all Ethiopian MSRI projects have advanced unproblematically.4 This is in stark contrast to projects elsewhere in Africa (many covered in this volume) that have stalled, assumed radically new forms, or been canceled. The smooth progress of the MSRI in Ethiopia and Ethiopia’s deep economic ties with China and strong support for all things China have led some to query if Ethiopia has become a Chinese client state.5 Beyond this, some believe China has significantly influenced Ethiopian domestic politics. Such views, though, are problematic in various ways, not the least of which is that ties with China also have empowered Ethiopia and that Ethiopia has its own reasons for embracing China. There are numerous studies of Ethiopia’s relationship with China.6 Many, though, are outdated or lack in-depth coverage of economic links. In addition, there are few true political economy analyses with economic studies usually failing to systematically analyze how economics influences politics or vice versa. There are even fewer treatments focusing specifically on Ethiopia in China’s MSRI. Ethiopia warrants more attention, however, given its weight in East Africa and importance to the MSRI in Africa and the salience of East Africa to China. As far as coverage of Ethiopia in the MSRI and Ethiopia–China relations is concerned, the main issue is not that the literature is wrong, but rather that some studies explain Ethiopian policies overly simplistically, ignore the fact that links with China also have empowered Ethiopia, and minimize the fact that variables like domestic politics can have contradictory effects. To preview, this chapter shows that the MSRI has progressed well in Ethiopia, though there clearly are challenges. Not surprisingly, it also echoes those reporting a broad and deep economic and political relationship between Ethiopia and China. It rejects, though, the characterization of Ethiopian domestic and foreign policies as simply derivative of its economic ties with China and also the claim such ties have enervated Ethiopia. Regarding the former, Ethiopia has its own international and domestic political reasons for supporting the MSRI, China, and Chinafavored policies. With respect to the latter, Ethiopia has gained strength in its dealings with neighboring countries, countries in the Horn of Africa region, and diverse international actors. One policy implication of our work is that analysts should be more cautious about assuming the MSRI or other economic dealings with China will have transformative (typically negative) political effects.

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Another is that observers should be cautious about concluding that a country’s domestic or foreign policies are hostage to economic links with China. The Ethiopia case shows diverse variables are operative and given this that there are multiple possibilities for change (albeit not all equally likely) and myriad pathways for influencing policy. Among the theoretical implications of our analysis are that political-economic analysis is needed to unpack the ramifications of the MSRI and its drivers, that domestic politics variables warrant more attention, and that developing countries/African states are not as weak as is commonly assumed depending upon the context and the nature of their economic relationships with China. The chapter starts by providing a very brief overview of historical China–Ethiopia relations. It then examines “contemporary” ties which began in 1995 with the coming to power of the Ethiopian People’s Revolutionary Democratic Front (EPRDF).7 This section devotes special attention to the critical role of Meles Zenawi, former Prime Minister (1995–2012) and EPDRF leader, because he was one of the earliest proChina African advocates at a time when much of the world was skeptical about China’s intentions toward the continent. Indeed, it is fair to say he single-handedly set up Ethiopia for a long-term, deep, and comprehensive relationship with China. The chapter then explores the nature of Ethiopia’s economic engagement with China, examining trade, Chinese outward foreign direct investment (FDI), and contracts. It then shifts to exploring what is happening with actual MSRI projects. It focuses on three sectors: railways and road, power, and industrial parks/special economic zones (SEZs). Following this, it analyzes the MSRI’s effect on Ethiopian domestic and foreign policy. It concludes with, among other things, a discussion of the policy and theoretical importance of our findings and future research avenues.

An Overview of Ethiopia–China Political Relations The 1955 Bandung Asia-Africa Conference clearly marks the start of notable post-1949 interactions between Ethiopia and China. No formal Sino-Ethiopian agreements emerged from Bandung, but the seeds for future cooperation had been firmly sown. 1956, just one year later, found Ethiopian Emperor Haile Selassie welcoming a cultural delegation from the PRC. Nevertheless, for various reasons, such as Selassie’s

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dislike of communism and preference for the West, the establishment of formal diplomatic relations between Ethiopia and China had to wait until 1970. Thereafter, Ethiopia’s economic and political ties with China grew, though not evenly.8 In any event, ever since the 1990s, this multi-dimensional relationship probably has been the most significant, far-reaching, and economically consequential one for Ethiopia in modern times. One can trace the surge in ties from the 1990s onward to the EPRDF, the coalition government that took power from the Derg military regime in 1991.9 In 1995, Ethiopian foreign policy makers began to debate the wisdom of their country’s pro-Western foreign policy because of Western human rights pressure and a sense Ethiopia’s interests often diverged from the West. Ethiopian decision makers identified China and Russia, with a preference for China, as potential alternatives and the government subsequently dispatched diplomats to Beijing to foster greater engagement. This culminated in Zenawi’s first official visit to China in 1995, the year he became Prime Minister. From 1996 to 2005, the two countries consolidated their relations, with a positive tone established from the get-go after Beijing reciprocated Zenawi’s visit with a visit by then Chinese President Jiang Zemin to Ethiopia in May 1996. Thereafter, Zenawi intensified his country’s political, military, and economic links as well as party-to-party links with China because of his desire to fend off the aforementioned pressures, gain support that facilitated internal political control, grow and diversify Ethiopia’s economy, pursue an Asian-style development state model, and exploit Chinese financial resources.10 Prime Minister Zenawi died in 2012 and was succeeded by Hailemariam Desalegn. Ethiopia persisted in leaning toward China because this stance meshed with its international and domestic political and economic needs. It needed trade with China, Chinese outward FDI (OFDI), Chinese infrastructure and, relatedly, loans, economic and technical assistance, and, to a much lesser degree, aid. As before, Ethiopia wanted alternatives to the West. China’s economic model, appealing foreign policy principles such as non-interference and win-win, and Ethiopia need for a friend to help it fend off pressures for political liberalization continued to push Addis Ababa toward Beijing. Ethiopia continued to find China a useful military partner, too, buying military hardware such as artillery, light armored vehicles, and troop transports, participating in military exchanges, and hosting a military attaché. In late 2016, a very high-ranking member of China’s Central Military Commission visited

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Ethiopia to discuss cooperation in areas such as training and United Nations (UN) peacekeeping.11 Post-1995, China viewed Ethiopia positively for both political and economic reasons, though the former has been dominant for most of the period. Regarding political reasons, other than its strategic location, Ethiopia attracts because it is a diplomatic hub. To illustrate, Addis Ababa, Ethiopia’s capital, hosts the African Union, the UN Economic Commission for Africa, the Intergovernmental Authority for Development, and various international nongovernmental organizations. Good relations with Ethiopia and a strong presence there consequently gave China an opportunity for close contact with African leaders and the eminent personages who influence individual African nations’ domestic and foreign policies. In addition, Ethiopia has the largest standing army in sub-Saharan Africa and is a force for stability in the Horn of Africa. Aside from the above, Zenawi was both a defender and champion of China rhetorically and in international bodies like the UN Human Rights Commission, Chinese-favored political and economic principles, and Chinese policy positions such as “One China.” Turning to economics, Ethiopia is one of the largest countries in Africa in terms of population, has been growing rapidly, apparently has vast energy resources, and is a gateway to the interior of Africa.12

Contemporary Ethiopian Economic Relations with China A 2018 CNN report on Addis Ababa vividly illustrates China’s heavy economic footprint in Ethiopia: “Cars chug through the city on smooth Chinese roads, Chinese cranes lift the skyline, sewing machines hum in Chinese factories in Chinese-owned industrial parks, tourists arrive at the Chinese-upgraded airport and commuters ride modern Chinese trains to work.”13 In this section, we present data on Ethiopia–China trade volumes and the composition of bilateral trade. After this, we delve into the themes of Chinese OFDI (COFDI), industrial parks and special economic zones (SEZs), Chinese infrastructure/contracting, and issues associated with Ethiopia’s non-MSRI/BRI economic relations with China.

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Table 1

2001 2005 2010 2011 2012 2013 2014 2015 2016 2017 2018

Ethiopia’s Trade with China, 2001–2018 (amounts in USD millions) Exports

Imports

Total

Trade balance

1.67 82.42 241.76 283.44 320.92 318.51 483.52 371.66 409.31 346.39 334.21

135.96 514.12 2,062.08 1,718.11 2,572.36 3,114.05 4,993.22 5,956.47 5,657.90 4,655.26 4,447.19

137.63 596.54 2,303.85 2,001.55 2,893.28 3,432.56 5,476.74 6,328.13 6,067.21 5,001.65 4,781.40

(134.30) (431.70) (1,820.32) (1,434.67) (2,251.44) (2,795.55) (4,509.70) (5,584.81) (5,248.59) (4,308.87) (4,112.98)

Source International Monetary Fund (IMF), “Direction of Trade Statistics” (International Monetary Fund [IMF], “Direction of Trade Statistics [DOTS],” https://data.imf.org)

Trade Trade began to grow notably after 2000, partly due to the passage of the United States (US) African Growth and Opportunity Act (AGOA) which afforded designated African countries specific preferences on their exports of goods, especially textiles and apparels, to the United States.14 In 2006, China became Ethiopia’s major trade partner, overtaking Saudi Arabia.15 Table 1 provides statistics on Ethiopia’s exports to and imports from China from 2000 to 2018 as well as the trade balance in each of these years. Trade statistics and other studies make amply clear that the composition of trade between Ethiopia and China has long been one where Ethiopia has exported primary goods such as sesame seeds and leather to China in exchange for equipment, machines, and finished products ranging from electronics to clothing to leather to pharmaceuticals to yarn.16 COFDI For a long time, Ethiopia’s receipts of COFDI flows were infinitesimal. Notable investments, relatively speaking, eventually took place, particularly after 2000, with very large investments in cement, hundreds of Chinese investments, of various sizes, in manufacturing (the biggest

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sector by far), construction, and real estate.17 These investments allowed COFDI to overtake that from other big investors such as India and Saudi Arabia.18 Still, COFDI flows into Ethiopia did not compare to other COFDI destinations in Africa. Before continuing with the discussion of COFDI in Ethiopia, it needs to be pointed out that FDI has special appeal for Ethiopia because it holds the potential to help Ethiopia industrialize, a major goal of Zenawi’s and a key aspect of many Ethiopian development plans such as the Plan for Accelerated and Sustained Development to End Poverty (2005–2010), the Growth and Transformation Plan (GTP) I (2010–2015), and GPT II (2015–2020). Among other things, Ethiopian leaders view industrialization as a path to diversify away from agriculture, generate foreign exchange, and create jobs as well as to surmount other developmental obstacles.19 To advance its quest for more FDI, Ethiopia has launched a number of policies, both political and economic, aimed at attracting investors generally and Chinese investors specifically. As will be discussed, a subset of these policies pertains to industrial parks and SEZs. Returning to COFDI, due to a surge in recent years, over the period 1992–2016, China became “the largest foreign direct investor in the country…whether one looks at the number of projects…or the total amount of capital invested.”20 Table 2 provides figures on COFDI flows for select years between 2000–2018 using data from the American Table 2 COFDI in Ethiopia, 2010–2018 (amounts in USD millions)

Year

AEI-Heritage CGIT

CARI

2010 2011 2012 2013 2014 2015 2016 2017 2018

$140.00 0 0 0 300.00 0 350.00 $580.00 0

$58.53 72.30 121.56 102.46 119.59 175.29 282.14 181.08 341.25

Source AEI-Heritage CGIT and CARI (The AEI-Heritage CGIT is available at https://www.aei.org/china-global-investment-tracker and CARI at http://www.sais-cari.org. Differences between the two data sets relate to the fact that they use different data sets, different counting thresholds, and other factors)

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Enterprise Institute (AEI)-Heritage Foundation China Global Investment Tracker [hereinafter AEI-Heritage CGIT] and the John Hopkins University SAIS China-Africa Research Initiative [hereinafter CARI]. These numbers are not huge, but they reflect growth. One contemporary snapshot of the sectoral distribution of COFDI in Ethiopia reports it flows mainly into manufacturing, construction, and real estate, with the average investment size quite small. As far as manufacturing is concerned, it has been going into labor-intensive activities such as garments and shoes with some flowing into electronics. Helping Ethiopia draw COFDI are the aforementioned AGOA, trading agreements with the EU, and Ethiopia’s large population and proximity to neighboring markets.21 Contracting COFDI has been dwarfed by Chinese contracting in Ethiopia. One of earliest noteworthy, post-2000 Chinese contracts was an award in 2002 to build a more than $350 million power station—the Tekeze Hydro Power Project. Over the next eight years or so, Chinese companies also garnered deals to develop telecommunications services, construct roads, and expand Ethiopia’s Bole international airport. Chinese firms were heavily involved in power sector projects, costing more than $1.7 billion, designing, supplying parts for, and constructing dams, power plants, and power transmission lines. Major non-MSRI hydropower projects include the $1.3 billion Finchaa-Amerti-Neshe hydroelectric dam and the $555 million Chemoga-Yeda hydropower projects. Financing from Chinese entities such as the China Export-Import Bank (“China Ex-Im Bank”) reportedly played an important role in Chinese companies winning the aforementioned projects as well as others such as a massive housing project, a light rail system, and the Ethio-Djibouti SGR (discussed further below).22 Power generation projects have value to Ethiopia (and China) in part because they produce energy that can be sold to neighboring countries and generate foreign exchange needed to repay loans from China.23 Industrial Parks and SEZs As noted, industrial parks and SEZs are one tool Ethiopia has employed to attract FDI and, relatedly, industrialize. In line with this, it has established five industrial parks including Bole Lemi, Kilinto (both in the Addis

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Ababa area), Hawassa, Dire Dawa, and Kombolcha (discussed below). To make its industrial parks and SEZs attractive to investors, Ethiopia offers cheap land, pre-built facilities, significant tax breaks, reduced tariffs, and specialized services. China plays three critical roles in the development and success of Ethiopia’s industrial parks and SEZs. First, it finances and builds them (Hawassa is an example). Second, it provides preferential financing and subsidies to companies involved in them and may assist when government action is needed to create an environment supportive for Chinese firm involvement. Third, Chinese companies are supposed to invest in the parks and SEZs.24 One of the earliest Chinese SEZs in Ethiopia was the Eastern Industrial Zone (EIZ), established in 2007 in Dukem, south-east of Addis Ababa, at a cost of more than $700 million. When initially formulated, the plan was for this EIZ, privately owned, to have 80 projects within its confines in areas like electrical materials, textiles, and steel manufacturing. Per one analysis, there are 30 firms in the EIZ, with a heavy emphasis on textiles and clothing, though one also can find operations relating to construction materials, vehicles, and basic iron and steel.25 Issues in the Ethiopia–China Economic Relationship Issues pertaining to Ethiopia’s trade include a persistent and rising trade deficit (see Table 1). Another is the composition of trade (covered above). Concerns about this are hardly surprising given that Ethiopia wants to industrialize and diversify. Related to both, there are those in Ethiopia displeased with inflows of competitive Chinese firms and goods, which undercut Ethiopian firms at home and abroad and potentially stunt the development of Ethiopian industry as well as concerns about the quality of Chinese goods. Beyond this, there are concerns about the long-term economic viability of Chinese projects. Beyond this, there have been concerns about the extent to which Chinese firms in Ethiopia have relied on Chinese inputs and workers and are transferring technology and knowhow, though it is clear China and Chinese companies do have various programs in place to facilitate human development in Ethiopia.26 Generally speaking, issues such as the trade deficit or the unbalanced composition of trade have not meaningfully affected bilateral ties because China is the central or only partner for many of the initiatives that Ethiopian leaders have deemed critical for the country’s economic development. On top of this, there has been a sense the China model is most

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suited to Ethiopia’s national conditions and the political cost of working with China economically is tolerable because, in essence, there is none in contrast to cooperating with Western countries and financial institutions which link all kinds of political conditions with their aid and loans.27 We should not forget that even prima facie negatives have their positives. For instance, while the composition of trade is unbalanced, Ethiopians engaged in trade facilitation and small-scale production and service operations do gain from imports of Chinese manufacturers. Furthermore, the explosion in Chinese machinery and transportation imports flowing into Ethiopia relates, in part, to Chinese infrastructure projects, which have yielded diverse benefits to Ethiopia.28

MSRI Infrastructure Projects in Ethiopia As elsewhere, it is a challenge to differentiate Ethiopian MSRI from non-MSRI related projects. Moreover, there are no maritime projects in Ethiopia per se other than the MPP at Doraleh, which has a very strong link to Ethiopia. Since the MPP is covered in Styan’s chapter “Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations” in this volume, we focus on other connectivity projects such as railways, which have an obvious link to the MSRI and the larger BRI (we do not cover airports, pipelines, roads, and telecommunications for reasons of space and focus). We also consider industrial parks/SEZs in Ethiopia because they fit with China’s MSRI aims of exporting excess capacity and creating opportunities for Chinese firms. Lastly, we treat various power projects in Ethiopia as MSRI projects because they are needed to fuel Ethiopian industry, industrial parks/SEZs, and transportation infrastructure, generate currency to repay Ethiopia’s MSRI/BRI debts, and reflect connectivity.29 Connectivity Infrastructure MSRI connectivity infrastructure in Ethiopia has two purposes. First, it is designed to connect the landlocked country with other countries in the region, providing a means for goods, services, and people to flow out of Ethiopia as well as through Ethiopia to other parts of Eastern Africa and beyond. Second, it links Ethiopia internally. Both purposes mesh quite well with Ethiopia’s GTP I and II which call for connecting many of Ethiopia’s major cities via rail.

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Turning to other transport-related infrastructure, the EthiopiaDjibouti SGR (Addis Ababa-Djibouti railway) is perhaps the highlight of the MSRI in Ethiopia. The China Ex-Im Bank provided the bulk of the financing for this multi-billion-dollar 750 km long, electric railway, built by China Railway Group Ltd. (CREC) and China Civil Engineering Construction Corporation (CCECC). Aside from connecting Ethiopia to the MPP, it eventually is supposed to be part of a larger transboundary network connecting ports in Berbera (Somaliland), Mogadishu (Somalia), Lamu (Kenya), and Bagamoyo (Tanzania) as well as other major regional railways such as the Mombasa-Nairobi SGR. The railway is critical for Ethiopia because it provides a way to transport the goods that Ethiopia is/will be producing in tandem with its industrialization drive and the expansion of its industrial parks/SEZs. In addition, it gives the country access, through Djibouti, to the sea. The Ethiopia-Djibouti SGR has not been an unvarnished success. Besides burdening Ethiopia with massive debts whose terms later had to be renegotiated, the project has been adversely affected by financial, operating, and political problems such as insufficient usage by passengers and shippers, power outages, and political blockades.30 Another noteworthy MSRI-related railway project is the $1.5 billion Mekelle-Woldia-Hara Gebeya project. This project came into being before the birth of the MSRI. It includes rail lines, maintenance facilities, stations, tunnels, and other system components and seeks to boost Ethiopia’s internal transportation network and links to Djibouti via the Ethiopia-Djibouti SGR. Chinese companies such as China Communications Construction Company (CCCC) are involved in design and engineering, construction, and general contracting. Government financial constraints as well as shortfalls of foreign funding have greatly slowed the progress of this project.31 Another project meriting attention is the completed Addis Ababa Light Rail Transit (AALRT) project, which was constructed by CREC, almost entirely financed by the China Ex-Im Bank, and operated by Chinese firm Shenzhen Metro Group Company.32 Industrial Parks/Special Economic Zones The MSRI is quite visible in Ethiopian industrial parks and SEZs. One park drawing much attention, other than the EIZ treated earlier in this chapter, is the flagship Hawassa Industrial Park. This park, which was built by CCECC and inaugurated in June 2017, is a showcase

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for Ethiopia and a model for other Ethiopian and African industrial parks and SEZs. Other notable industrial parks involving Chinese firms include the Arerti Industrial Zone (CCCC), the Bahir Dar Industrial Park (CCECC), the Dire Dawa Industrial park (CCECC), Huajian Industrial Park (Huajian Group), Kombolcha Industrial Park (CCECC), and Mekelle Industrial Park (CCCC). These parks, which can run into the hundreds of millions of dollars to construct, are found in the north, south, and east of the country, will feature textiles and apparel, food processing, building/construction materials, vehicle assembly, and electronics, with many linked to various Ethiopian railway projects. The Kilinto industrial park stands out because it will feature pharmaceutical manufacturing.33 These parks will house many Chinese companies and Ethiopia expects them, among other things, to fuel growth, attract FDI, create jobs, boost exports, advance Ethiopia’s industrialization, promote technology transfer, and increase tax revenues.34 The industrial parks have delivered notable results, but there also have been disappointments and political problems. Regarding disappointments, issues include insufficient technology transfers and use of local inputs, inadequate human capacity training, the excessive use of Chinese managers, a failure to meet export targets, and the politically driven, dispersed nature of industrial parks (the latter two issues do not relate to the fact parks are Chinese, but do limit the payoffs of Chinese industrial parks). With respect to political problems, land taken for parks has provoked unrest among certain ethnic groups and issues have emerged with respect to wages and working conditions as well as social dislocation.35 Power Projects Chinese companies have been very active in energy generation (hydro and wind) and transmission projects in Ethiopia. Power projects are critical for Ethiopia because they are needed to fuel Ethiopia’s industrial parks and SEZs as well as the manufacturing that takes place within and without them, lure FDI (foreign investors have noted that they are attracted to Ethiopia not only by its low cost labor, but also its cheap electricity), power Ethiopia’s growing transportation infrastructure, and generate foreign exchange. In line with this, Ethiopia plans to dramatically expand its power generation capabilities. Statements in Chinese official media make clear that Beijing is quite supportive of COFDI and Chinese

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contracting in power generation and grid initiatives, describing it as “a key priority area in its Comprehensive Strategic Partnership with Ethiopia.”36 Major power projects involving Chinese investors and/or contractors are the $580 million Geba hydropower, the $400 million plus Genale Dewa III hydropower, and the $1.7 billion Gibe III hydropower projects, the 51 MW Adama I and 153 MW Adama II wind farm projects, and a nearly $2 billion State Grid of China electricity transmission and distribution network investment.37 Beyond this, three Chinese companies—China Gezhouba Group, Voith Hydro Shanghai, and Sinohydro Corp—are involved in the more than $4 billion Grand Ethiopian Renaissance Dam (GERD), which is Ethiopia’s marquis power generation and will be the largest hydropower plant in Africa. To be clear, Chinese companies do not occupy a central role in this project, but nonetheless they have an important role and Chinese entities are involved in financing parts of it such as power transmission lines. The GERD has sparked serious tensions between Ethiopia and Egypt due to the severe impact it will have on the Nile River and, subsequently, water and soil flows to Egypt.38

Ethiopian Domestic and Foreign Policies and Their Drivers As noted earlier, there are works that view Ethiopian domestic and foreign policy as deferential to China and as reflecting an enfeebled Ethiopia. There are those that attribute this state of affairs to Ethiopia’s extensive economic relationship—comprised of the MSRI, trade, COFDI, nonMSRI infrastructure, and so on—with China and the benefits derived from it. In this section, we describe some of the ways in which Ethiopian domestic and foreign policy seem to favor China or Chinese-favored policies. We then probe the reasons shaping Ethiopia’s domestic and foreign policy before turning to evaluate whether or not economic forces have undermined Ethiopian sovereignty and national independence. Ethiopia’s Domestic Model Ethiopia has strongly embraced China’s model of state-led economic development. Under Zenawi and his successor Desalegn, Ethiopia repeatedly spoke positively about China’s statist model, viewed industrialization and infrastructure construction, core features of China’s economic rise,

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as essential for Ethiopia’s, and established an economic system dominated by state-owned enterprises (SOEs) run by government, party, and military elites. On the political front, Ethiopia embraced the notion of a one-party state, repression of opposition forces, and the dominance of one ethnic group.39 A quote from the Economist distills the above quite well: the continent’s second most populous country and fastest-growing economy has close intellectual links with China’s Communists and often sends officials to their party school in Beijing. There, Ethiopians imbibe the gospel of industrialization overseen by a strong state that exerts tight control over an ethnically diverse population with a history of strife.40

One concrete illustration of Chinese influence is that Ethiopia’s national economic plans—e.g., the aforementioned GTP I and GTP II—stress core MSRI features. Indeed, in mid-May 2018, the Chinese Ambassador to Ethiopia tellingly stated, “‘We’re discussing…how to align the Chinaproposed Belt and Road Initiative with that of Ethiopia’s massive poverty reduction program …GTP II, which runs from 2015 to 2020.’”41 Regarding emphasizing core MSRI features, Ethiopia’s GTP seeks to transform Ethiopia via massive infrastructure projects like road networks, rail networks, and hydropower as well as industrializing via an expansion in the country’s manufacturing capacity. Other manifestations of Chinese influence include Ethiopia’s emphasis on industrial parks and SEZs as one of its core development strategies. As well, the promise of the MSRI and other forms of interaction with China have pushed Ethiopian Airlines (EAL), Ethiopia’s national carrier, to expand its China flights and seek to become a BRI hub in Africa on the way to creating an “Aerial Silk Road.”42 Since the time of Zenawi, Ethiopia has worked to attract COFDI. “For example, it has waived customs duties for the import of capital goods and has set up a one-stop shop to handle commercial registration and business licenses. It also has appointed Chinese speaking liaison officers to facilitate COFDI and the Ethiopian Investment Commission regularly arranges trips to China.”43 It is not the case, however, that all Ethiopian policies mirror Chinese desires. For instance, China is still waiting for Ethiopia to create the banking and telecommunications, civil service, and trade structures it and Chinese businesses desire.44 Beyond this, Ethiopia

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does not allow Chinese firms to set up trading business and most service businesses inside the country.45 Ethiopian Foreign Policy As we have noted, Ethiopia often has supported, praised, or defended China or Chinese-favored principles. Vivid examples include Zenawi’s claim at the African Union heads of state summit in 2012 that “China…is one of the reasons for the beginning of the African renaissance” and during the 2006 Forum on China-Africa Cooperation his denigration of the notion China was looting Africa.46 Another was Zenawi’s statement during a meeting with former Chinese Premier Wen Jiabao in 2003 that “Ethiopia and China share identical views on international affairs.”47 Yet another has been Ethiopia’s continuing support for the One China policy and Chinese actions in Tibet.48 As far as the MSRI is concerned, Ethiopia has repeatedly proffered positive sentiments about it and the BRI. For instance, in a piece published in 2017, the Embassy of Ethiopia in Beijing wrote “Ethiopia is one of the African countries that welcomed with enthusiasm, China’s BRI.”49 That same year, Zenawi’s successor, Desalegn, noted his country would take the BRI “as an opportunity to speed up the transformation of the Ethiopian economy.”50 Two years later, at an investment forum in Ethiopia, an Ethiopian official charged with FDI attraction lauded China’s “excellent incentive” as an “offering to the world to promote global growth and prosperity.”51 Ethiopia’s proChina foreign policy is more than just rhetoric. There are frequent visits by high-level Ethiopian representatives to Beijing and Addis Ababa also regularly hosts top Chinese government and party officials. Furthermore, when it was a member of the UN Human Rights Commission, Ethiopia joined with others to block criticisms of China.52 Despite its close relationship with China, it is important to keep in mind that Ethiopia has not abandoned its close interactions with other countries including the US, the European Union (EU), and Western institutions such as the World Bank. As far as the United States is concerned, Ethiopia continues to meet with US government officials and decision makers, to receive US humanitarian and development aid, and to cooperate with the United States on matters relating to regional security, peacekeeping, and anti-terrorism as well as arms sales and training. With respect to the EU, Ethiopia has extensive cooperation with it relating to

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climate change and environmental protection, food security, governance, and population.53 Analysis It is convenient to attribute much of the above to the MSRI coupled with Ethiopia’s economic ties with China. After all, Ethiopia has benefitted in many ways, some interrelated, from the economic relationship. First, it seems to have spurred faster growth. Second, it has boosted Ethiopia’s exports. Third, it has increased Ethiopia’s access to capital in the form of COFDI as well as loans. Fourth, it has built up the country’s power, transportation, and other infrastructure, albeit not for free. Fifth, it has created jobs, a big issue in a country where there is very high unemployment. Sixth, it has assisted with poverty alleviation. Seventh, China and Chinese companies have contributed to Ethiopia’s human capital development.54 There are three problems with this train of analysis even though the aforementioned benefits are real. One problem is that, as previously noted, there are economic downsides to the relationship, which undercut somewhat the warming effect of economics on politics. A second limitation is that Ethiopian leaders, particularly Zenawi, had their own ideological and political reasons for embracing the China model and backing China that were not purely about the economic allure of China. These reasons include support for Marxism-Leninism, disdain for neoliberalism and (excessively) free markets and free trade, and faith in the role of the state to develop the country’s agricultural and industrial sectors. China also has had value for Ethiopia due to its ability to provide Ethiopia international space, domestic political cover, and, of course, economic goods such as FDI, loans, and training.55 A third shortcoming is that Zenawi and the EPRDF had domestic political reasons for embracing the China model and China. Growth, employment, and infrastructure, to name a few things, helped legitimize the EPRDF’s grip on power. Moreover, the EPRDF used joint ventures (JVs) and the resources obtained from JVs between EPRDF-linked SOEs and Chinese investors or contractors to secure the loyalty of EPRDF and other key power brokers.56 Contrary to those concluding that Ethiopia has been enervated by its participation in the MSRI and broader economic links to China, there also are signs it has been empowered. For instance, Ethiopia success in relatively quickly renegotiating some of its massive debts to China—obtaining

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payment extensions and the cancelation of interest-free loans—has something to do with its deep economic links to China, its showcase role for China in Africa (e.g., with respect to industrial parks and SEZs), and its critical role in East Africa and the MSRI in East Africa.57 On the international relations front, Ethiopia’s economic successes (deriving in part from its economic relationship with China) as well as ability, the existence of an alternative represented by China have afforded it increased bargaining power vis-à-vis foreign companies and international financial institutions.58 Furthermore, it is no coincidence Ethiopia has been involved in many recent peace initiatives relating to Somalia and Eritrea, Eritrea and Djibouti, Kenya and Somalia, and its border with the Eritrea border.59 Strengthened by its involvement in the MSRI and ties with China, Ethiopia is now reshaping the sub-region in previously unimaginable ways. The balance of power in Africa is changing, too, with Ethiopia now able to stand up to Egypt regarding the GERD dispute in part because its power has grown, but also in part because China is involved in the GERD, limiting the potential for an aggressive Egyptian response.

Conclusion There are many lenses through which one can explore the political economy of the MSRI and, more generally, the political effect of a country’s economic links with China. In this chapter, we have investigated the power of the MSRI and other economic ties on Ethiopia. We began by offering a short primer on Ethiopia–China relations. Next, we examined the contemporary political relationship. Following this, we detailed Ethiopia’s trade, FDI, infrastructure, and other economic links with China. Subsequently, we explored Ethiopia in the MSRI, concentrating on railways and roads, energy and power, and industrial parks and SEZs. We then analyzed the MSRI’s effects on Ethiopia’s domestic and foreign policies. Our analysis of Ethiopia does not show any problems with the implementation of the MSRI, though it remains unclear if the objectives of the MSRI will be realized fully given the fluid situation in Ethiopia. Detailing the MSRI’s situation in Ethiopia, however, is not our sole goal. More specifically, in this chapter, we have sought to examine the MSRI’s domestic and international political effects. In contrast to those fearing economic lures have made Ethiopia a captive state, we showed that the MSRI coupled with Ethiopia’s trade, infrastructure, and other

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economic links with China have empowered Ethiopia. Moreover, we have shown that analyses stressing the power of economics overlook numerous domestic and international logics propelling Ethiopia to maintain close ties with China, to back China, and to advocate policies that Beijing supports. To reiterate, one of the policy implications of our study is that students of the MSRI should avoid jumping to the conclusion that the MSRI/BRI or other economic dealings with China automatically will create obsequious MSRI/BRI participants. Another is that analysts must examine multiple factors in multiple realms and at multiple levels if they truly want to understand the roots of a country’s domestic and foreign policies. Yet another is that researchers should not overlook the possibility that the MSRI, COFDI, and Chinese infrastructure in Ethiopia, Africa, and elsewhere have the potential not just to make participants or host countries hostage, but also to make China a hostage as implied by its willingness to renegotiate Ethiopian debt! In terms of theoretical findings, one is the seemingly obvious, but oft ignored, advice that domestic political variables need attention. Another is that political-economic analysis can illuminate better what is transpiring in Ethiopia and other MSRI participants than analyses that see a one-to-one correspondence between economic stimuli and outcomes. In terms of limitations, our analysis relies largely on news media and respected secondary sources. We have not had a chance to interview top Ethiopian decision-makers. We also have not had an opportunity to undertake a rigorous cost–benefit analysis of various MSRI and other Chinese projects in Ethiopia which might yield a richer understanding of their political effects. In the future, we hope time and resources will allow us to address both of these issues. Finally, the MSRI, COFDI in Ethiopia, and the situation in Ethiopia are in flux which makes it imperative, going forward, to monitor continuously, the salience and impact of the variables we have discussed. Indeed, the MSRI, which Ethiopia embraced partly because of its embrace of the China model, paradoxically seems to be undermining the China model because more “openness” and liberalization, and privatization appear to be needed to fuel connectivity, industrialization, FDI, and trade. In April 2018, Abiy Ahmed became Ethiopia’s Prime Minister. Since then, to promote growth and stability, he has moved to break up state monopolies in energy, shipping, and telecommunications, begun privatization initiatives in aviation, railways, and manufacturing, worked on

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launching a stock market, enhanced Ethiopia’s access to ports throughout the region, and liberalized the political sphere. Success will be no easy task with Abiy facing daunting internal political problems, serious economic challenges, and cautious Chinese lenders and investors.60 All this will affect Ethiopia’s MSRI projects and their (and other ties) effect on Ethiopia. It remains to be seen how smooth the future of Ethiopia’s Silk Road actually will be.

Notes 1. It seems odd to talk about Ethiopian MSRI projects since Ethiopia is landlocked. Ethiopia, though, can access the sea through Djibouti. Moreover, various projects in Ethiopia fit broader Chinese MSRI/BRI goals like creating opportunities for Chinese multinational corporations (MNCs), enhancing market access, and boosting energy security. 2. “Belt and Road Initiative New Driving Force for Sino-Ethiopian Relations: Chinese Ambassador,” Xinhuanet, April 19, 2019, http://www. xinhuanet.com/english/2019-04/19/c_137988708.htm. Background about MSRI and the BRI features, goals, statuses, challenges, and effects is available in the introduction to this volume and Jean-Marc F. Blanchard and Colin Flint, “The Geopolitics of China’s Maritime Silk Road Initiative,” Geopolitics 22, no. 2 (2017): 223–245; Jean-Marc F. Blanchard, “Probing China’s 21st Century Maritime Silk Road Initiative (MSRI): An Examination of MSRI Narratives,” Geopolitics 22, no. 2 (2017): 246–268; and Jean-Marc F. Blanchard, “China’s Maritime Silk Road Initiative (MSRI) and Southeast Asia: A Chinese ‘Pond’ Not ‘Lake’ in the Works,” Journal of Contemporary China 27, no. 111 (2018): 329–343. 3. Readers interested in learning more about the MPP at Doraleh should see the chapter by David Styan in this volume. 4. Jean-Marc F. Blanchard, “Problematic Prognostications About China’s Maritime Silk Road Initiative (MSRI): Lessons from Africa and the Middle East,” Journal of Contemporary China 29, no. 122 (2020): 165–166. This does not mean, though, all projects succeed or deliver the intended results. See, e.g., Istvan Tarrosy and Zoltan Voros, “Revisiting Transportation Projects in Ethiopia,” The Diplomat, January 26, 2019, https://thediplomat.com/2019/01/revisiting-chinese-transp ortation-projects-in-ethiopia. 5. Relevant discussion appears in Al Mariam, “Chinese Neocolonialism in Africa: The Dragon Easting the African Lion and Cheetah? (Part I),” Ethiopia Zare, September 4, 2017, https://ethiopiazare.com/opinion/ viewpoint/5542-chinese-neocolonialism-in-africa-the-dragon-eating-the-

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6.

7.

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12.

13.

african-lion-and-cheetah-part-i; Gashaw Ayferam Endaylalu, “China in Africa: A Partner or Patron, Ethiopia in Focus,” International Relations and Diplomacy 6, no. 6 (2018): 325–333; and Tridivesh Singh Maini and Mahitha Lingala, “BRI and the China-Ethiopia Relationship,” The Geopolitics, December 10, 2019, https://thegeopolitics.com/bri-andthe-deepening-china-ethiopia-ties. Useful contemporary works include Edson Ziso, A Post State-Centric Analysis of China-Africa Relations: Internationalization of Chinese Capital and State-Society Relations in Ethiopia (Cham: Palgrave Macmillan, 2018); Olayiwola Abegunrin and Charity Manyeruke, China’s Power in Africa (Cham: Palgrave Macmillan, 2020), chap. 8; and Aaron Tesfaye, China in Ethiopia: The Long-Term Perspective (Albany: State University of New York Press, 2020). Until December 1, 2019, the EPRDF was a left-wing federalist political coalition of four ethnic-based political parties: Tigray People’s Liberation Front, Amhara Democratic Party, Oromo Democratic Party and Southern Ethiopian People’s Democratic Movement. David H. Shinn, “Ethiopia and China: Two Former Empires Connect in the 20th Century,” International Journal of Ethiopian Studies 8, no. 1–2 (2014): 150–152. In 1974, the Derg, a group consisting of military officers with leftist inclinations, ousted Emperor Haile Selassie in a coup. In 1991, the EPRDF overthrew the Derg. Shinn, “Ethiopia and China,” 151–152. Seifudein Adem, “China in Ethiopia: Diplomacy and Economics of Sino-Optimism,” African Studies Review 55, no. 1 (2012): 145–146; Shinn, “Ethiopia and China,” 152, 159–160; and Negera Gudeta Adula, “Ethiopian Foreign Policy Under Military and EPRDF Regimes: Changes and Continuities,” Journal of Political Science and International Relations 2, no. 1 (2019): 25–31. On the military relationship, see, Jean-Pierre Cabestan, “China and Ethiopia: Authoritarian Affinities and Economic Cooperation,” China Perspectives, no. 4 (2012): 53, 55–56; “China, Ethiopia Agree to Augment Military Cooperation,” Global Times, November 11, 2016, http://www.globaltimes.cn/content/1019721.shtml; and Aaron Tesfaye, “China-Ethiopia Relations and the Horn of Africa,” ISPI , September 20, 2019, https://www.ispionline.it/en/publication/china-ethiopia-relati ons-and-horn-africa-23968. Adem, “China in Ethiopia,” 147–149; Cabestan, “China and Ethiopia;” Shinn, “Ethiopia and China,” 157–158; Endaylalu, “China in Africa,” 328; and Tesfaye, “China-Ethiopia Relations and the Horn of Africa.” Jenni Marsh, “Skyscrapers, Trains, and Roads: How Addis Ababa Came to Look Like A Chinese City,” CNN , September 3, 2018, https://www.cnn. com/2018/09/02/africa/addis-ababa-china-construction/index.html.

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14. Alemayehu Geda and Atnafu G. Meskel, “Impact of China-Africa Investment Relations: Case Study of Ethiopia,” Africa Portal, January 12, 2009, https://media.africaportal.org/documents/Ethiopia-China_ Eth_Invest_Fina.pdf, 13. 15. Shinn, “Ethiopia and China,” 156. 16. Cabestan, “China and Ethiopia,” 57; and Malacha Chakrabarty, “Ethiopia-China Economic Relations: A Classic Win-Win Situation?” World Review of Political Economy 7, no. 2 (2016): 230–235. 17. Geda and Meskel, “Impact of China-Africa Investment Relations,” 13–15. 18. Adem, “China in Ethiopia,” 154–155. 19. Françoise Nicolas, “Chinese Investors in Ethiopia: The Perfect Match?” Ifri, March 1, 2017, https://media.africaportal.org/documents/Nic olas_Chinese_Investors_Ethiopia_2017_.pdf, 9–11. 20. Ibid., 17. 21. Nicolas, “Chinese Investors in Ethiopia,” 18–19. 22. Geda and Meskel, “Impact of China-Africa Investment Relations,” 17–22; Shinn, “Ethiopia and China,” 153–154; International Rivers, “Hydropower in Africa: Africa Dams Briefing,” September, 2015, https://www.internationalrivers.org/sites/default/files/attached-files/afr ica_dams_briefing_.pdf, 69–81; and Amsalu K. Addis and Zhu Zuping, “Assessment of the Impact of Chinese and Indian Economic Activities in Africa: A Particular Focus on Ethiopia’s Economy,” China Report 55, no. 3 (2019): 245–248. 23. Cabestan, “China and Ethiopia,” 58. 24. Nicolas, “Chinese Investors in Ethiopia,” 11–15, 19. 25. Geda and Meskel, “Impact of China-Africa Investment Relations,” 6; Adem, “China in Ethiopia,” 150; and Nicolas, “Chinese Investors in Ethiopia,” 19–23. 26. Geda and Meskel, “Impact of China-Africa Investment Relations,” 19–28; Adem, “China in Ethiopia,” 152–153; Shinn, “Ethiopia and China,” 156– 157; Chakrabarty, “Ethiopia-China Economic Relations?” 230; and Addis and Zhu, “Assessment of the Impact of Chinese and Indian Economic Activities in Africa,” 256–257. 27. Adem, “China in Ethiopia,” 154. 28. Chakrabarty, “Ethiopia-China Economic Relations,” 228, 236–237 29. For similar approaches regarding the designation of “MSRI” projects, see Paul Nantulya, “Implications for Africa from China’s One Belt One Road Strategy,” Africa Center for Strategic Studies Spotlight, March 22, 2019, https://africacenter.org/spotlight/implications-for-afr ica-china-one-belt-one-road-strategy; Blanchard, “Problematic Prognostications About China’s Maritime Silk Road Initiative (MSRI)”; and Masabo’s contribution to this book.

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30. “Ethiopia PM Says China will Restructure Railway Loan,” Reuters, September 6, 2018, https://af.reuters.com/article/eritreaNews/idA FL5N1V628E; Eric Ng, “Botched Chinese Railway Project in Africa Is a Warning to Belt and Road Investors,” South China Morning Post, October 29, 2018, https://www.scmp.com/print/business/banking-fin ance/article/2170549/botched-chinese-railway-project-africa-warningbelt-and; and Yunnan Chen, “Ethiopia and Kenya Are Struggling to Manage Debt for Their Chinese-Built Railways,” Quartz Africa, June 4, 2019, https://qz.com/africa/1634659/ethiopia-kenya-struggle-with-chi nese-debt-over-sgr-railways. See also chapter “The Maritime Silk Road Initiative: Connecting Africa” (Mboya) and chapter “Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations” (Styan) in this book. 31. “Africa’s Changing Infrastructure Landscape: Africa Construction Trends Report 2016,” Deloitte, November, 2016, https://www2.deloitte.com/ content/dam/Deloitte/za/Documents/manufacturing/DeloitteAfrica_ Construction_Trends_2016_Nov2016.pdf; Daniel Berhane, “Ethiopia: Mekelle-Woldya Railway Project at a Standstill,” Horn Affairs, May 13, 2017, https://hornaffairs.com/2017/05/13/ethiopia-mekelle-wol dya-railway-project-standstill; and Yonas Abiye, “Lack of Finance Derails Second Railway Project,” The Reporter, April 27, 2019, https://www.the reporterethiopia.com/article/lack-finance-derails-second-railway-project. 32. Yonas Abiye, “Corporation to Takeover AALRT from Chinese Operators,” The Reporter, January 13, 2018, https://www.thereporterethiopia. com/article/corporation-takeover-aalrt-chinese-operators. 33. “Feature: Chinese Companies Powering Ethiopia’s Ambition to Become Africa’s Manufacturing Hub,” Xinhuanet, June 19, 2017, http:// www.xinhuanet.com//english/2017-06/19/c_136375524.htm; “Chinese Firms Constructing 5 Industrial Zones in Ethiopia,” Xinhuanet, June 23, 2017, http://www.xinhuanet.com/english/2017-06/23/c_1 36389622.htm; Habtamu Liben, “Spotlight: Chinese Engagement in Ethiopia’s Economic Boom in a Nutshell,” Xinhuanet, May 11, 2018, http://www.xinhuanet.com/english/2018-05/11/c_137170412.htm; and “News Analysis: Chinese-Built Industrial Parks Drive Ethiopia’s Ambition in Manufacturing Sector, Job Creation,” Xinhuanet, August 30, 2019, http://www.xinhuanet.com/english/2019-08/30/c_1383 49024.htm. 34. Ibid. 35. Bill Donahue, “China Is Turning Ethiopia into a Giant Fast-Fashion Factory,” Bloomberg, March 2, 2018, https://www.bloomberg.com/ news/features/2018-03-02/china-is-turning-ethiopia-into-a-giant-fastfashion-factory; Ding Fei, “Work, Employment, and Training through Africa-China Cooperation Zones,” China-Africa Research Initiative,

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no. 27 (2018): 1–4; and Tom Gardner, “Expansion of Ethiopia’s First Industrial Park Reopens Old Wounds,” Reuters, February 1, 2018, https://www.reuters.com/article/us-ethiopia-landrights-industrial/exp ansion-of-ethiopias-first-industrial-park-reopens-old-wounds-idUSKBN1F L59R. Similar issues also noted in more general discussions of COFDI in Ethiopia and since there is a good proportion of COFDI in industrial parks it can be assumed what is noted in these publications also applies to industrial parks. “Interview: Energy A Priority Area in China-Ethiopia Cooperation: Chinese Ambassador,” Xinhuanet, May 18, 2018, http://www.xinhua net.com/english/2018-05/18/c_137189350.htm. Alemayehu Bacha, “Ethiopia to Build New Hydropower Plant on Geba River,” 2Merktao.com, September 10, 2014, https://www.2merkato. com/news/alerts/3256-ethiopia-to-build-new-hydropower-plant-ongeba-river; International Rivers, “Hydropower in Africa,” 69–88; “Interview: Energy a Priority Area in China-Ethiopia Cooperation: Chinese ambassador”; and “China Agrees to Invest $1.8bn in Ethiopia’s Power Grid,” Global Construction Review, April 29, 2019, http://www.global constructionreview.com/news/china-agrees-invest-18bn-ethiopias-powergrid. “China Lends Ethiopia S$1.2b for Mega-Dam Power Lines,” The Straits Times, April 27, 2013, https://www.straitstimes.com/business/chinalends-ethiopia-s12b-for-mega-dam-power-lines; “Ethiopia Agrees with Chinese Firms to Accelerate GERD Construction,” Daily News Egypt, March 3, 2019, https://wwww.dailynewssegypt.com/2019/03/03/ ethiopia-agrees-with-chinese-firms-to-accelerate-gerd-construction; and “Ethiopia Dam Official Blames Construction Delays on Conglomerate METEC,” Reuters, October 1, 2019, https://www.reuters.com/article/ us-ethiopia-dam/ethiopia-dam-official-blames-construction-delays-on-con glomerate-metec-idUSKBN1WG3CB. “Looking East,” The Economist, October 21, 2010, https://www. economist.com/middle-east-and-africa/2010/10/21/looking-east; “Ethiopia Takes Inspiration from China’s Success for Own Development,” Xinhuanet, May 9, 2018, www.xinhuanet.com/english/201805/09/c_137164847.htm; and Jon Harald Sande Lie and Berouk Mesfin, Ethiopia: A Political Economy Analysis (Oslo: Norwegian Institute of International Affairs, 2018). “Neither A Sprint nor A Marathon,” The Economist, May 30, 2015, http://www.economist.com/news/middle-east-and-africa/21652307-afr icas-most-impressive-economic-managers-suffer-excessive-caution-neither. “Interview: Energy a priority area in China-Ethiopia cooperation.” Republic of Ethiopia (RoE), Embassy of Ethiopia in Brussels, “Walking the Walks of the Belt and Road Initiative,” August 9, 2017, https://eth

104

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48. 49. 50.

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53. 54.

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iopianembassy.be/walking-the-walks-of-the-belt-and-road-initiative; and “Interview: China’s BRI Important Impetus to Boost Ethiopian Airlines’ Global Presence–CEO,” China.org.cn, April 18, 2019, http://www. china.org.cn/world/Off_the_Wire/2019-04/18/content_74694815. htm. Irene Yuan Sun, Kartik Jayaram, and Omid Kassiri, “Dance of the Lions and Dragons: How Are Africa and China Engaging, and How Will the Partnership Evolve?” McKinsey & Company, June 28, 2017, https://www.mckinsey.com/featured-insights/middle-east-and-afr ica/the-closest-look-yet-at-chinese-economic-engagement-in-africa, 54. “Neither A Sprint nor A Marathon.” Sun, Jayaram, and Kassiri, “Dance of the Lions and Dragons,” 54. Adem, “China in Ethiopia,” 147–148; and William Wallis, “China Puts Space-Age Seal on African Role,” Financial Times, January 31, 2012. PRC, Ministry of Foreign Affairs, “Premier Wen Jiabao Holds Talks with Ethiopian Prime Minister Meles Zenawi,” December 16, 2003, https:// www.fmprc.gov.cn/ce/ceza/eng/zghfz/zfgx/t165328.htm. Ibid. RoE, Embassy in Brussels, “Walking the Walks of the Belt and Road Initiative.” “China, Ethiopia Agree to Deepen Cooperation,” Xinhuanet, June 22, 2017, http://www.xinhuanet.com//english/2017-06/22/c_1363 86698.htm. “Officials Hail BRI’s Role in Promoting Global Growth,” Xinhuanet, July 3, 2019, http://www.xinhuanet.com/english/2019-07/03/c_1381 96023.htm. On the former, see, e.g., PRC, Embassy of the PRC in the RoE, “Political and Economic Exchanges,” n.d., http://et.china-embassy.org/ eng/zagx/zzjmjw. On the latter, see Monika Thakur, “Building on Progress?” South African Institute of International Affairs Occasional Paper, no. 38 (2009): 7, https://www.africaportal.org/publications/bui lding-on-progress-chinese-engagement-in-ethiopia1. Lie and Mesfin, “Ethiopia,” 35–36. Jenni Marsh, “Employed by China,” CNN , August, 2018, https://www. cnn.com/interactive/2018/08/world/china-africa-ethiopia-manufactu ring-jobs-intl. On the above two points, see Alex de Waal, “The Theory and Practice of Meles Zenawi,” African Affairs 112, no. 446(2012): 148–155; Donald Kaberuka, “Meles Zenawi and the Economic Transformation in Africa,” Speech at the Opening of “The Meles Zenawi Foundation,” in Ethiopia on January 26, 2015, https://www.afdb.org/fileadmin/ uploads/afdb/Documents/Generic-Documents/Speech_%E2%80%93_ AfDB_President_Donald_Kaberuka_-_Inaugural_lecture_at_the_launch

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ing_of_the_Meles_Zenawi_Foundation_-_Addis_Ababa__Ethiopia_%E2% 80%93_January_29__2015.pdf; and Thakur, “Building on Progress?” 15. Ziso, A Post State-Centric Analysis of China-Africa Relations, 67. Laura Zhou, “Ethiopia in Talks with China to Ease ‘Serious Debt Pressure’ Tied to New Silk Road Rail Link, Envoy Says,” South China Morning Post, March 24, 2019, https://www.scmp.com/news/china/ diplomacy/article/3002957/ethiopia-talks-china-ease-serious-debt-pre ssure-tied-new-silk; “China Cancels Ethiopia’s Interest-free Loans, PM in Beijing for Forum,” Africa News, April 25, 2019, https://www.afr icanews.com/2019/04/25/china-forgives-ethiopia-s-interest-free-loanspm-in-beijing-for-forum; and Jevansa Nyabiage, “Lender’s Remorse? China Finds Africa Projects Require a Growing Wave of Debt Forgiveness,” South China Morning Post, August 11, 2019, https://www.scmp. com/news/china/diplomacy/article/3022301/lenders-remorse-chinafinds-africa-projects-require-growing. Niv Horesh, “Ethiopia’s Political Ripple a Big Test for Infrastructure-led Chinese Approach,” The Conversation, January 5, 2017, https://thecon versation.com/ethiopias-political-ripple-a-big-test-for-infrastructure-ledchinese-approach-70659. Abdi Latif Dahir, “Photos: How Africa’s Youngest Leader Transformed Troubled Ethiopia in Just 100 Days,” Quartz Africa, July 24, 2018, https://qz.com/africa/1334958/how-abiy-ahmed-transf ormed-ethiopia-in-100-days. See, e.g., John Aglionby and Emily Feng, “China Scales Back Investment in Ethiopia,” Financial Times, June 3, 2018; Dahir, “Photos”; Jason Burke, “‘These Changes Are Unprecedented’: How Abiy Is Upending Ethiopian Politics,” The Guardian, July 8, 2018, https://www.theguardian.com/world/2018/jul/08/abiy-ahmedupending-ethiopian-politics; Lionel Barber and David Pilling, “My Model Is Capitalism’: Ethiopia’s Prime Minister Plans Telecoms Privatization,” Financial Times, February 24, 2019; and “Ethiopia Not Ready for Foreign Investment in Telecoms, Banking: President,” Reuters, April 24, 2018, https://af.reuters.com/article/topNews/idAFKBN1HV1K1OZATP.

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eruka_-_Inaugural_lecture_at_the_launching_of_the_Meles_Zenawi_Founda tion_-_Addis_Ababa__Ethiopia_%E2%80%93_January_29__2015.pdf. Liben, Habtamu. “Spotlight: Chinese Engagement in Ethiopia’s Economic Boom in a Nutshell.” Xinhuanet, May 11, 2018. http://www.xinhuanet. com/english/2018-05/11/c_137170412.htm. Lie, Jon Harald Sande, and Berouk Mesfin. Ethiopia: A Political Economy Analysis. Oslo: Norwegian Institute of International Affairs, 2018. “Looking East.” The Economist, October 21, 2010. https://www.economist. com/middle-east-and-africa/2010/10/21/looking-east. Maini, Tridivesh Singh, and Mahitha Lingala. “BRI and the China-Ethiopia Relationship.” The Geopolitics, December 10, 2019. https://thegeopolitics.com/ bri-and-the-deepening-china-ethiopia-ties. Mariam, Al. “Chinese Neocolonialism in Africa: The Dragon Easting the African Lion and Cheetah? (Part I).” Ethiopia Zare, September 4, 2017. https://ethiopiazare.com/opinion/viewpoint/5542-chinese-neocol onialism-in-africa-the-dragon-eating-the-african-lion-and-cheetah-part-i. Marsh, Jenni. “Employed by China.” CNN , August, 2018. https://www.cnn. com/interactive/2018/08/world/china-africa-ethiopia-manufacturing-jobsintl. Marsh, Jenni. “Skyscrapers, Trains, and Roads: How Addis Ababa Came to Look Like A Chinese City.” CNN , September 3, 2018. https://edition.cnn.com/ style/article/addis-ababa-china-construction-style/index.html. Nantulya, Paul. “Implications for Africa from China’s One Belt One Road Strategy.” Africa Center for Strategic Studies Spotlight, March 22, 2019. https://africacenter.org/spotlight/implications-for-africa-chinaone-belt-one-road-strategy. “Neither A Sprint Nor A Marathon.” The Economist, May 30, 2015. http:// www.economist.com/news/middle-east-and-africa/21652307-africas-mostimpressive-economic-managers-suffer-excessive-caution-neither. “News Analysis: Chinese-Built Industrial Parks Drive Ethiopia’s Ambition in Manufacturing Sector, Job Creation.” Xinhuanet, August 30, 2019. http:// www.xinhuanet.com/english/2019-08/30/c_138349024.htm. Ng, Eric. “Botched Chinese Railway Project in Africa Is a Warning to Belt and Road Investors.” South China Morning Post, October 29, 2018. https://www.scmp.com/print/business/banking-finance/article/217 0549/botched-chinese-railway-project-africa-warning-belt-and. Nicolas, Francoise. “Chinese Investors in Ethiopia: The Perfect Match?” Ifri, March 1, 2017. https://media.africaportal.org/documents/Nicolas_C hinese_Investors_Ethiopia_2017_.pdf. Nyabiage, Jevansa. “Lender’s Remorse? China Finds Africa Projects Require a Growing Wave of Debt Forgiveness.” South China Morning Post,

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August 11, 2019. https://www.scmp.com/news/china/diplomacy/article/ 3022301/lenders-remorse-china-finds-africa-projects-require-growing. “Officials Hail BRI’s Role in Promoting Global Growth.” Xinhuanet, July 3, 2019. http://www.xinhuanet.com/english/2019-07/03/c_138196023. htm. People’s Republic of China, Embassy of the PRC in the Republic of Ethiopia. “Political and Economic Exchanges.” http://et.china-embassy.org/ eng/zagx/zzjmjw. People’s Republic of China, Ministry of Foreign Affairs. “Premier Wen Jiabao Holds Talks with Ethiopian Prime Minister Meles Zenawi.” December 16, 2003. https://www.fmprc.gov.cn/ce/ceza/eng/zghfz/zfgx/t165328.htm. Republic of Ethiopia, Embassy of Ethiopia in Brussels. “Walking the Walks of the Belt and Road Initiative.” August 9, 2017. https://ethiopianembassy.be/ walking-the-walks-of-the-belt-and-road-initiative. Shinn, David H. “Ethiopia and China: Two Former Empires Connect in the 20th Century.” International Journal of Ethiopian Studies 8, no. 1–2 (2014): 149–164. Sun, Irene Yuan, Kartik Jayaram, and Omid Kassiri. “Dance of the Lions and Dragons: How Are Africa and China Engaging, and How Will the Partnership Evolve?” McKinsey & Company, June 28, 2017. https://www.mckinsey.com/featured-insights/middle-east-and-africa/ the-closest-look-yet-at-chinese-economic-engagement-in-africa. Tarrosy, Istvan, and Zoltan Voros. “Revisiting Transportation Projects in Ethiopia.” The Diplomat, January 26, 2019. https://thediplomat.com/ 2019/01/revisiting-chinese-transportation-projects-in-ethiopia. Tesfaye, Aaron. “China-Ethiopia Relations and the Horn of Africa.” ISPI , September 20, 2019. https://www.ispionline.it/en/publication/china-eth iopia-relations-and-horn-africa-23968. Tesfaye, Aaron. China in Ethiopia: The Long-Term Perspective. Albany: State University of New York Press, 2020. Thakur, Monika. “Building on Progress?” South African Institute of International Affairs Occasional Paper, no. 38 (2009). https://www.africaportal. org/publications/building-on-progress-chinese-engagement-in-ethiopia1. Waal, Alex de. “The Theory and Practice of Meles Zenawi.” African Affairs 112, no. 446 (2012): 148–155. Wallis, William. “China Puts Space-Age Seal on African Role.” Financial Times, January 31, 2012. Zhou, Laura. “Ethiopia in Talks with China to Ease ‘Serious Debt Pressure’ Tied to New Silk Road Rail Link, Envoy Says.” South China Morning Post, March 24, 2019. https://www.scmp.com/news/china/diplomacy/art icle/3002957/ethiopia-talks-china-ease-serious-debt-pressure-tied-new-silk. Ziso, Edson. A Post State-Centric Analysis of China-Africa Relations: Internationalization of Chinese Capital and State-Society Relations in Ethiopia. Cham: Palgrave Macmillan, 2018.

Djibouti and Small State Agency in the Maritime Silk Road: The Domestic and International Foundations David Styan

Introduction The chapter provides comparative insight into the evolution of the Belt and Road Initiative (BRI) via a detailed analysis of Chinese investment in one key hub on the Maritime Silk Road (MSR).1 It analyzes how and why diminutive Djibouti became such a strategically significant state for Chinese companies, the Chinese government, and the Chinese navy. Since 2013, the People’s Republic of China (PRC/China) has invested heavily in Djibouti’s ports and railway, rapidly transforming the Red Sea state into a key logistical hub for a wide range of Chinese trade, investment, and naval activities on the MSR. As such, Djibouti’s case appears comparable to maritime hubs on the MSR in Asia; most explicitly Gwadar in Pakistan and Hambantota in Sri Lanka. In Sri Lanka as in Djibouti, a state-owned enterprise (SOE), China Merchants Group (CMG), is the leading investor in port and free zone development. In Djibouti as in Hambantota, the sustainability of debt to China has become a major policy issue. The chapter highlights the integrated regional characteristic of China’s investment in the Horn of Africa. China’s involvement in Djibouti

D. Styan (B) Birbeck College, University of London, London, UK © The Author(s) 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8_4

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is both predicated upon, and dwarfed by, the investment of a large number of both state-owned and private Chinese companies in neighboring Ethiopia. The Djiboutian and Ethiopian economies are closely integrated, not least because Djibouti’s ports are a conduit for the bulk of Ethiopia’s foreign trade. While the chapter focuses primarily on commercial investments, it focuses briefly on the factors enabling Djibouti to host China’s first permanent overseas naval facility in August 2017. It examines whether this stems from the extensive Chinese commercial investments in the region, broader geo-strategic rivalry with the United States (US) and other powers, or other factors. It also considers whether there are unique factors underpinning China’s naval ties with Djibouti and whether it will remain the only “military hub” on the MSR. Djibouti became a formal participant in the MSRI on September 2, 2018, following a meeting between Djibouti’s President Ismael Omar Guelleh and his Chinese counterpart President Xi Jinping in Beijing. The next day, addressing the seventh Forum on China African Cooperation (FOCAC), President Guelleh stated: [W]e have greatly benefited from Chinese investments in our ports, railways, and roads […] the One Belt, One Road Initiative is, therefore, the key to furthering our growth agenda and we are delighted that our region will continue to benefit from its many advantages.2

Ten months earlier, in November 2017, Djibouti’s prominent position on the MSR was reflected in China’s high-profile reception of the Djiboutian President during a state visit to Beijing, the first foreign head of state to be received by Xi Jinping following the 19th national congress of the Chinese Communist Party. The chapter has two central analytical concerns. Firstly, to examine how a key Chinese company on the MSR globally—CMG—pioneered commercial investment in Djibouti’s Ports and Free Zone Authority (DPFZA) and its facilities. In so doing, it sheds light on the motivations of Chinese SOEs in the MSRI, which have been charged with acting based on political considerations and gives us a sense of what forms MSRI projects might take elsewhere. Interestingly, we see the application of a standard “template” of MSR investment (mirroring very similar Chinese port strategies at Colombo and Hambantota in Sri Lanka, for example) as well as indications of newer MSRI components, notably involving Chinese telecoms and e-payments investors, initially Chongqing-based

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IZP in Djibouti. While the chapter focuses on Djibouti and the Horn of Africa, it also flags comparisons with China-Kenya ties. There, substantive infrastructure investments, notably in the Mombasa-Nairobi railway, have prompted similar policy debates, including over CMG’s role and debt sustainability.3 Secondly, by considering negotiations over China’s naval access to Djibouti, it examines the degree of political agency wielded by small states with whom China negotiates in the construction of MSR. Conventional wisdom is that they must bow to the dictates of Beijing given their relative weakness vis-à-vis China. However, this text shows the situation appears much more complex given the diverse bargaining assets of states. Djibouti’s stable, patronage-based government has considerable prior experience and skill in negotiating similar access with other global powers. This experience includes extensive negotiations over debt rescheduling and cancelation; China following multilateral and French agencies in accepting write-offs. It argues that China’s naval presence in Djibouti reflects a double paradox. Firstly, despite Djibouti’s diminutive size and lack of material resources, its government had a relatively strong hand when China came to negotiate the construction of naval facilities in Djibouti between 2014 and 2015. Equally paradoxically, it was more straightforward and less controversial internationally for China to establish its first overseas military facility directly alongside other major powers, rather than in a state with no history of hosting foreign forces. The chapter is structured into six sections aside from the introduction. Section “Geographic and Historical Contexts of Djibouti’s Links with China” provides essential background, including a brief summary of the salient characteristics of Djibouti itself. Section “The Evolution of Djibouti’s Relations with China” sketches a chronology of the evolution of political and economic ties between Djibouti and Beijing before analyzing the degree to which political and security cooperation in the maritime domain preceded major projects in port and railway infrastructure as part of the MSRI since 2013. Section “Key MSRI Infrastructure Projects in the Horn” then examines these specific projects in detail, noting that these are designed primarily to accelerate China-Ethiopia economic ties, rather than develop Djibouti per se. Section “China’s Naval Facilities in Djibouti” briefly outlines the evolution of China’s military facilities in Djibouti. Section “Djibouti and the Debt Trap Debate” then evaluates key policy issues including debates around the indebtedness of African states to China and the central role of CMG. Finally, the chapter concludes by considering what insights from China’s investment

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in Djibouti might be applicable to other small states on the MSR. The chapter draws on a range of secondary sources and the author’s own research in the region. Much of the empirical material is also informed by an earlier article analyzing Djibouti’s role on the MSRI.4

Geographic and Historical Contexts of Djibouti’s Links with China Despite the “win-win” rhetoric about partnerships between China and small states along the MSR, one of the key challenges for Beijing has been the disparate size and political systems of the states in which it has invested. Malaysia and Sri Lanka both have sizable populations and pluralist polities, whereas the Maldives has less than half a million people and a highly unstable, fractious polity. Djibouti also has a population of around a million, but appears a highly stable, Presidential polity with a tiny electorate. Djibouti gained political independence from France only in 1977. It has a minuscule GDP, in both absolute and per-capita terms. Djibouti owes both its existence and its current diplomatic significance for Beijing to its strategic location. Its territories overlook the southern entrance to the Red Sea and provide a natural port and railhead for its giant neighbor Ethiopia. Both factors are central to understanding the pivotal position that it plays for China. France ruled Djibouti from the late nineteenth century, but retained considerable influence. French forces were scaled back in the 1990s, yet Djibouti remains France’s largest military base in Africa. French troops underpin the European Union (EU)’s anti-piracy force in Djibouti and cooperate closely with US forces. They also reportedly still manage the firing ranges and desert training facilities now being used by Chinese forces. Two, interlinked domestic political characteristics are of relevance to the analysis of Djibouti’s bilateral ties with China. Firstly, power is highly personalized. President Guelleh’s control rests on a patronage-based polity. Economic “rents” accrue from foreign military bases and access to economic assets, particularly port fees. Revenues are then redistributed to maintain control and legitimacy. Secondly, this patronage-based political system in part accounts for Djibouti’s unusual flexibility and innovation in terms of foreign policy. Nimble, often personalized, foreign policy has repeatedly generated significant political and economic capital from inauspicious foundations—most recently in relation to China. Thus, Djibouti’s power and influence are disproportionately greater than the state’s small

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size and ostensibly “dependent” role would suggest. Influence is magnified through diplomatic presence in international fora, notably the African Union, the Arab League and La Francophonie grouping of Frenchspeaking states. Schematically, Djibouti’s regional and foreign policy roles can be viewed in a series of distinct ways, each of which has implications for China’s regional strategy in the Horn of Africa. Firstly, Djibouti is a bilateral bridge providing access to the sea for the Horn’s regional hegemon, neighboring Ethiopia, whose foreign trade has overwhelmingly transited via Djibouti since the closure of Eritrea’s ports following the 1998 Ethio-Eritrean border war. This “bridge” perspective, which can equally be construed as a corridor, is central to the argument about the subregional characteristics of MSRI investment in Djibouti; rail, port and pipeline projects all reinforcing this aspect of China’s involvement in the broader region. Second, corresponding more closely to Djibouti’s own official “Vision 2035” economic development framework, is its role as a gateway to the wider region. This is premised on the successful growth model of ‘portcities’ such as Dubai and Singapore.5 The vision promotes Djibouti as the Horn’s natural regional and logistical hub. Although Vision 2035 predates China’s MSRI, it effectively shares its “gateway” notion of linking Africa to world markets, the commercial objectives of CMG and the “connectivity” rationale of the MSR more broadly. The third dimension has sought to revive Djibouti’s status as a maritime logistical hub for container transshipments. This has been most explicit since the 2008 opening by DPFZA of the Doraleh Container Terminal port, then managed and part-owned by Dubai Ports World (DPW). This marketing of Djibouti as a global container port and hub emphasizes Djibouti’s centrality to trade flows between Asia, Africa, and Europe. Djibouti’s relations with DPW soured after 2012 due to politically charged legal issues. These ultimately resulted in the Djiboutian government nationalizing the port and revoking DPW’s management license in 2018. China’s MSRI investment thus offers an opportune alternative source of port finance and links to China’s global shipping networks. This role has been both reconfigured and boosted by China’s significant investment in infrastructure within both Djibouti and Ethiopia between 2012 and 2018. There has been an abrupt shift from Djibouti’s Arab partners (particularly the United Arab Emirates, owners of DPW) to Chinese and other Asian partners in terms of who promotes and funds

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this vision. The shift has mirrored the growth in economic and political ties between Djibouti and Beijing and the growth of MSRI-related investments in Djibouti; most notably the railway, Multi-Purpose Port (MPP) and International Free Zone discussed below. For Djibouti, the MSR has greatly amplified long-standing aims both to consolidate the state’s role as the Horn’s pre-eminent port and to boost its status as a transshipment hub. The final aspect of foreign policy is Djibouti’s role as host to a series of overseas military bases. In recent years Djibouti has become an “international maritime and military laboratory” spawning new networks of naval, military and surveillance cooperation, both among NATO forces (above all, United States or US, France and EU), and between them and diverse Asian powers.6 This trend has greatly accelerated in the intervening years with China’s promotion of the MSRI and the establishment of China’s naval facility in Doraleh in 2017.

The Evolution of Djibouti’s Relations with China Each state in the wider Horn of Africa has a different set of ties with China, with Ethiopia, the now separate states of Northern and Southern Sudan, and Kenya having the most substantive ties.7 Djibouti’s ties with China with can be divided into three phases. The first phase opened with Djibouti establishing formal diplomatic relations with the PRC in January 1979. The republic’s first President, Hassan Gouled Aptidon, made the first of three state visits to Beijing later in 1979. In terms of Beijing’s overall Africa policy, for two decades, there was little significant about Djibouti. Aptidon’s successor, his nephew, Ismael Omar Guelleh visited China in 2001 and attended the Beijing FOCAC summit in November 2006. A second phase is linked to the inception of Chinese anti-piracy patrols from 2008, with closer ties anchored primarily in maritime logistics. Specifically, Djibouti’s port provided bunkering and services for the growing number of Chinese ships transiting the Gulf of Aden. In 2008, China launched its first anti-piracy missions in the Indian Ocean and Gulf of Aden.8 Yet China’s anti-piracy activities in the region from 2008 did not immediately prompt close bilateral ties. Delegation visits were rare and China did not station a military attaché in Djibouti. However, ties were upgraded in July 2012, during President Guelleh’s second state visit to the 5th FOCAC conference. This led to the establishment of a bilateral “Joint Ministerial Commission” and the deepening of civilian and military

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(including naval) ties. These, in turn, reflected Beijing’s promulgation of the MSRI in 2013 and the acceleration of infrastructure investments in the Horn of Africa as a whole. The contemporary period of bilateral ties, 2012–2019, has been marked by growing MSR investment, Chinese infrastructure activities, and a bilateral “strategic partnership” established in 2017. The aforementioned July 2012 meetings came as Ethiopia, China, and Djibouti agreed to fund the renovation of the Ethio-Djibouti railway and construct associated port-facilities in Djibouti. Ethiopia had long sought to renovate the dilapidated French rail line to Djibouti’s port. Despite numerous previous Western and multilateral feasibility studies, funding was not forthcoming prior to China’s 2012 offer.

Key MSRI Infrastructure Projects in the Horn The contemporary phase of bilateral ties between China and Djibouti comprises several distinct components. Firstly, at the heart of the relationship are the two infrastructure projects integral to the MSRI in the Horn of Africa: the Ethio-Djiboutian railway and the MPP at Doraleh in Djibouti. This connects the rail project to the Red Sea, Suez, and the Indian Ocean. In addition, China has also constructed several small ports and a vast water conduit from Ethiopia. South of Djibouti’s capital, an oil terminal and Sino-Djiboutian Liquid Natural Gas plant are also under construction. This will be linked to Chinese-funded hydrocarbon development in Ethiopia’s southeastern Ogaden region via a pipeline.9 The second component of China’s ties with Djibouti comprises direct ownership of Djiboutian assets. In 2013, the state-owned CMG purchased almost a quarter of the shares in Djibouti’s port authority. Three years later, it sought—but ultimately did not secure—a similar equity stake in Ethiopian Shipping Lines, the Ethiopian state-owned shipping company whose vessels use Djibouti as their homeport. Thirdly, the number of programs in Djibouti funded with Chinese aid have sharply increased. These include new educational facilities, a state-of-the art Diplomatic Institute for the Ministry of Foreign Affairs, and a new military hospital. China also provides scholarships, telecoms, and military assistance. The fourth and final component comprises China’s first permanent overseas naval facility, located alongside China’s new MPP.

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The Djibouti-Ethiopia Rail-Link The “strategic partnership” which has evolved over the last five years reflects the fact that since 2012 China’s has become Djibouti’s largest inward investor, thanks largely to the aforementioned rail link to Addis Ababa, with its associated infrastructure, and the aforementioned MPP, with its associated Djibouti International FTZ (DIFTZ). The backbone of China’s investment in the Horn is the renovated Ethio-Djibouti railway. Full commercial services began in 2018. At its inauguration in 2016, China’s ambassador to Ethiopia La Yifan claimed: “[I]t is the first standard gauge electrified railroad on the continent built with Chinese standards and technology, and certainly it will not be the last.”10 The 756 km railway is poised to enhance regional economic integration in the Horn. The railway is arguably the most substantive, tangible component of the MSRI in East Africa to date. Its role is not simply to facilitate trade via the ports in Djibouti, but to provide Ethiopia’s burgeoning industrial zones—part-planned and financed by China, now occupied by Chinese and other companies producing for a global market—with a maritime outlet. The China-led renovation project cost an estimated $3.5 billion, financed 70% by China Export-Import Bank (Ex-Im Bank) and 30% by the Ethiopian government, for the 650 km tranche which traverses Ethiopia. The final 100 km segment in Djibouti was also built by China Railway Construction Corporation (CRCC), but under a separate contract which the Djiboutian government initialed in February 2012. Valued at $505 million, wrangles subsequently emerged in 2015 over whether the Djiboutian government or China was responsible for the costs of electrifying the line. This was resolved via the CRCC taking an equity stake in Djibouti’s portion of the rail operating company. This incident suggests limited financial foresight and skill from the Djiboutian government in negotiating Chinese contracts.11 China’s Doraleh MPP Facility Commercially, the MSRI is, above all, about aligning the “connectivity” of global shipping lanes and ports and with Chinese capital. The new Chinese-owned and constructed Doraleh MPP encompasses container, general, and bulk cargo facilities. Work on the port began in mid-2013. The inauguration of the port was held on May 24, 2017 in the presence

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of the CEOs of major Chinese construction and maritime corporations, including CMG and Dalian Ports. The 1.2 km quayside provide deepwater moorings that can accommodate up to six of the world’s largest cargo ships simultaneously.12 The MPP cost $590 million, jointly financed by DPFZA and CMG, consolidating the CMG’s role in the MSRI.13 Contractually, the Doraleh MPP is separate from the surrounding DIFTZ. DIFTZ’s complex ownership and management structure was announced in January 2016: a Chinese investment consortium, including CMG and Dalian Ports, manages the FTZ, with Djibouti’s Port Authority and other investors holding minority stakes. The first phase of DIFTZ opened in July 2018. If and when it is completed DIFTZ will encompass 4,800 hectares, cost $3.5 billion, and be the largest FTZ on the continent. Such FTZs are an integral part of the MSRI and in terms of the Horn of Africa are planned to be linked by inland logistics centers close to Chinese industrial parks in Ethiopia. The DIFTZ enhances China’s commercial presence in the Red Sea, COSCO and other Chinese companies having established comparable ports closer to Suez, further north in the Red Sea.14 Although rail and port investments are its central MSRI elements, Djibouti hosts a third significant Chinese project, the $340 million (95% covered by China Ex-Im Bank loans) aqueduct between Ethiopia and Djibouti. This is capable of piping 100,000 m2 per day of water to alleviate arid Djibouti’s acute water shortages. Ethiopia already supplies Djibouti with hydroelectricity.15 It is worth stressing that, there is a complete absence of critical public policy debate within the country on any aspects of the MSRI, be they good or bad, largely because public discourse is tightly controlled. Domestic media consists uniquely of state-owned TV, radio, and press agency reports. This reflects the highly controlled patronage nature of public and political life more generally in a state with a tiny salaried elite, almost entirely dependent upon employment in the civil service. Moreover, there are no fora for airing debates or grievances: “civil society” and think-tanks are nonexistent, unlike in neighboring Ethiopia. Thus, there is an absence of critical discourse on practical aspects of the impact of the MSRI, notably the impact of Chinese investment on job creation. The MSRI has brought relatively little employment to Djibouti because CMG and other companies imported the bulk of their labor. Nor is there domestic debate on the environmental impact of infrastructure works on the Doraleh littoral or Djibouti’s growing debt burden owed to China.

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This, quiescent aspect of domestic political life Djibouti clearly underpins the manner in which local politics influences Chinese interaction with the state authorities. China has been able to build-up extensive ties with the Djiboutian President, his ministers and wider government, without attracting critical attention from within the country. Given the longstanding presence of numerous other foreign military bases in the country, neither is the arrival of Chinese troops controversial domestically.

China’s Naval Facilities in Djibouti A good deal has already been written on the rationale and nature of China’s military presence in Djibouti, including by this author.16 Clearly, Djibouti’s status as the first military outpost on the MSR is of both practical and symbolic significance, and the opening of the base in August 2017 has heightened interest in the military aspects of the BRI.17 Here we briefly consider just two aspects of the China’s naval base: firstly, the manner in which its construction was facilitated by CMG’s involvement in Djibouti, and secondly whether the reasons advanced by China for the base imply an enhanced military role for Chinese forces in the Horn and East Africa? China opened its first permanent overseas naval facility in Djibouti in August 2017. Chinese authorities routinely deny any direct linkage between the MSR and the increasingly global reach of China’s navy, the People’s Liberation Army Navy (PLAN). Thus, in Beijing’s version, the establishment of a permanent naval “logistics center” in Djibouti reflects not the country’s status as a MSR hub, but rather the PLAN’s decadelong engagement in multilateral anti-piracy operations in the region and China’s broader commercial and multilateral international engagements. However, in terms of the broader themes of this chapter, it is interesting to note the policy and practical intertwining of military and civilian installations in Djibouti. The PLAN base nestles alongside CMG’s vast new MPP and they share quaysides. China’s naval base is in practice a heavily militarized annex alongside the Doraleh MPP, built and managed by CMG. PLAN ships can moor at the vast Chinese (CMG)-owned quayside a few hundred meters away, which is large enough to accommodate all but two ships in China’s fleet.18 By 2019 a separate jetty had also been constructed and linked directly to the base. While the US opposed China’s presence in Djibouti, it was obliged to coexist at close quarters with China (the bases are barely 12 km apart).

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This is central to the argument that Djibouti’s President wields real political agency, even vis-à-vis China. In negotiating the terms of China’s navy’s construction of its logistics facility in Djibouti in 2014–2015, President Guelleh and his entourage were able to draw on earlier experience hammering-out the financial and legal terms of agreements with western powers. Similarly, allowing China to construct a base adjacent to western facilities increased Djibouti’s negotiating power—and base rent rates— vis-à-vis the US and other allies while concurrently strengthening the independence and leverage of Djiboutian foreign policy. It seems that Djibouti’s geostrategic position, and its leaders’ political longevity and experience of negotiating military access, gave it greater leverage than other states negotiating with China along the MSRI, such as Sri Lanka, Myanmar, or the Maldives.19 China itself has advanced several reasons for opening a naval facility. In November 2016, a defense ministry spokesman said China planned to use the base to better implement its international obligations and to protect the nation’s overseas interests but not to seek “military expansion.” Four distinct roles and rationales for the base are prominent in China’s public discourse. The first is to bolster and protect China’s fast-growing portfolio of investments in the region. Secondly, anti-piracy operations have been central to China’s role in the region. The base enhances technical support to Chinese anti-piracy and other naval and merchant vessels in the region. A third factor is the increased presence of Chinese nationals in Africa and the Middle East. During the 2011 war in Libya, the Chinese government found itself unable to evacuate its citizens without help from Western powers. When it in 2015, it came time to evacuate Chinese from Yemen, Chinese forces were better prepared. With far more Chinese living in all the states of East Africa, the permanent base and logistics in Djibouti addresses this weakness. Fourthly, China now has a growing number of peacekeepers deployed in multilateral roles, particularly with the UN in Africa.20 Beijing has pledged to increase these numbers and the Djibouti facility clearly enhances China’s ability to project military power in the Red Sea and Indian Ocean, and to also deploy troops in Africa. This is the same role Djibouti has long played for France and the US. CMG’s Shekou Model in Djibouti A comparative concern for analysts of Chinese port investments in Africa and elsewhere on the MSR is the central role of CMG. As noted above,

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CMG holds a minority stake in the national Port Authority and is the main investor in the Doraleh’s MPP and associated DIFTZ. It is by far the largest Chinese company operating in Djibouti. Several analytical questions are pertinent to CMG’s role on the MSR. Firstly, to what extent is CMG acting as a “normal” profit-maximizing commercial concern? If it is, what timeframe do its shareholders expect dividends on large African infrastructure projects with unproven revenue flows? Secondly, as a SOE, are CMG’s actions in Africa and Asia guided primarily by the Chinese state for political rather than commercial reasons? If so, while ostensibly seeking to replicate the “Shekou model” across the MSR, CMG seems to have played the role of a vanguard investor and foreign-policy coordinator in several key hubs on the MSR. There is relatively little literature which seeks to disaggregate disparate Chinese commercial and political interests within the overarching MSRI framework.21 Nevertheless, CMG’s role in Djibouti does appear to correspond to a fairly standardized, “one-size-fits-all approach” template to port and free zone development construction and finance in different locations on the MSR. The conglomerate’s first ever overseas investment was in 2009, in the port of Colombo in Sri Lanka.22 Since then CMG has become a leading actor on the MSR, with investments in 18 ports worldwide. French analyst Thierry Pairault notes that the role CMG has played in Djibouti largely mirrors that which they played elsewhere in Africa, notably in Tangiers in Morocco and Lomé in Togo.23 Other contemplated port projects—most notably the vast port and free zone in proposed in Bagamoyo, Tanzania, which did not happen—do suggest a standardized approach.24 Djibouti’s development as a hub on the MSRI follows the pattern established in Sri Lanka, where CMG invested first in the port of Colombo, and then Hambantota.25 CMG’s role in Djibouti dates from July 2011 when the para-statal Port Autonome International de Djibouti (PAID) re-assumed direct management of its old port facilities within Djibouti-ville. In January 2013 PAID was restructured as a private company. CMG acquired a 23.5% share, for $85 million, alongside the Djiboutian government, the port authority being renamed the DPFZA. As the rail and port projects were nearing completion in 2016– 2018, CMG assumed a higher profile in bilateral ties. In April 2016 CMG announced a “strategic commercial partnership” for Djibouti with Qingdao, China’s third largest port. In 2017, Li Xiaopeng, president of CMG, outlined his vision for Djibouti to China Daily:

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Making full use of Djibouti’s geographical advantages, we are in the process of making the country the ‘Shekou of East Africa,’ a hub for regional shipping, logistics and trade. We will use our experience in Shekou and adjust the model to local conditions. […] The group wants to use the model of Shekou, dubbed ‘Port-Park-City’. 26

Pairault has argued plausibly that Djibouti’s experience of complex, interlocking shareholdings of CMG, Dalian ports, and—significantly—Chinese telecommunication companies, in the joint-ownership structures of the DIFTZ, closely mirrors the development of Chinese commercial structures elsewhere in Africa.27 China’s blueprint for Djibouti as a key hub on the MSR was promoted vigorously to the government by CMG and the former vice-president of the World Bank, Lin Yifu, in December 2015. At the same time, CMG purchased a 15% stake in the digital data giant IPZ, who play a key role in China’s promotion of global e-payments systems. CMG and IPZ jointly formed “Silk Road E-Merchants” to promote a “Global Port Alliance,” a networked system of e-payments and container logistics linking 29 ports and 55 container terminals on the MSR.28 Locally, it is Djibouti which hosts Africa’s first branch of the “International Silk Road Bank” and a “Big Data Center” run by IPZ.

Djibouti and the Debt Trap Debate Studying the evolution of Djibouti’s debts provides some insight into the heated, broader debates over China’s alleged “debt diplomacy” and the BRI. The speed and scale of China’s incorporation of diminutive Djibouti into the MSR framework clearly beg questions as to the financial sustainability of the commercial and concessional loans which Djibouti has contracted with China. However, Djibouti’s experience suggests that that debt leverage is not an intentional tool of China’s BRI policies, but rather reflects a lack of foresight and adequate planning by both African and Chinese sides. In 2019, total Djiboutian external debt stood at $2.3 billion. In 2016, the IMF noted a further $5 billion of planned investments within the ambitious Vision 2035 portfolio. All but one of these were Chinese projects, including $3 billion for the proposed liquid natural gas pipeline from Ethiopia’s Ogaden region.29 As noted earlier, the modalities of the financing the railway has been a regular source of unease between Beijing and Djibouti, with several wrangles, including a stop-gap “temporary”

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$20 million debt-for-equity-swap to electrify the line, the details of which were agreed in August 2016.30 In April 2017 the IMF highlighted that non-concessional loans from China were not sustainable given Djibouti’s fragile fiscal base.31 By 2018, the level of indebtedness of African states to China due to BRI projects had gained a far higher international profile for three reasons. The most significant factor fueling allegations of “Debt Trap Diplomacy” on the MSR was the mid 2017 deal in which CMG obtained a 99-year lease on Sri Lanka’s indebted Hambantota in exchange for $1.12 billion.32 This sum included CMG covering the Sri Lankan government’s outstanding debts on the project. With Djibouti’s ports already part-managed by China (via CMG’s minority holding in the Port Authority), and given the government’s weak fiscal position, to critics Djibouti appears vulnerable to China taking a larger stake in the MPP if the state is unable to service its debts. The equation is compounded by Djibouti’s dispute with DPW over the management of the Doraleh Container Terminal, which culminated in Djibouti’s nationalization of the disputed container terminal in early 2018. This prompted many to conjecture that CMG or other Chinese groups would emerge as the eventual owners of the sequestered DPW shares, strengthening Chinese control of the Ethio-Djibouti corridor. Any link between China and the dispute is denied by Djiboutian ministers, who also claim they will be able to repay Chinese debts.33 No tangible evidence has been offered to support a link between the DPW dispute and a Chinese takeover, beyond CMG’s existing stake in the port authority and Djibouti’s lack of funds to purchase the DPW’s shares. The second reason for the focus on African debt and the BRI was that allegations of Chinese debt-diplomacy in Djibouti featured prominently in the US national security advisor John Bolton’s presentation of US African policy in December 2018. Bolton denounced what he termed China’s “strategic use of debt to hold states in Africa captive to Beijing’s wishes”, claiming that: “[…] soon, Djibouti may hand over control of the Doraleh Container Terminal, a strategically located shipping port on the Red Sea, to Chinese state-owned enterprises,” adding “Such predatory actions are sub-components of broader Chinese strategic initiatives, including ‘One Belt, One Road’—a plan to develop a series of trade routes leading to and from China with the ultimate goal of advancing Chinese global dominance.”34

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Thirdly, the “debt diplomacy” debate surrounding the MSRI in East Africa was further enflamed by the revelation in December 2018 that the Kenyan authorities had secretly pledged Beijing a stake in Mombasa port as security against the Nairobi-Mombasa railway project, a key MSRI investment comparable to the Ethio-Djibouti railway link. A $2.3 billion loan from Exim Bank to Kenya Railways Corporation was secured by offering China an equity stake in the profitable Kenya Port Authority in the event of default.35 Again, there is little evidence either that KRC will default or that China desires that outcome as an indirect way of acquiring port shares. The muddled state of Djibouti’s financial ties with China and the Kenyan scandal does raise the broader question of poor assessment of profitability and African states’ repayment capacities. This was noted in October 2018 at a BRI symposium in Hong Kong by a leading official at China’s Export and Credit Insurance Corporation, Sinosure. He estimated that that Sinosure might may be facing a $1 billion loss on their loans to the Addis-Djibouti railway due to mismanagement. The official stated that, “developers and financiers of projects in developing nations supported by Beijing’s ‘Belt and Road Initiative’ need to step up their risk management to avoid disaster.”36 Although precise details are not in the public domain, discussions on the rescheduling of Ethiopian and Djiboutian railway debt began on the margins of the FOCAC 2018 summit. In July 2019, Djibouti’s finance minister announced that rescheduling over 30 years at Libor+2.1% had been agreed. The deal followed the revised attitudes to heavily indebted MSRI states that appears at the time of the second Belt and Road Forum in Beijing in April 2019.37

Conclusion: Djibouti---A MSRI Fulcrum Between Africa and the Middle East This overview of China-Djibouti ties in the context of the broader impact of the MSRI upon Africa and the Middle East highlights several key factors for analysts of both the BRI and Arab and African states’ relations with Beijing. Two in particular are central to this account. Firstly, the chapter has highlighted that there are distinct, geographically integrated dimensions to China’s investments in rail, port, and manufacturing infrastructure in Djibouti and Ethiopia. While there are similarities to the large infrastructure investments elsewhere in East Africa, port and railway

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developments in Kenya for example, these are not integrated or part of a coherent, continent-wide MSRI master plan. Indeed, it remains unclear as to whether the Ethio-Djibouti rail corridor will ultimately compete with, and potentially undercut the commercial feasibility of the rival Lamu PortSouth Sudan-Ethiopia-Transport (LAPSSET) Corridor project, an issue raised in Chapter 2 by Mboya as well. Clearly, Djibouti’s geostrategic location, overlooking vital shipping lanes, and its key role as a transcontinental maritime hub linking the Red Sea and Indian Ocean, in large part explain its importance to the maritime dimensions of China’s MSRI. These include anti-piracy activities, container transshipments, submarine fiber optic cables, and China’s military and diplomatic presence in the region. However, it is as a gateway to the states and markets wider Horn of Africa that Djibouti’s importance lies in terms of the nature and future evolution of China’s ambitions for the MSR. Central to the chapter’s argument has been that the analysis of the MSRI in the Middle East and Africa has to be undertaken at the subregional level. Specifically, one should not view the MSRI as a “one policy size fits all” in a given geographic region, be it across Africa as a whole, within East Africa broadly defined, or just the Horn of Africa. Rather, it is clear that for Djibouti, the state gains added locational value because of its proximity, not just to global shipping lanes, but also to Ethiopia and key Ethiopian infrastructure.38 Bilateral ties with Djibouti can only be understood within the context of China’s investment in the Horn of Africa in its totality. This is particularly pronounced due to the fact that Ethiopia, the regional hegemon (in terms of population, market size, and political status; i.e., as the oldest independent African state and host of the African Union), is landlocked. Thus, infrastructure development and access to global markets can only be achieved on a regional scale. In terms of the relative influence and autonomy of small states on the MSRI, the Djiboutian government is clearly the minnow economically in what is in effect an integrated, albeit distinctly unbalanced, SinoEthio-Djiboutian partnership in infrastructure development in the Horn. Indeed, China’s involvement has reinforced interdependence between Ethiopia and Djibouti in terms of the railway, ports and aqueduct development. Nevertheless, it is clear that that such “small,” and ostensibly “dependent” MSRI participants can wield considerable political agency. Djibouti has lucratively played-off potentially rival foreign powers, including China and the US, as they and other states seek access to military facilities in proximity to the Bab al-Mandab’s geo-strategic location.

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Furthermore, it has an authoritarian President with extensive experience and skill in negotiating with great powers. This is in part reflected by the apparent ease with which Djibouti re-negotiated its large debts to China in 2019. A second core theme of the chapter has been to underscore the degree to which the MSRI investment in Djibouti corresponds to a “template” of MSRI infrastructure, and more specifically in which CMG has played the preponderant role. CMG’s role in Djibouti corresponds to a variant of what appears to be a standardized “one-size-fits-all approach” template to port and free zone development construction and finance used elsewhere on the MSR. Other prospective port projects support this finding. This view is supported by analyses of Chinese manufacturing in Africa. CMG’s role in a Chinese developmental state blueprint is also explicitly supported by Chinese advocates of such strategies, notably Justin Yifu Lin, who supported the Djibouti developments, while playing a key role in Ethiopia, and has since promoted such approaches more broadly in Africa.39 It remains for Chinese analysts to discern to what degree this template corresponds to the government’s political, and in the Djiboutian case military, directives, or is driven partly by CMG’s commercial imperatives. The Djiboutian government’s own policy aims of enhancing the state’s role as a global maritime hub meshed closely with CMG’s belief that large-scale Chinese investment can loosely replicate a standard “template” drawn from the Shenzhen development model. This envisages port, rail and free zone infrastructure effecting rapid economic transformation via a Shekou-type FTZ, transforming Djibouti into a “Shekou of East Africa.”40 Despite the creation of the DIFTZ, by 2020 this goal still appeared somewhat utopian, not least because of doubts over the efficiency, levels of debt and profitability of the Ethio-Djiboutian railway.41 In addition, factors hampering MSRI development in Djibouti include prohibitively high utility costs, an arid climate, searing temperatures, the lack of a domestic labor force, meaning that Chinese companies’ preferences is for highland Ethiopia’s Chinese-backed manufacturing zones.42 Thus, Djibouti is likely to act essentially as a Chinese bridge to Ethiopia, remaining domestically essentially an entrepôt economy. Beyond the above, it should be noted that the Djibouti case does not suggest that the “Djibouti’s model” of a militarized naval facility alongside large (CMG-owned) civilian ports will be replicated elsewhere on the MSR. This is in part because Djibouti’s situation reflects several unique

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factors. These include its critical geostrategic location, the PLAN’s longestablished presence in the region via anti-piracy activities, the relative ease of acquiring military facilities in a state with extensive experience of hosting foreign military bases, and a lack of alternative locations or receptive host states in Arabia and East Africa. While not a central analytical focus of this piece, the Djibouti case contributes to our thinking about the so-called debt-trap debate. In this case, evidence from Djiboutian dossiers analyzed here does not suggest that exploiting debt leverage is an intentional Chinese policy. Rather debt for equity tradeoffs in the Djibouti case reflect a lack of foresight and adequate planning on both African and Chinese sides, which now prompt a reevaluation of the likely profitability and repayment terms on Chinese loans. The most likely outcome of these debates is a more systematic Chinese approach to debt rescheduling. Thus, following the 2018 FOCAC summit in Beijing, both Djibouti and Ethiopia obtained significant restructuring of the debts associated with the construction of the Ethiopia-Djibouti railway, extending repayment periods from 10 to 30 years. The relative ease with which China altered the terms to states perceived of as key partners within the MSRI again highlights Djibouti’s leverage in conjunction with Ethiopia. It also suggests that comparisons with Hambantota are misplaced. Acknowledgements The author expresses his thanks to Xu Jing for her help conforming this chapter to publisher style requirements.

Notes 1. For background on the MSR Initiative (MSRI), see the introduction to this book. 2. Ismail Omar Guelleh, Speech to Beijing FOCAC Summit, China, September 3, 2018, https://www.facebook.com/PAGEOFFICIEL LEIOG/posts/2050264555023907. 3. For a related discussion, see Cliff Mboya’s contribution in this edited volume. 4. David Styan, “China’s Maritime Silk Road and Small States,” Journal of Contemporary China 29, no. 122 (2020): 191–206. See also Sonia Le Gouriellec, “Djibouti’s Foreign Policy in International Institutions,” in African Foreign Policies in International Institutions, eds. Jason Warner and Timothy M. Shaw (London: Palgrave, 2018), 389–402; David Styan, “Djibouti: Small State Strategy at a Crossroads,” Third World Thematics

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8.

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11. 12.

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1, no. 1 (2016): 79–91; and David Styan, Djibouti: Changing Influence in the Horn’s Strategic Hub (London: Royal Institute for International Affairs, 2013). “Djibouti’s ‘Vision 2035’ Plan,” June 20, 2014, http://www.djibouti.dj/ en/about-djibouti/djibouti-vision-2035/. Styan, Djibouti: Changing Influence in the Horn’s Strategic Hub, 12. On Ethiopia, see Sonia Le Gouriellec, “Chine, Éthiopie, Djibouti: un triumvirat pour la Corne de l’Afrique? [China, Ethiopia, Djibouti: A Triumvirate for the Horn of Africa?]” Études internationales [International Studies] 49, no. 3 (2019): 523–546; David Styan, “China’s Maritime Silk Road: The Horn of Africa and Red Sea,” in Regions in the Belt and Road Initiative, ed. Jonathan Fulton (London: Routledge, 2020), 75–96; as well as Chapter 2 by Mboya and Chapter 3 by Jean-Marc F. Blanchard and Edson Ziso in this edited volume. Andrew S. Erickson and Austin M. Strange, eds., Six Years at Sea… and Counting: Gulf of Aden Anti-Piracy and China’s Maritime Commons Presence (Washington, DC: The Jamestown Foundation, 2015). Led by China’s Poly CGL Group, see Agence Djiboutienne d’Information [Djibouti Information Agency], “Réalisation d’une série d’accords entre le gouvernement djiboutien et le Group chinois Poly CGL [A Series of Agreements between the Djiboutian Government and the Chinese Group Poly CGL],” May 13, 2018, http://www.adi.dj. “Ethiopia-Djibouti Railway Inaugurated,” Railway Gazette, October 5, 2016, https://www.railwaygazette.com/infrastructure/ethiopia-djiboutirailway-inaugurated/43302.article. Except as otherwise noted, all amounts herein are in United States dollars (USD). “Djibouti’s Doraleh Port Officially Opens,” Xinhuanet, May 24, 2017, 2018, http://www.xinhuanet.com/english/2017-05/24/c_136312120. htm. For details of CMG’s global role in the MSRI see Mathieu Duchatel and Alexandre Sheldon Duplaix, Blue China: Navigating the Maritime Silk Road to Europe (Brussels: European Council on Foreign Relations, 2018), 15. China has invested in Egypt’s Port Said and al-Adabiya facilities. David Shinn, “China’s Power Projection in the Western Indian Ocean,” China Brief 17, no. 6 (2017): 4–8. Antony Kiganda, “Chinese Funded Ethio-Djibouti Water Project to Be Inaugurated Soon,” Construction Review, June 27, 2017, https://constr uctionreviewonline.com/2017/06/chinese-funded-ethio-djibouti-waterproject-to-be-inaugurated-soon. For details of debt related to the pipeline, see Thierry Pairault, “La dette chinoise de Djibouti” [“Djibouti’s Chinese

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17.

18. 19.

20.

21.

22. 23.

24. 25.

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Debt”], GeoPoWeb (France), The China Africa Project, July 31, 2020, https://chinaafricaproject.com/analysis/djiboutis-chinese-debt. Styan, “China’s Maritime Silk Road and Small States”; Erica Downs, Jeffrey Becker and Patrick de Gategn, China’s Military Support Facility in Djibouti: The Economic and Security Dimensions of China’s First Overseas Base (Washington, DC: Centre for Naval Analyses, 2017); and Jean-Pierre Cabestan, “China’s Military Base in Djibouti: A Microcosm of China’s Growing Competition with the United States and New Bipolarity,” Journal of Contemporary China 29, no. 125 (2020): 731–747. Nadège Rolland, ed., “Securing the Belt and Road Initiative: China’s Evolving Military Engagement Along the Silk Roads,” NBR Special Report no. 80, September 3, 2019, https://www.nbr.org/publication/ securing-the-belt-and-road-initiative-chinas-evolving-military-engage ment-along-the-silk-roads. Downs, Becker and Gategn, China’s Military Support Facility in Djibouti, 6. For comparative studies of the MSRI and such states, see Jean-Marc F. Blanchard, ed., China’s Maritime Silk Road Initiative and South Asia (Singapore: Palgrave, 2018); Jean-Marc F. Blanchard, “China’s Maritime Silk Road Initiative and Southeast Asia: A Chinese ‘Pond’ Not ‘Lake’ in the Works,” Journal of Contemporary China 27, no. 111 (2018): 329– 343. On China’s growing role in peacekeeping, see Chris Alden et al. eds., China and Africa: Building Peace and Security Cooperation on the Continent (London: Palgrave, 2017). To date there appears to be no firm-level analysis of factors shaping the BRI. Disaggregated approaches to the analysis of foreign policy include Li Xue, “China’s Foreign Policy Decision-Making Mechanism and ‘One Belt One Road’ Strategy,” Journal of Contemporary East Asia Studies 5, no. 2 (2016): 23–35; Lee Jones and Shahar Hameiri, “Rising Powers and State Transformation: The Case of China,” European Journal of International Affairs 22, no. 1 (2016): 72–98. Hong Zhang, “Beyond ‘Debt-Trap Diplomacy’: The Dissemination of PRC State Capitalism,” China Brief 19, no. 1 (2019): 8–12. See: Thierry Pairault, Djibouti et les routes électroniques de la soie [Djibouti and the Electronic Silk Roads] (Paris: EHESS, 2017); Thierry Pairault, “La China Merchants à Djibouti: de la route maritime à la route numérique de la soie [China Merchants in Djibouti: From the Maritime Silk Road to the Digital Silk Road],” Revue Espace Géographique et Société Marocaine, no. 24–25 (2018): 59–79. For further commentary on Bagamoyo, see Masabo’s chapter herein. Amanda Lee, “China Merchants Port to Invest Up to US$1.12 Billion in Sri Lanka’s Hambantota Port,” South China Morning Post,

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27. 28.

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31. 32.

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July 25, 2017, https://www.scmp.com/business/companies/article/210 4080/china-merchant-port-invest-us112b-sri-lankas-hambantota-port. Deng Yanzi, “CMG Wants to Make African Port of Djibouti ‘New Shekou’,” China Daily, July 3, 2017, http://www.chinadaily.com.cn/ business/2017-03/07/content_28455386.htm. The notion of a “Shekou model” refers to the port suburb of Shenzhen, the historic home of China Merchants Group in Guangdong. CMG is now headquartered in Hong Kong. Pairault, Djibouti et les routes électroniques de la soie, 4–6. Pairault, “La China Merchants à Djibouti,” 72. In April 2019, Bloomberg reported that IPZ had withdrawn from Djibouti, being replaced by a CMG subsidiary. Nizar Manek, “China Merchants in Talks to Replace Ousted Djibouti-Bank Partner,” Bloomberg, April 17, 2019, https://www.bloomberg.com/news/articles/2019-04-17/chinamerchants-in-talks-to-replace-ousted-djibouti-bank-partner. International Monetary Fund (IMF), “Djibouti: 2016 Article IV Consultation, Table 1,” IMF Country Report no. 17/87 (April 6, 2017), https://ideas.repec.org/p/imf/imfscr/17-87.html, 22. For a contextualization and update of Djibouti’s debt owed to China, see “China, Djibouti, and the New York Time: How Much Debt?” China Africa Research Initiative-Johns Hopkins University SAIS, March 1, 2017, http://www.chinaafricarealstory.com/2017/03/china-djiboutiand-new-york-times-how.html. For a detailed analysis of debt rescheduling and repayments to China, see Pairault, “La Dette Chinoise de Djibouti.” In an interview with the author in April 2015, Aboubaker Omar Hadi, the head of the DFZPA was candid about the confusion over financing, suggesting that revenues from the railway would allow a buy-back of the shares conceded to the Chinese to pay for electrification. IMF, “Djibouti: 2016 Article IV Consultation.” For a critical analysis of diverse analyses of the deal, see “Did China ‘Seize’ Sri Lanka’s Hambantota Port for Unpaid Debt?” China Africa Research Initiative-Johns Hopkins University SAIS, July 1, 2019, http://www.chinaafricarealstory.com/2019/07/did-chinaseize-sri-lankas-hambantota.html. Chris Wright, “Africa: Why Djibouti’s China Debt Is Raising the Alarm,” Euromoney, January 7, 2019, https://www.euromoney.com/article/b1c lfx2rfvlhx6/africa-why-djiboutis-china-debt-is-raising-the-alarm. Abdi Latif Dahir, “The Trump Administration’s Africa Policy Is All About Countering China’s Influence,” Quartz Africa, December 14, 2018, https://qz.com/africa/1495859/bolton-unveils-trump-africastrategy-to-counter-china-russia. George Omondi, “Mombasa Port at Risk as Audit Finds It Was Used to Secure SGR Loan,” The East African, December 20,

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2018, https://www.theeastafrican.co.ke/business/Mombasa-port-SGRloan-default-Chinsa/2560-4903360-clh5nn/index.html. Eric Ng, “Botched Chinese Railway Project in Africa Is a Warning to Belt and Road Investors,” South China Morning Post, October 23, 2018, https://www.scmp.com/business/banking-finance/article/ 2170549/botched-chinese-railway-project-africa-warning-belt-and. For details, see “China’s New Debt Sustainability Framework For the BRI,” China Africa Research Initiative-Johns Hopkins University SAIS, August 27, 2019, http://www.chinaafricarealstory.com/2019/ 08/chinas-new-debt-sustainability.html; Pairault, “La Dette Chinoise de Djibouti.” For additional discussion of the Ethiopia case, see Jean-Marc F. Blanchard, “Problematic Prognostications about China’s Maritime Silk Road Initiative (MSRI): Lessons from Africa and the Middle East,” Journal of Contemporary China 29, no. 122 (2020): 159–174. Justin Yifu Lin and Arkebe Oqubay, “Introduction,” in China-Africa and an Economic Transformation, eds. Justin Yifu Lin and Arkebe Oqubay (Oxford: Oxford University Press, 2019); Justin Yifu Lin, “China’s Rise and Structural Transformation in Africa,” in Oxford Handbook of Economics and Africa, eds. Celstin Monga and Justin Yifu Lin (Oxford: Oxford University Press, 2014). Arkebe Oqubay is a key figure in Ethiopian economic policy making. For an informed, evocative account of CMG’s role in Shenzhen’s transformation—and of Yuan Geng, the company’s CEO who died in 2016, see Mary Ann O’Donnell’s blog https://shenzhennoted.com, particularly “Yuan Geng Memorial,” https://shenzhennoted.com/2016/02/ 01/yuan-geng-memorial. Yunnan Chen, “Ethiopia and Kenya Are Struggling to Manage Debt for Their Chinese-Built Railways,” Quartz Africa, June 4, 2019, https://qz.com/africa/1634659/ethiopia-kenya-struggle-with-chi nese-debt-over-sgr-railways. For contrasting views of Chinese manufacturing zones in Ethiopia, see Greg Mills, “A Tale of Two Free Zones Learning from Africa’s Success.” The Brenthurst Foundation Discussion Paper, no. 1 (2019), http://www.thebrenthurstfoundation.org/article/a-tale-of-twofree-zones-learning-from-africa-s-success; Philip Giannecchini and Ian Taylor, “The Eastern Industrial Zone in Ethiopia: Catalyst for Development?” Geoforum 88 (2018): 28–35.

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References Agence Djiboutienne d’Information [Djibouti Information Agency]. “Réalisation d’une série d’accords entre le gouvernement djiboutien et le Group chinois Poly CGL [A Series of Agreements between the Djiboutian Government and the Chinese Group Poly CGL].” May 13, 2018. http://www.adi.dj/. Alden, Chris, Abiodun Alao, Zhang Chun, and Laura Barber, eds. China and Africa: Building Peace and Security Cooperation on the Continent. London: Palgrave, 2017. Blanchard, Jean-Marc F. “Problematic Prognostications About China’s Maritime Silk Road Initiative (MSRI): Lessons from Africa and the Middle East.” Journal of Contemporary China 29, no. 122 (2020): 159–174. Blanchard Jean-Marc F., ed. China’s Maritime Silk Road Initiative and South Asia. Singapore: Palgrave, 2018. Blanchard, Jean-Marc F. “China’s Maritime Silk Road Initiative and Southeast Asia: A Chinese ‘Pond’ Not ‘Lake’ in the Works.” Journal of Contemporary China 27, no. 111 (2018): 329–343. Cabestan, Jean-Pierre. “China’s Military Base in Djibouti: A Microcosm of China’s Growing Competition with the United States and New Bipolarity.” Journal of Contemporary China 29, no. 125 (2020): 731–747. Chen, Yunnan. “Ethiopia and Kenya Are Struggling to Manage Debt for Their Chinese-Built Railways.” Quartz Africa, June 4, 2019. https://qz.com/afr ica/1634659/ethiopia-kenya-struggle-with-chinese-debt-over-sgr-railways/. “China, Djibouti, and the New York Time: How Much Debt?” China Africa Research Initiative-Johns Hopkins University SAIS, March 1, 2017. http:// www.chinaafricarealstory.com/2017/03/china-djibouti-and-new-york-timeshow.html. “China’s New Debt Sustainability Framework for the BRI,” China Africa Research Initiative-Johns Hopkins University SAIS, August 27, 2019, http:// www.chinaafricarealstory.com/2019/08/chinas-new-debt-sustainability.html. Dahir, Abdi Latif. “The Trump Administration’s Africa Policy Is All About Countering China’s Influence.” Quartz Africa, December 14, 2018. https://qz.com/africa/1495859/bolton-unveils-trump-africa-strategy-tocounter-china-russia. Deng, Yanzi. “CMG Wants to Make African Port of Djibouti ‘New Shekou’.” China Daily, July 3, 2017. http://www.chinadaily.com.cn/business/201703/07/content_28455386.htm. “Did China ‘Seize’ Sri Lanka’s Hambantota Port for Unpaid Debt?” China Africa Research Initiative-Johns Hopkins University SAIS, July 1, 2019. http://www.chinaafricarealstory.com/2019/07/did-china-seize-sri-lan kas-hambantota.html. “Djibouti’s ‘Vision 2035’ Plan.” June 20, 2014. http://www.djibouti.dj/en/ about-djibouti/djibouti-vision-2035.

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“Djibouti’s Doraleh Port Officially Opens.” Xinhuanet, May 24, 2017. http:// www.xinhuanet.com/english/2017-05/24/c_136312120.htm. Downs, Erica, Jeffrey Becker, and Patrick de Gategn. China’s Military Support Facility in Djibouti: The Economic and Security Dimensions of China’s First Overseas Base. Washington, DC: Centre for Naval Analyses, 2017. Duchatel, Mathieu and Alexandre Sheldon Duplaix. Blue China: Navigating the Maritime Silk Road to Europe. Brussels: European Council on Foreign Relations, 2018. Erickson, Andrew S., and Austin Strange, eds. Six Years at Sea… and Counting: Gulf of Aden Anti-Piracy and China’s Maritime Commons Presence. Washington, DC: Jamestown Foundation, 2015. “Ethiopia-Djibouti Railway Inaugurated.” Railway Gazette, October 5, 2016. https://www.railwaygazette.com/infrastructure/ethiopia-djibouti-railway-ina ugurated/43302.article. Giannecchini, Philip, and Ian Taylor. “The Eastern Industrial Zone in Ethiopia: Catalyst for Development?” Geoforum 88 (2018): 28–35. Gouriellec, Sonia Le. “Chine, Éthiopie, Djibouti: un triumvirat pour la Corne de l’Afrique? [China, Ethiopia, Djibouti: A Triumvirate for the Horn of Africa?]” Études internationales [International Studies] 49, no. 3 (2019): 523–546. Gouriellec, Sonia Le. “Djibouti’s Foreign Policy in International Institutions.” In African Foreign Policies in International Institutions, edited by Jason Warner and Timothy M. Shaw, 389–402. London: Palgrave, 2018. Government of Djibouti. “Vision 2035.” June 20, 2014. http://www.djibouti. dj/en/about-djibouti/djibouti-vision-2035. Guelleh, Ismail Omar. Speech to Beijing FOCAC Summit, China. September 3, 2018. https://www.facebook.com/PAGEOFFICIELLEIOG/posts/205026 4555023907. International Monetary Fund (IMF). “Djibouti: 2016 Article IV Consultation.” IMF Country Report, no. 17/87 (April 6, 2017). https://ideas.repec.org/p/ imf/imfscr/17-87.html. Jones, Lee, and Shahar Hameiri. “Rising Powers and State Transformation: The Case of China.” European Journal of International Affairs 22, no. 1 (2016): 72–98. Kiganda, Antony. “Chinese Funded Ethio-Djibouti Water Project to Be Inaugurated Soon.” Construction Review, June 27, 2017. https://constructionrev iewonline.com/2017/06/chinese-funded-ethio-djibouti-water-project-to-beinaugurated-soon. Lee, Amanda. “China Merchants Port to Invest Up to US$1.12b in Sri Lanka’s Hambantota Port.” South China Morning Post, July 25, 2017. https://www.scmp.com/business/companies/article/2104080/chinamerchant-port-invest-us112b-sri-lankas-hambantota-port.

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Li, Xue. “China’s Foreign Policy Decision-Making Mechanism and ‘One Belt One Road’ Strategy.” Journal of Contemporary East Asia Studies 5, no. 2 (2016): 23–35. Lin, Justin Yifu, and Arkebe Oqubay. “Introduction.” In China-Africa and an Economic Transformation, edited by Lin Justin Yifu and Arkebe Oqubay, 1– 16. Oxford: Oxford University Press, 2019. Lin, Justin Yifu. “China’s Rise and Structural Transformation in Africa.” In Oxford Handbook of Economics and Africa, edited by Celstin Monga and Justin Yifu Lin. Oxford: Oxford University Press, 2014. Manek, Nizar. “China Merchants in Talks to Replace Ousted Djibouti-Bank Partner.” Bloomberg, April 17, 2019. https://www.bloomberg.com/news/ articles/2019-04-17/china-merchants-in-talks-to-replace-ousted-djiboutibank-partner. Mills, Greg. “A Tale of Two Free Zones Learning from Africa’s Success.” The Brenthurst Foundation Discussion Paper, no. 1 (2019). http://www.thebre nthurstfoundation.org/article/a-tale-of-two-free-zones-learning-from-africas-success/. Ng, Eric. “Botched Chinese Railway Project in Africa Is A Warning to Belt and Road Investors.” South China Morning Post, October 23, 2018. https://www.scmp.com/business/banking-finance/article/2170549/ botched-chinese-railway-project-africa-warning-belt-and. O’Donnell, Mary Ann. “Yuan Geng Memorial.” February 1, 2016. https://she nzhennoted.com/2016/02/01/yuan-geng-memorial. Omondi, George. “Mombasa Port at Risk as Audit Finds It Was Used to Secure SGR Loan.” The East African, December 20, 2018. https://www.theeastafrican.co.ke/business/Mombasa-port-SGR-loandefault-Chinsa/2560-4903360-clh5nn/index.html. Pairault, Thierry. Djibouti et les routes électroniques de la soie [Djibouti and the electronic silk roads]. Paris: EHESS, 2017. Pairault, Thierry. “La China Merchants à Djibouti: de la route maritime à la route numérique de la soie [China Merchants in Djibouti: From the Maritime Silk Road to the Digital Silk Road].” Revue Espace Géographique et Société Marocaine, no. 24–25 (2018): 59–79. Pairault, Thierry. “La dette chinoise de Djibouti” [Djibouti’s Chinese Debt], GeoPoWeb (France). The China Africa Project, July 31, 2020. https://chi naafricaproject.com/analysis/djiboutis-chinese-debt. Rolland, Nadège, ed. “Securing the Belt and Road Initiative: China’s Evolving Military Engagement Along the Silk Roads.” NBR Special Report, no. 80 (September 3, 2019). https://www.nbr.org/publication/securing-the-beltand-road-initiative-chinas-evolving-military-engagement-along-the-silk-roads.

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Shinn, David. “China’s Power Projection in the Western Indian Ocean.” China Brief 17, no. 6 (2017): 4–8. https://international.thenewslens.com/article/ 66502. Styan, David. “China’s Maritime Silk Road and Small States.” Journal of Contemporary China 29, no. 122 (2020): 191–206. Styan, David. Djibouti: Changing Influence in the Horn’s Strategic Hub. London: Royal Institute for International Affairs, 2013. Styan, David. “Djibouti: Small State Strategy at a Crossroads.” Third World Thematics 1, no. 1 (2016): 79–91. Styan, David. “China’s Maritime Silk Road: The Horn of Africa and Red Sea.” In Regions in the Belt and Road Initiative, edited by Jonathan Fulton, 75–96. London: Routledge, 2020. Wright, Chris. “Africa: Why Djibouti’s China Debt Is Raising the Alarm.” Euromoney, January 7, 2019. https://www.euromoney.com/article/b1clfx2rf vlhx6/africa-why-djiboutis-china-debt-is-raising-the-alarm. Zhang, Hong. “Beyond ‘Debt-Trap Diplomacy’: The Dissemination of PRC State Capitalism.” China Brief 19, no. 1 (2019): 8–12.

Tanzania in China’s MSRI: The “Chinese Dream” Awaits Alignment with the African One Conrad John Masabo

Introduction Tanzania is one of the few countries that is a party both to the historical Maritime Silk Road (MSR) and contemporary 21st Maritime Silk Road Initiative (MSRI), part of the People’s Republic of China (hereinafter PRC/China)’s larger Belt and Road Initiative (BRI). Despite the fact Tanzania is one of the African countries slotted into the BRI and has very long-term cordial diplomatic relationship with China, Tanzania seems to lag behind in terms of the number of ongoing and completed BRI-related projects. Having been honored to host two top PRC dignitaries within a span of four years, President Hu Jintao in February 2009 and President Xi Jinping in March 2013, who notably chose Tanzania as the second country to visit after assuming the Presidency (his first stop was Russia)

The author would like to thank the editor for his extensive feedback as well as his editorial assistance. He also would like to thank Xu Jing for assistance conforming this chapter to publisher style requirements. C. J. Masabo (B) Department of History, Political Science, and Development Studies, Dar es Salaam University College of Education, Dar es Salaam, Tanzania © The Author(s) 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8_5

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and the first country to visit in Africa, it was expected that Tanzania could be at the epicenter of China’s economic initiative, particularly the MSRI. Prior to launching of the BRI in October 2013, an agreement was signed in March 2013 between Chinese and Omani firms which had partnered, with the government of Tanzania, to undertake the financing and development of the Bagamoyo Special Economic Zone (BSEZ) and Mbegani seaport in Bagamoyo (hereafter the Bagamoyo Port complex or BPC). Many observers expected this agreement, witnessed by President Xi and then Tanzanian President Jakaya Mrisho Kikwete, to materialize into more practical undertakings after the BRI was launched and Africa subsequently slotted into China’s MSRI. After Tanzania was invited to China’s Belt and Road Forum (BRF) in May 2017, there were increasing hopes that the stalemated negotiations over Bagamoyo Port would be addressed.1 However, such hopes ultimately proved wrong. Instead of positive developments, there were more delays and finally negotiations were suspended. This was partly the result of a move by the then new Tanzania government under President John J. Magufuli to distance itself from the policies of its predecessor and partly the result of rising economic nationalism, first manifested in the mining sector, expanding its influence into the infrastructure arena.2 Past scholarship sheds little light on these developments because there are few studies focusing on Tanzania in China’s MSRI. Indeed, there is a broader lack of attention to contemporary Tanzania-China economic ties and most available studies largely fail to engage with the BRI or MSRI.3 Explorations of Tanzania in China’s MSRI, such as they are, primarily consist of pieces in the mass media with little serious analysis of the subject. To illustrate, while undertaking this analysis, I only came across two studies that have at least identified some MSRI projects in Tanzania, albeit with no details.4 As such, one of the goals of this chapter is to plug this gap by gauging the extent to which political and economic (investment and trade) relations affect the course of MSRI projects in Tanzania. This study has both policy and theoretical implications. One of the policy implications is to illuminate the importance (or not) of historical relations. After all, Tanzania and China enjoy a long, special relationship that dates back to the founding fathers of these nations. Yet, we do not see Tanzania treated as a top priority in China’s MSRI projects in Africa. Second, it sheds light on the importance of past infrastructure cooperation for current political economic relations. In this vein, it needs to be

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pointed out that China has been deeply involved in infrastructure development in Tanzania for the last twenty years or so. Thus, here too, one would expect the two countries to be highly motivated to build upon their past accomplishments, especially given that a central focus of the MSRI (and the larger BRI) is connectivity through modern infrastructure. Lastly, the Tanzania case can help to illuminate the practical meaning of “visuals” like the 2017 BRF. As noted, Tanzania is a BRI-designated country in Africa and was one of the countries invited to attend the first BRF. In terms of theoretical implication, this study highlights that domestic political variables (especially the ideas and preferences of top leaders) may have the upper hand over economic ones.5 The chapter’s key finding is that the successful realization of MSRI projects in Tanzania requires the support of Tanzania’s top leadership. That is to say, although Tanzania and China have close diplomatic ties and MSRI projects have economic benefits, these alone will not ensure the implementation of MSRI projects. The current stance of the Tanzania government and various steps taken with regard to construction agreements, including those involving Chinese firms, suggest that politics and individual personality surpass economics as drivers of project initiation and implementation. This is clearly shown by the push and pull over the BPC, which strongly shows politics has the upper hand over economic factors. The chapter consists of five sections. The next (second) section provides a synopsis of Tanzania-China political relations focusing on the post-Cold War period. Its focus is on the changing nature of actors, from state-to-state to a mixture of actors, namely multinational corporation (MNCs), small and medium enterprises (SMEs), and state-owned enterprises (SOEs). The third presents an analysis of Tanzania-China economic cooperation. The fourth examines Tanzania in China’s MSRI by pointing out major trends in China involvement in construction and implementation of MSRI project in Tanzania and within the BSEZ. The fifth serves as the conclusion. It summarizes the study and presents the chapter’s main findings. It further points out some of the policy and theoretical implications of these findings. Beyond this, some areas for future research are suggested and closing statements follow.

Tanzania-China Political Relations The people of modern day Tanzania’s contact with China began around fourteenth century, though the roots of contemporary political relations

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are traceable to December 1961 when Tanganyika became the 10th African state to recognize China.6 This opened the door for more formal and concrete steps that culminated into the establishment of the formal diplomatic relations between Tanzania and China on November 26, 1964 and the signing of friendship treaty in 1965 during Mwalimu Julius Nyerere’s, the first President of Tanzania, state visit in China. Following this treaty, several cooperation initiatives were undertaken between the two countries in areas ranging from political and diplomatic relations to military and economic cooperation.7 In terms of diplomatic visits, between 1964 and 2018, there have been twenty state visits by Tanzanian Presidents to China and two state visits by Chinese Presidents to Tanzania.8 Although Tanzania-China relations have always been good, the end of Cold War brought changes in the relationship, one being an increasing number of actors. Today, there are more private and profit seeking MNCs and SMEs interacting with the Tanzanian government and citizens directly as opposed to the SOEs omnipresent in the early days of China–Tanzania cooperation. This change, as Julius Nyang’oro argues, has had a significant impact and has transformed Tanzanians’ social relations both with Chinese and among themselves.9 Surprisingly, as with studies of many other African countries’ links with China, these changes seem to have escaped scrutiny.10 Tanzania is purposely selected because it represents a hard test case or a case where conditions should support the MSRI’s progress. As well, studying “Tanzania-China relations contributes to nuancing the assessments about the growing Chinese footprint in Africa and underscores the diversity of actors active on the continent.”11 Regarding Tanzania representing a hard test case, four reasons standout. First, Tanzania and China have had a unique and uninterrupted relationship since its establishment in 1964.12 Second, Tanzania and China have had similar interests in promoting African decolonization and socialism.13 Third, Tanzania as the headquarters of the Organization of African Unity (OAU)’s Liberation Committee provided a base for Chinese anti-colonial and—imperialism activities.14 Fourth, Tanzania was one of the major beneficiaries of Chinese aid and loans, as symbolized by China’s first major international aid project embodied in the Freedom Railway, the Tanzania and Zambia Railway Authority (TAZARA).15 For China, TAZARA was a sign of China’s readiness to help and provide an alternative to traditional development partners.16 These plus cordial relations between the

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Chinese Communist Party (CCP) and Tanzanian Chama Cha Mapinduzi (CCM), Tanzania’s dominant political party, joint venture (JV) development projects such as the Chinese-Tanzanian Joint Shipping Company (SINOTASHIP), Friendship (Urafiki) Textile Mill, Ubungo Farm Implements (UFI), and other current construction projects make Tanzania a compelling and hard test case for interrogating Africa’s response to BRI and MSRI in particular.

Tanzania-China Economic Relations The backbone of Tanzania-China economic relations is their 20-year friendship treaty.17 Some of its manifestations are the number of economic cooperation initiatives which were launched in the wake of this treaty. Also important was the March 1984 “The Barter Trade Protocol between the People’s Republic of China and the United Republic of Tanzania.” Pursuant to this protocol, Tanzania was to send to China 5,000 tons of cement and 1,000 tons of mimosa (wattle) extract in return for spare parts for the Urafiki Textile Mills and the UFI and also to send 5,000 tons of cashew nuts in return for bicycles.18 Noteworthy, too, were the Kiwira Coal Mine and Leganga-Mchuchuma steel project implemented by Sichuan Hongda Group and its local affiliate Tanzania-China International Mineral Resources Ltd (TCIMRL), a JV with Tanzania Nation Development Corporation.19 Tanzania-China Trade There has been a significant growth in trade between Tanzania and China over the last ten years as shown in Fig. 1. For instance, in 2007, trade was worth only $290 million, consisting of exports worth $180 million and import worth $110 million. By 2013, trade had increased over 20 times to $3.7 billion in 2013.20 Per Wang Ke, the Chinese Ambassador to Tanzania, by April 2019, Tanzania-China bilateral trade had reached $3.98 billion, making China Tanzania’s largest trading partner.21 In 2017, China was the third-largest market for Tanzanian exports ($329 million) after South Africa ($709 million) and India ($1.11 billion). Similarly, that year, China was the largest source of Tanzania’s imports worth $1.69 billion, followed by India, the United Arab Emirates (UAE), and South Africa with imports worth, respectively $1.2 billion, $562 million, and $493 million.22

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TRADE VOLUME AMOUNT PER YEAR (IN MILLION USD)

Export

Import

Total Volume

Total Balance

3000 2500 2000 1500 1000 500 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

YEARS

Fig. 1 Tanzania-Chinese general trade volume, 2008–2018 (amounts in USD $millions) (Source Author’s compilation from various sources [Tanzania Revenue Authority (TRA), https://www.tra.go.tz/index.php/113-statistics/94-trade-sta tistics; The United Republic of Tanzania, Ministry of Finance and Planning (MoFP), https://www.mof.go.tz/index.php; Tanzanian National Bureau of Statistics (NBS), https://www.nbs.go.tz/index.php/sw/machapisho/pato-lataifa; and Ministry of Industry and Trade (MIT), “Speeches,” https://www.mit. go.tz/speeches])

China Foreign Direct Investment (FDI) in Tanzania As with many other countries, data about Chinese outward FDI (OFDI) flows to Tanzania and its impacts are hard to obtain. One of the challenges is that countries often do not use the same measurement methodologies. In Tanzania, the problem of data quality is compounded by the fact that data are gathered and synthesized by different ministries and departments. In any event, using the well-regarded American Enterprise Institute China Global Investment Tracker [hereinafter AEI CGIT], it appears Chinese OFDI (COFDI) flows to Tanzania have soared, reaching a total of $10.17 billion for the period between 2007 and 2018. The distribution, reflected in Fig. 2, is as follows: metals $2.7 billion; transport $2.67 billion; real estate $2.24 billion; energy $2.17 billion; utilities

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UƟliƟes 2% Energy 21%

Real Estate 22%

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Agriculture 2% Metals 27%

Transport 26%

Fig. 2 Sectoral distribution of COFDI in Tanzania, 2007–2018 (Source AEI CGIT)

$0.23 billion; and agriculture $0.16 billion.23 As well, the number of Chinese companies investing in Tanzania have increased. China and Infrastructure Development in Tanzania The recent infrastructure boom in Tanzania has brought hope for change in the economic landscape of the country. The construction sector in Tanzania contributed 15.1% of its GDP in 2016 (12.5% of its GDP in 2014) and will be the main driver of growth in the future.24 In most of these projects, the role of China cannot be overemphasized. Infrastructure is not only one of China’s largest footprints in Tanzania, but also other parts of East Africa (see Table 1). According to one consultancy, “Chinese financiers have helped to bridge Africa’s infrastructure financing gap, with China estimated to be the single largest financier of African infrastructure.”25 Key projects in Tanzania include the national stadium, Mtwara-Dar es Salaam natural gas pipeline, Dar es Salaam port expansion, the Tanzania terrestrial fiber optic network (NICTBB), analogue

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Table 1

China’s engagement in infrastructure development in East Africaa

Year

Number of projects

Project value in (US $bn)

Building (%)

China’s share funding (%)

Ownership (%)

2013 2014 2015 2016 2017 2018

93 51 61 43 71 139

67.7 60.7 57.5 27.4 32.6 87.1

19 31 21 41.9 53.5 54.7

17 16 8 23.3 25.4 25.9

0 2 0 0 1.4 5.8

a Compiled from Deloitte, If You Want to Prosper, First Build Roads: Africa Construction Trends Report 2018 (London: Deloitte, 2019)

to digital signal upgrading, water project at Ruvu Chini, and numerous other road projects. Apart from these Chinese financed projects, Chinese firms have been involved in implementing various infrastructure projects such as construction of the Ubungo Interchange Bridge and the Dar es Salam port expansion (to be discussed).

Tanzania in China’s MSRI As in many other African countries, it is challenging to identify definitively MSRI-related projects in Tanzania. Reasons include difficulties in accessing official documents such as relevant Memorandums of Understanding (MoUs) and the fact that such materials, even if obtainable, often do not specifically name MSRI projects. Apart from this, some projects labeled as MSRI projects were launched before the birth of the BRI.26 For the sake of this analysis, we designate projects as MSRI projects based on their link to MSRI standard features and initiative objectives—i.e., proximity to major shipping lanes; proximity to existing ports; and hinterland connectivity—as well as a MSRI projects list prepared by World Bank experts.27 More specifically, this chapter treats two projects in Tanzania as MSRI projects. The first is the BPC and the second is Dar es Salaam port (hereinafter Dar port). The BPC is a newly planned complex that was approved in 2013. Construction was scheduled to begin in 2017 and then delayed to 2018, but then never started due to disagreements between the government and investors. In contrast, the Dar port expansion has been proceeding according to schedule since September 19, 2017. The Dar port expansion draws upon funding from the World Bank and the UK’s

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Department for International Development (DfID) and work is being done according to a 2017 agreement between a Chinese construction conglomerate, the China Harbour Engineering Company Ltd. (CHEC) and the Tanzania Port Authority (TPA). The focus of the analysis below is the BPC although the Dar port occasionally may be mentioned for clarification purposes.

Bagamoyo Special Economic Zone (BSEZ): A Leading Gateway for Africa’s Landlocked Countries? BSEZ is one of the six Tanzanian flagship SEZs projects (the others are the Mtwara, Kigoma, Tanga, Ruvuma, and Manyoni SEZs) earmarked in the Tanzanian Five Year Development Plan, 2016/2017–2020/2021.28 Per the BSEZ Master plan, it will cover an area of 9800 hectares, out of which the port will occupy 10% of the total area.29 Modeled on Shenzhen SEZ in China, the BSEZ, if completed, is anticipated to become a key engine for Tanzania industrial transformations and a hub for national economic development. Among projects envisaged for the BSEZ are a $120 million industrial park, $70 million tourism park, $90 million free port facility, $70 million free trade zone, $50 million science and technology park, $70 million international business center, and industrial sheds costing $20 million.30 If all were to go as planned, then Bagamoyo’s strategic role in “enabling Tanzania’s clear integration in the New Silk Road project and making it a bridgehead for Chinese manufacturing businesses relocating to East Africa” could be evident.31 Moreover, as one China–Africa specialist has remarked, “Bagamoyo could become an industrial gateway not only for youth-filled Tanzania but half a dozen landlocked African countries.”32 The planned BPC is associated with the mega BSEZ. The development of this new port, at Mbegani-Bagamoyo, which is a particularly suitable site for deepwater berths development, is one of the key components of the TPA’s Ports Master Plan (PMP). The development of the BPC gained urgency following a 2008 port traffic forecast study for the TPA’s Tanzania PMP, which showed that by 2018, regardless of the expansion of the existing Tanzania International Container Terminal Services Ltd. (TICTS) terminal, the Dar port would not be able to handle the amount

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of cargo it would be receiving.33 As such there was a need for an alternative port and attention turned to the historically significant Bagamoyo port. When this project was originally conceived in the mid- 2000s, the plan was for a relatively small two-berth port estimated to cost about $225 million. However, by 2009, the project had morphed into a $680 million facility. Later, it ballooned into a $10 billion facility that would entail a modern deep seaport and a logistics park.34 According to a feasibility study, the financing and construction of the Bagamoyo Port was supposed to be done according to a public–private partnership (PPP) model. Investment, construction, and management responsibilities would be split between the TPA and a private operator to reduces financial burdens on the public sector, improve management capability, and facilitate the deployment and transfer of advanced technology with the aim of improving productivity and service quality.35 It is within this framework that the China Merchants Ports Holdings Limited (hereinafter CMPH) and the State General Reserve Fund of the Sultanate of Oman (hereinafter SGRF) came to be involved in the financing of this project. As noted, Chinese President Xi and then Tanzanian President Kikwete witnessed the signing of the agreement for China and Oman to finance the construction of the port and other infrastructure. Financing obligations specifically were distributed as follows: CMPH 80% and SGRF 20%.36 On October 16, 2015, the foundation stone for the port construction was laid by Kikwete, at a ceremony attended by Lu Youqing, China’s Ambassador to Tanzania. Afterwards, the project was rebranded as an MSRI project and was expected to be one of China’s mega projects in Africa. Given the proposed implementation and financing strategy, soon after the signing and laying of the foundation stone, a Joint Working Team (“JWT”) between the Government of Tanzania and CMPH and SGRF was created. The latter two were tasked with the responsibility to develop a comprehensive development plan for the complex. On March 31, 2017, CMPH and SGRF submitted a revised project development comprehensive proposal in line with new government directives for the private sector to take lead in project development. It was expected that after government approval, construction would begin the same year.37 For its part, the government planned to construct supporting infrastructure for the BSEZ, particular roads, railways, water, and power supply.

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The BPC The BPC consist of two components: a seaport and a logistics park each planned to occupy an area of 400 hectares. The planned port will be an ultramodern deep-sea port, the largest deepwater seaport in East Africa with a total quay length of 3,300 meters and depth of 17 meters designed to accommodate the world’s largest containerships, with an estimated operating capacity of 50 million tones cargo and an annual capacity of 20 million Twenty Foot Equivalent Units (TEUs).38 The planned logistic park will provide facilities designed to meet the client needs in areas such as bounded storage cargo, consolidated international transshipment, and co-chain logistics. Apart from design and tender (2015–2016 phase), its construction was to consist of three phases: Phase I (2017–2020); Phase II (2023–2026); and Phase III (2027–2030).39 To facilitate connectivity to parts of Tanzania and the regional countries to be served by this port (e.g., Malawi, Zambia, Democratic Republic of Congo [DRC], Rwanda, Burundi, and Uganda) it will be supported with connections to Tanzania’s rail and road network.40 The plan is to connect the port to the north arm meter gauge railway line, centralline meter and standard gauge railway (SGR) and the freedom railway, the TAZARA. Together with these, will be the construction of the outer-ring road connecting Bagamoyo Port (and a future Bagamoyo Airport) to Morogoro Road, the Kisarawe Freight Centre, Julius Nyerere International Airport, and the existing Dar port. Disagreements between the government of Tanzania and BPC investors over conditions that President Magufuli has labeled as “exploitative and awkward” have frozen the progress of the BPC.41 Tanzania specifically objected to Chinese and Omani investors’ exorbitant demands for a 99-year lease, tax free status, discounted utility rates, the freedom to open and operate any other business without first seeking approval, and limits on the government’s rights to develop other ports. For its part, Tanzania countered with an offer of a 33-year lease while rejecting all other investor demands.42 As of now, the situation remains unchanged, with one analyst opining that Tanzania’s “take it or leave it” attitude shows that “African leaders are becoming more demanding that Chinesefunded projects align with African development needs, or at least African political interests.”43

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Other BSEZ Projects Together with the port and port side logistic park, the plan is to develop other complexes within BSEZ. Based on the government’s plan of action, a “start-up direct investment from private finance initiatives will be of the order of $1.6 billion and rising to $5.6 billion, with industrial direct employment of 270,000 people out of which about 20,000 people will be employed during the first three years of the construction phase.”44 Like the seaport and the logistic park, several actors are expected to be involved in the implementation processes of other projects. For example, the Government of South Korea has agreed to support the development of a science and technology park at BSEZ with Export Processing Zone Authority (EPZA) and Tanzania Commission for Science and Technology (COSTECH) collaborating to implement the project as agents of the Government of Tanzania.45 In addition to this, the governments of Tanzania will set up a one-stop service center in collaboration with the investing partners to serve the business and commercial activities in the SEZ. Primarily, the BSEZ is planned to become a home for manufacturing, value addition processing, and residential facilities. It envisages utilizing local resources in developing labor-intensive industries such as agriculture processing, textiles, clothing, leather, and furniture. When fully developed, it hopes to host construction materials, steel making, automobile assembly, and natural gas processing. Furthermore, the area is expected to develop into an area for electronics, high-tech processing, and advanced manufacturing industries. About 190 industries have been earmarked for development within the SEZ which, once fully developed, is expected to attract about 700 industries and become a strategic investment zone in East Africa.46 A total of 2200 hectares area has been allocated for the development of this industrial city which will occupy almost 1350 hectares, leaving the rest for a commercial center, residential facilities, tourist attractions, and recreation facilities.47 Unlike the BPC project, other BSEZ projects have progressed significantly according to data from the Ministry of Finance and Planning.48 Potential Gains of the BPC for Tanzania A World Bank report entitled “Opening the Gates: How the port of Dar es Salaam Can Transform Tanzania” analyzed how much Tanzania loses

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because of its various ports’ inefficiencies.49 If the Bagamoyo Port was completed, it would contribute significantly to the Tanzania’s economy not just by boosting economic activity, but also by generating tax revenue, especially given that more than 20 million TEUs cargo was expected to be handled by this port annually. The BSEZ itself was envisioned to be an engine for industrial transformation and a pathway to fulfilling the Tanzania Development Vision 2025 of becoming a middle-income, industrial nation. To be more specific, the BSEZ was “expected to transform Tanzania into a transport logistics hub and gateway to the regional and international trade with linked industrial platform for value addition and manufacturing processes.”50 More generally, investments within BSEZ were expected to generate an annual output to US$1 billion by 2020.51 With regard to job creation and employment, it was forecasted to create about 20,000 jobs by December 2020 while more than 270,000 industrial jobs would flow from the realization of the project.52 Furthermore, the BSEZ’s planned science and technology park would serve the purpose of technology transfer and creating a hub of technological innovation. The BPC Adrift As of the time of this writing, the BPC remains stalled and there are no signs it will restart in the near future. The reasons for this are both economic and political. Regarding economic factors, there are worries about the debt burdens that will result from the projects, disputes about project ownership shares, and uncertainties about the need for the port and its economic viability. Western donors like the World Bank and other funders also seem unenthused about the BPC, preferring to focus on the Dar port. With respect to political factors, there appear to be three relevant factors at work. One concern is ownership stakes, a political as well as an economic issue.53 A second is the government’s desire to diversify its contractors and sources of funds. Both are linked to the change of the government. Under President Magufuli, the government has distanced itself from the policies of his predecessor and intensifying economic nationalism that first manifest itself powerfully in mining sector has now spread to towards other areas like infrastructure projects such as the BPC.54 A third factor is the government’s displeasure with the demands of Chinese lenders and investors, for example, their requirement Chinese workers be used.55

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The “debt trap” argument has been used to explain the problems associated with many Chinese BRI projects and has been viewed as the manifestation of a new kind of neocolonialism.56 MSRI projects in Tanzania have not been immune from such accusations given the large sums of money involved and the fact that Tanzania has had to borrow most of its share from Chinese institutions. In addition, from the BPC’s inception there have been divergent views among Tanzania’s political elites about its merits. As well, disagreements over project ownership shares about the project have been a key factor obstructing project implementation and progress in negotiations.57 Apart from this, some forecasts suggest that, due to the slow growth of economies in the region, imports will be adversely affected, which, in turn, will reduce the need for a new port.58 And, as noted, the BPC increases competitions with Tanzania’s other ports (Dar as Salaam, Mtwara, and Tanga) and puts the country into competition with other ports such as Mombasa in Kenya and Beira in Mozambique.59 Beyond the above, as noted, the World Bank and other Western donors prefer to support the expansion of Dar port to meet the demands of Tanzania’s port customers. The bank also has spent some time analyzing the root problem at the Dar port in order to identify solutions for addressing the bottlenecks that caused inefficiencies there.60 Moreover, there has been little support from the African Union (AU)’s Programme for Infrastructure Development in Africa (PIDA).61 The African Development Bank, the main financier behind the AU’s PIDA, have been silent on this project by concentrating on projects that were initiated and proposed by the African countries that could facilitate Africa intra-trade and connectivity. It is evident that the incumbent government has become disenchanted with the conditions associated with Chinese projects. For example, even though the China ExIm Bank had promised to provide a $7.6 billion loan to build a new SGR and had signed an agreement with Tanzania providing $6.8 billion for the construction of a 2,561 km SGR connecting the Dar port to cities in western Tanzania as well as Rwanda and Burundi, Tanzania terminated the agreement and turned to alternative funding sources and hired new contractors, Yapi Merkez Insaat Ve Sanay (Turkey) and Mota-Engil, Engenherie and Construcao Africa (Portugal). This resulted from the “the current government [attempting] to avoid relying on a single external actor” as well as the unnecessary delays by Chinese funders and their condition of hiring their own engineers.62

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Conclusion This chapter examines Tanzania involvement in China’s MSRI and its implementation. It opened with some general comments on TanzaniaChina political relations, moving to a treatment of bilateral economic relations with a focus on trade, investment, and infrastructure. Having laid this foundation, the chapter moved to discussing the MSRI projects in Tanzania particularly the BPC. Thereafter, it examined some of the potential upsides and downsides of the project. The balance of this section highlights some key findings and then assesses their policy and theoretical implications. It is evident from this analysis that the implementation of MSRI projects in Tanzania is highly problematic and that the past and current Tanzanian governments prioritize MSRI projects quite differently. Lastly, I suggest areas for possible for future research. For some analysts, the Bagamoyo Port “presents an opportunity to test the potential of China’s 21st Century Maritime Silk Road as game changer for Africa’s development … aligning the ‘Chinese Dream’ with an African one.”63 This paper shows, though, that the BPC has stalled and, indeed, seems dead. There are many logics behind this. To emphasize a point made earlier, the case of MSRI projects in Tanzania shows that political arguments have overshadowed economic ones and that an individual can exert tremendous influence on the progress of the MSRI, especially given there is no law binding an incumbent to fulfill the plans of his/her predecessor. Regarding the power of political arguments, as noted, economic nationalism first witnessed in the mining sector is now reflected in the infrastructure sector. Beyond this, there have been growing concerns about corruption, the potential adverse economic implication of the various planned infrastructure projects, and national sovereignty. Beyond its empirical and analytical contributions, this chapter shows how hard it seems to be for China to change its modus operandi in the face of a changing political landscape globally and in Africa. If China is to succeed, it is high time for it to deliver on its win-win rhetoric and recognize that potential economic benefits alone may not sell its MSRI agenda. To elaborate on the latter, China needs to recognize that political concerns of MSRI participants also need to be addressed. These concerns lie not only at the popular level, but also among the governments with which Chinese firms deal. For reasons of space and focus, this chapter could not address all aspects of MSRI projects in Tanzania. There remain many important

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areas to explore including the relationship between China’s MSRI and non-MSRI projects. Specifically, analysts should identify and differentiate them based on key characteristics. Another area worth investigating is the implication of the MSRI for indigenous populations with proper attention to both negative and positive aspects. “Project ownership” is another area meriting consideration because many projects seem to be encountering problems because people do not feel they are part of them. Last but not least, one can analyze how MSRI projects can be synchronized with existing national infrastructure to improve the logistics network from ports. This is so because the port will depend on the inland infrastructure network, both the roads, the meter gauge northern line, the central SGR and meter gauge railway lines, and the TAZARA. Since these are under different arrangements, there is a need for ensuring that shipped goods will be carried by the facilities that do not make up part of MSRI projects. The MSRI in Tanzania is still a novel concept and many do not understand what it means. So far there have been two major forums about the BRI, the first in 2017 and the second in 2019. Although they mark a remarkable move toward creating awareness about China’s MSRI, they are insufficient because they did not reach a large audience. There also is a need to communicate more forthrightly about the MSRI. To date, communications suggest only good things. However, negative impacts also need to be discussed because revelations from elsewhere about the failings or limits of the MSRI likely will damage the prospects for future MSRI project acceptance in Tanzania. Relatedly, silence and secrecy about MSRI agreements also threatens project and prevents an important national debate over the MSRI. Above all, for fruitful cooperation, and if it is to benefit all, the MSRI must be guided by true win-win principles.

Notes 1. Michael M. O. Ehizuelen, “More African Countries on the Route: The Positive and Negative Impacts of the Belt and Road Initiative,” Transnational Corporations Review 9, no. 4 (2017): 341–359. 2. Thabit Jacob and Rasmus H. Pedersen, “New Resource Nationalism? Continuity and Change in Tanzania’s Extractive Industries,” The Extractive Industries and Society 5, no. 2 (2018): 287–292; and Kai Roder, “‘Bulldozer Politics’, State-making and (Neo-)Extractive Industries in Tanzanian Mining Sector,” The Extractive Industries and Society 6, no. 2 (2018): 407–412.

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3. See Hezron Makundi, Huib Huyse and Patrick Develtere, “Negotiating the Technological Capacity in Chinese Engagements: Is the Tanzanian Government in the Driving Seat?” South African Journal of International Affairs 24, no. 3 (2017): 331–353; Mhidini J. Shangwe, “China Soft Power in Tanzania: Opportunities and Challenges,” China Quarterly of International Strategic Studies 3, no. 1 (2017): 79–100; Julius E. Nyang’oro, The JK Legacy: Politics and Public Policy in Tanzania (New Jersey: Africa World Press, 2016); Hezron Makundi, Huib Huyse and Patrick Develtere, “Cooperation Between China and Tanzania on ICT: Fish, Fishing Tackle or Fishing Skills?” Journal of Chinese Economic and Business Studies 14, no. 2 (2016): 129-149; JeanPierre Cabestan and Jean-Raphaël Chaponnière, “Tanzania’s All-weather Friendship with China in the Era of Multipolarity and Globalisation: Towards a Mild Hedging Strategy,” African East Asian Affairs 3 (2016): 34–61; Ng’wanza Kamata, “Perspectives on Sino-Tanzanian Relations,” in China’s Diplomacy in Eastern and Southern Africa, ed. Seifudein Adem (Oxford and New York: Routledge, 2016), 87–105; Huruma H. Sigalla, “Changing Trends in the Tanzania–China Relationship,” Österreichische Zeitschrift Für Soziologie 39, no. 1 (2014): 61–78; and Martin Bailey, “Tanzania and China,” African Affairs 74, no. 294 (1975): 39–50. 4. Tristan Reed and Sasha Trubetskoy, “Assessing the Value of Market Access from Belt and Road Projects,” World Bank Policy Research Working Paper, no. 8815 (2019): 54. Also see François de Soyres, et al., “How Much Will the Belt and Road Initiative Reduce Trade Costs?,” World Bank Policy Research Working Paper, no. 8614 (2018): 38. 5. Robert D. Putnam, “Diplomacy and Domestic Politics: The Logic of Two Level Games,” International Organization 42, no. 3 (1988): 427–460; Barbara Farnham, “Impact of the Political Context on Foreign Policy Decision-Making,” Political Psychology 25, no. 3 (2004): 441–463; and Jean-Marc F. Blanchard and Norrin M. Ripsman, “A Political Theory of Economic Statecraft,” Foreign Policy Analysis 4, no. 4 (2008): 371–398. 6. Bailey, “Tanzania and China.” 7. Sithara Fernando, “Chronology of China-Africa Relations,” China Report 43, no. 3 (2007): 363–373; Bailey, “Tanzania and China;” and Ai Ping, “From Proletarian Internationalism to Mutual Development: China’s Cooperation with Tanzania, 1965–95,” in Agencies in Foreign Aid: Comparing China, Sweden and United States in Tanzania, ed. Goran Hyden and Rwekaza Mukandala (New York: St. Martin’s Press Inc., 1999), 156–201. 8. All former Tanzanian Presidents have visited China. Mwalimu Julius Nyerere, Tanzania’s first President, has the most with 13 visits: 5 as President of Tanzania and 8 as the Chairman of South-South Commission. Ali

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9.

10.

11. 12. 13.

14.

15.

16.

17.

18. 19.

Hassan Mwinyi and Benjamin William Mkapa, the second and third Presidents of Tanzania, made 2 visits each while Jakaya Mrisho Kikwete, the fourth President of Tanzania, made 3 visits. From China’s part, Hu Jintao and Xi Jinping visited Tanzania in, respectively, February 2009 and March 2013. Vice Presidents, Prime Ministers, and Foreign Affairs Ministers and Party officials from each country also have visited the other. Nyang’oro, The JK Legacy; Also see, Cabestan and Chaponnière, “Tanzania’s All-weather Friendship with China in the Era of Multipolarity and Globalisation”; and Sigalla, “Changing Trends in the Tanzania–China Relationship.” See Darius A’Zami, “‘China in Africa’: From Under-Researched to UnderTheorised?” Millennium: Journal of International Studies 43, no. 2 (2015): 724–734; and Degele Ergano and Seshagiri Rao “Sino–Africa Bilateral Economic Relation: Nature and Perspectives,” Insight on Africa 11, no. 1 (2019): 1–17. Cabestan and Chaponnière, “Tanzania’s All-weather Friendship with China in the Era of Multipolarity and Globalisation,” 27. Nyang’oro, The JK Legacy. George Robersts, “‘China and the Devil Slaves’: Challenging Afro-Asian Solidarities in Tanzania,” Afro-Asian Vision, February 13, 2017, https:// medium.com/afro-asian-visions/china-and-the-devil-slaves-challengingafro-asian-solidarities-in-tanzania-216ceefa090b. Andrew Kiondo, “Tanzania’s Foreign Policy: The Socio-Economic Context,” in Politics and Administration in East Africa, ed. Walter O. Oyugi (Nairobi: East African Educational Publishers, 1994), 331–358. Haley J. Swedlund, “Is China Eroding the Bargaining Power of Traditional Donors in Africa?” International Affairs 93, no. 2 (2017): 389–408; and Jamie Monson, Africa’s Freedom Railway: How a Chinese Development Project Changed Lives and Livelihoods in Tanzania (Bloomington and Indianapolis: Indiana University Press, 2009). Julia C. Strauss, “The Past in the Present: Historical and Rhetorical Lineages in China’s Relations with Africa,” The China Quarterly, no. 199 (2009): 777–795. People’s Republic of China (PRC), Ministry of Foreign Affairs, “Treaty of Friendship Between the People’s Republic of China and the United Republic of Tanzania,” April 25, 2002, https://www.fmprc.gov.cn/mfa_ eng/wjb_663304/zzjg_663340/tyfls_665260/tyfl_665264/2631_6 65276/t15519.shtml. Kamata, “Perspectives on Sino-Tanzanian Relations,” 91–92. Rosemary Mirondo, “Chinese Company in $3 Billion LigangaMchuchuma Steel Project Reacts,” The Citizen, November 27, 2018, https://www.thecitizen.co.tz/News/Firm-speaks-out-on-Ligangaproject/1840340-4870356-d2hbwl/index.html.

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20. Shangwe, “China Soft Power in Tanzania,” 97. 21. Gadiosa Lamtey, “Ambassador: China Now Tanzania’s Largest Trading Partner,” The Citizen, April 17, 2019, https://www.thecitizen.co.tz/ News/1840340-5076094-c10oxm/index.html. 22. Trading Economics, “Tanzania Balance of Trade,” https://tradingec onomics.com/tanzania/balance-of-trade. Except as otherwise noted, all amounts in this chapter are denominated in US dollars (USD). 23. AEI CGIT, http://www.aei.org/china-global-investment-tracker. The AEI CGIT does not record any investment amount below 100 million so smaller amount investment are not captured. 24. Yejoo Kim and Nuša Tuki´c, “Tanzanian Infrastructure Development and the Role of China: The Case of Bagamoyo Port,” Centre for Chinese Studies-Stellenbosch University Policy Briefing, no. 4 (2018): 1. 25. Hannah Edinger and Jean-Pierre Labuschagne, “If You Want to Prosper, First Build Roads: China’s Role in African infrastructure and Capital Projects,” Deloitte, March 22, 2019, https://www2.deloitte.com/za/ en/pages/energy-and-resources/articles/consider_building_roads.Html, 51. 26. For related discussion, see Jean-Marc F. Blanchard, “China’s Maritime Silk Road Initiative (MSRI) and Southeast Asia: A Chinese ‘Pond’ Not ‘Lake’ in the Works,” Journal of Contemporary China 27, no. 111 (2018): 329–343, 331. 27. See Reed and Trubetskoy, “Assessing the Value of Market Access from Belt and Road Projects,” 54; Soyres, et al., “How Much Will the Belt and Road Initiative Reduce Trade Costs?” 38. For background on the MSRI generally, see National Development and Reform Commission and the State Oceanic Administration, PRC, “Vision for Maritime Cooperation under the Belt and Road Initiative,” June 20, 2017, https://eng. yidaiyilu.gov.cn/zchj/qwfb/16639.htm; and Jean-Marc F. Blanchard and Colin Flint, “The Geopolitics of China’s Maritime Silk Road Initiative,” Geopolitics 22, no. 2 (2017): 223–245. 28. See United Republic of Tanzania (URT), “National Five Year Development Plan 2016/17–2020/21: ‘Nurturing Industrialization for Economic Transformation and Human Development’,” June, 2016, http:// extwprlegs1.fao.org/docs/pdf/tan166449.pdf; and URT, “Implementation Strategy for National Five Year Development Plan 2016/17– 2020/21, Volume I—The Action Plan” [hereinafter URT “Implementation Strategy for National Five Year Development Plan”], December, 2017, https://www.datocms-assets.com/7245/1556203426-the-actionplan-16-1-2018-kempa.pdf. 29. COWI, “Bagamoyo SEZ Master Plan-Final Report,” January, 2013, https://tdu.or.tz/app/uploads/2018/01/Bagamoyo-Master-Plan-FinalReport.pdf.

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30. Polycarp Machira, “Chinese Firm States New ‘Willingness’ to Invest Bagamoyo Port Project,” The Guardian, September 17, 2018, https:// www.ippmedia.com/en/news/chinese-firm-states-new-%E2%80%98will ingness%E2%80%99-invest-bagamoyo-port-project. 31. Jean-Christophe Servant, “Will a New Port Make Tanzania ‘Africa’s Dubai’?” The Nation, February 19, 2019, https://www.thenation.com/ article/tanzania-china-bagamoyo-port/. 32. Nick Van Mead, “China in Africa: Win-Win Development, or a New Colonialism?” The Guardian, July 31, 2018, https://www.theguardian. com/cities/2018/jul/31/china-in-africa-win-win-development-or-anew-colonialism. 33. URT, Ministry of Transport & JICA, “Comprehensive Transport and Trade System Development Master Plan in the United Republic of Tanzania—Building an Integrated Freight Transport System—Final Report Volume 3” [hereinafter URT MT JICA Comprehensive Transport and Trade System Master Plan], March, 2014, https://openjicareport. jica.go.jp/pdf/12150504.pdf. 34. For further information on plans for this seaport project, see Tanzania Ports Authority (TPA), “Tanzania Ports Master Plan,” February, 2009, https://www.slideshare.net/jaekim522/final-report-tanzania-ports-mas ter-plan-1-to-100; and TPA, “Annual Report & Accounts for the Year Ended 30th June, 2014,” June, 2015, https://www.ports.go.tz/index. php/en/publications/reports-annual-reports-and-accounting/275. 35. URT MT JICA Comprehensive Transport and Trade System Master Plan, 21. 36. URT, Ministry of Trade, Industry and Investment, “Bagamoyo Special Economic Zone,” https://tdu.or.tz/available-land/bagamoyo-special-eco nomic-zone/. Also see Machira, “Chinese Firm States New ‘Willingness’ to Invest Bagamoyo Port Project”. 37. URT, “Implementation Strategy for National Five Year Development Plan,” 80. 38. Jana Hönke and Ivan Cuesta-Fernandez, “A Topographical Approach to Infrastructure: Political Topography, Topology and the Port of Dar es Salaam,” Environment and Planning D: Society and Space 35, no. 6 (2017): 1088. 39. For more details, see URT MT JICA Comprehensive Transport and Trade System Master Plan, chapter 4. 40. See URT MT JICA Comprehensive Transport and Trade System Master Plan, chapters 5 and 6. 41. “How the Dream For a Port in Bagamoyo Became Elusive,” The Citizen, June 9, 2019, https://www.thecitizen.co.tz/news/1840340-51503288r5ggd/index.html. Also see “Tanzania’s China-Backed $10bn Port Plan

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42.

43.

44. 45.

46. 47. 48.

49.

50. 51.

52.

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Stalls,” The East African, May 23, 2019, https://www.theeastafrican.co. ke/business/Tanzania-port-plan/2560-5127662-10sv8emz/index.html. Emmanuel Onyango, “Tanzania Gives Chinese firm Conditions for Bagamoyo Port,” The East African, October 21, 2019, https://www. theeastafrican.co.ke/business/Tanzania-gives-chinese-firm-conditions-forbagamoyo-port-/2560-5318790-10s5do7/index.html. John Hursh, “A Bump in the Belt and Road: Tanzania Pushes Back Against Chinese Port Project,” Centre for International Maritime Security, December 2, 2019, http://cimsec.org/a-bump-in-the-belt-and-roadtanzania-pushes-back-against-chinese-port-project/42449. URT, “Implementation Strategy for National Five Year Development Plan,” 11. Ibid., 12. The EPZA is a Tanzanian government agency responsible for coordinating all activities related to establishment of SEZs and External Processing Zones (EPZ), the former open for both domestic and export products production while the latter restricted to exports only. Machira, “Chinese Firm States New ‘Willingness’ to Invest Bagamoyo Port Project.” For more details see COWI, “Bagamoyo SEZ Master Plan-Final Report.” Philip I Mpango, “Maelezo ya Mheshimiwa Dkt. Philip I. Mpango (Mb), Waziri wa Fedha na Mipango, Akiwasilisha Mapendekezo ya Serikali ya Mpango wa Maendeleo wa Taifa na ya Kiwango na Ukomo wa Bajeti ya Serikali Kwa Mwaka 2020/21 [Explanations by Honourable Dr. Philip I. Mpango (MP), Minister of Finance and Planning, while Presenting of the Government Proposals for National Development Plan and for the Amount and Ceiling of Government Budget for the Year 2020/21],” May, 2020, https://www.parliament.go.tz/uploads/budgetspeeches/159 1886189-HOTUBAYABAJETIYASERIKALI.pdf, 13. Jacques Morisset, “Opening the Gates: How the port of Dar es Salaam Can Transform Tanzania: Tanzania Economic Update,” World Bank Working Paper, no. 77729 (2013), http://www.worldbank.org/tan zania/economicupdate, 34; and World Bank, “Tanzania Could Boost Its Economy by Reforming the Port of Dar es Salaam,” May 21, 2013, http://www.worldbank.org/en/news/press-release/2013/05/21/tan zania-could-boost-its-economy-by-reforming-the-port-of-dar-es-salaamworld-bank. URT, “Implementation Strategy for National Five Year Development Plan,” 206. See Tanzania GDP per capital, https://tradingeconomics.com/tanzania/ gdp-per-capita; and URT, “Implementation Strategy for National Five Year Development Plan,” 13. URT, “Implementation Strategy for National Five Year Development Plan,” 13.

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53. “Hotuba ya Waziri wa Ujenzi, Uchukuzi na Mawasiliano Mheshimiwa Mhandisi Isack aloyce Kamwelwe (Mb), Akiwasilisha Bungeni Mpango na Makadirio ya Mapato na Matumizi ya Fedha kwa Mwaka wa Fedha 2019/2020 [Speech by the Minister for Works, Transport, and Communication Hon. Engineer Isack Aloyce Kamwelwe (MP), Presenting to the National Assembly, the Plan and Estimates of Revenue and Expenditure for the Financial Year 2019/20],” April, 2019, https://www.scribd.com/ document/422253066, 99. 54. See Jacob and Pedersen, “New Resource Nationalism?” 287–292; and Roder, “‘Bulldozer Politics’, State-making and (Neo-) Extractive Industries in Tanzanian Mining Sector,” 407–412. 55. For more recent analysis of the political and economic challenges facing the MSRI in Africa and Tanzania in particular see May Tan-Mullins, “Smoothing the Silk Road Through Successful Chinese Corporate Social Responsibility Practices: Evidence from East Africa,” Journal of Contemporary China 29, no. 122 (2020): 215–218; and Jean-Marc F. Blanchard, “Problematic Prognostication About China’s Maritime Silk Road Initiative (MSRI): Lessons from Africa and the Middle East,” Journal of Contemporary China 29, no. 122 (2020): 168. 56. Brahma Chellaney, “China’s Debt-Trap Diplomacy,” Project Syndicate, January 23, 2017, https://www.project-syndicate.org/commentary/ china-one-belt-one-road-loans-debt-by-brahma-chellaney-2017-01; and Jeffrey Reeves, “Imperialism and the Middle Kingdom: The Xi Jinping Administration’s Peripheral Diplomacy with Developing States,” Third World Quarterly 39, no. 5 (2018): 976–998. 57. Ibrahim Yamba, “Ndugai Asks Govt to Explain Lack of Progress on Bagamoyo Port Project,” The Citizen, May 13, 2019, https://www. thecitizen.co.tz/News/Ndugai-asks-govt-to-explain-lack-of-progress-Bag amoyo-port-/1840340-5113052-3jf61u/index.html. Ownership shares have not been disclosed, but publicly available information indicate that the Bagamoyo Port would be owned and run by the two firms financing the project for 40 years, which threatens plans to accrue revenues from the project. See “Bagamoyo Port Enters Construction Phase,” The Economist, December 23, 2015, http://country.eiu.com/article.aspx?art icleid=433618227&Country=Tanzania&topic=Economy&subtopic=F_7; and Tom Minney, “Tanzania’s $10bn China-Funded Port Will Start in 2015,” Africa Capital Markets, October 30, 2014, http://www.africa ncapitalmarketsnews.com/2506/tanzanias-10bn-china-funded-port-willstart-in-2015. 58. “Don’t Build Bagamoyo Port, Shippers Tell Govt,” The Citizen, June 11, 2015, https://www.thecitizen.co.tz/magazine/1840564-27479549oi2o7/index.html.

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59. Kim and Tuki´c, “Tanzanian Infrastructure Development and the Role of China.” 60. See Morisset, “Opening the Gates,” 34; and World Bank, “Tanzania Dar es Salaam Maritime Gateway Project,” June 8, 2017, http://documents1. worldbank.org/curated/en/789801499047361859/pdf. 61. PIDA is a continental initiative, which has the buy-in of all African countries, for mobilizing resources to transform Africa through modern infrastructure. Its 51 cross-border infrastructure projects comprise more than 400 actionable sub-projects across four main infrastructure sectors, namely energy, transport, transboundary water and ICT. 62. Kim and Tuki´c, “Tanzanian Infrastructure Development and the Role of China,” 4. 63. Frannie A. Léautier, Michael Schaefer, and Wei Shen, “The Port of Bagamoyo: A Test for China’s New Maritime Silk Road in Africa,” The Diplomat, December 1, 2015, https://thediplomat.com/2015/12/theport-of-bagamoyo-a-test-for-chinas-new-maritime-silk-road-in-africa.

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Chellaney, Brahma. “China’s Debt-Trap Diplomacy.” Project Syndicate, January 23, 2017. https://www.project-syndicate.org/commentary/china-one-beltone-road-loans-debt-by-brahma-chellaney-2017–01. COWI. “Bagamoyo SEZ Master Plan-Final Report.” January, 2013. https:// tdu.or.tz/app/uploads/2018/01/Bagamoyo-Master-Plan-Final-Report.pdf. Deloitte. If You Want to Prosper, First Build Roads: Africa Construction Trends Report 2018. London: Deloitte, 2019. “Don’t Build Bagamoyo Port, Shippers Tell Govt.” The Citizen, June 11, 2015. https://www.thecitizen.co.tz/magazine/1840564-2747954-9oi2o7/ index.html. Edinger, Hannah, and Jean-Pierre Labuschagne. “If You Want to Prosper, First Build Roads: China’s role in African infrastructure and capital projects.” Deloitte, March 22, 2019. https://www2.deloitte.com/za/en/pages/ene rgy-and-resources/articles/consider_building_roads.html. Ehizuelen, Michael M. O. “More African Countries on the Route: The Positive and Negative Impacts of the Belt and Road Initiative.” Transnational Corporations Review 9, no. 4 (2017): 341–359. Ergano, Delege, and Seshagiri Rao. “Sino–Africa Bilateral Economic Relation: Nature and Perspectives.” Insight on Africa 11, no. 1 (2019): 1–17. Farnham, Barbara. “Impact of the Political Context on Foreign Policy DecisionMaking.” Political Psychology 25, no. 3 (2004): 441–463. Fernando, Sithara. “Chronology of China-Africa Relations.” China Report 43, no. 3 (2007): 363–373. Hönke, Jana, and Ivan Cuesta-Fernandez. “A Topographical Approach to Infrastructure: Political Topography, Topology and the Port of Dar es Salaam.” Environment and Planning D: Society and Space 35, no. 6 (2017): 1076– 1095. Hursh, John. “A Bump in the Belt and Road: Tanzania Pushes Back Against Chinese Port Project.” Maryland: Centre for International Maritime Security (CIMSEC), 2019. http://cimsec.org/a-bump-in-the-belt-and-road-tanzaniapushes-back-against-chinese-port-project/42449. “How the Dream for a Port in Bagamoyo Became Elusive.” The Citizen, June 9, 2019. https://www.thecitizen.co.tz/news/1840340-5150328-8r5 ggd/index.html. Jacob, Thabit, and Rasmus Hundsbæk Pedersen. “New Resource Nationalism? Continuity and Change in Tanzania’s Extractive Industries.” The Extractive Industries and Society 5, no. 2 (2018): 287–292. Kamata, Ng’wanza. “Perspectives on Sino-Tanzanian Relations.” In China’s Diplomacy in Eastern and Southern Africa, edited by Seifudein Adem, 87–105. Oxford and New York: Routledge, 2016. Kamwelwe, Isaack A., “Hotuba ya Waziri wa Ujenzi, Uchukuzi na Mawasiliano Mheshimiwa Mhandisi Isack aloyce Kamwelwe (Mb), Akiwasilisha Bungeni

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Mpango na Makadirio ya Mapato na Matumizi ya Fedha kwa Mwaka wa Fedha 2019/2020 [Speech by the Minister for Works, Transport, and Communication Hon. Engineer Isack Aloyce Kamwelwe (MP), Presenting to the National Assembly, the Plan and Estimates of Revenue and Expenditure for the Financial Year 2019/20].” April, 2019. https://www.scribd.com/doc ument/422253066. Kim, Yejoo, and Nuša Tuki´c. “Tanzanian Infrastructure Development and the Role of China: The Case of Bagamoyo Port.” Centre for Chinese StudiesStellenbosch University Policy Briefing, no. 4 (2018). Kiondo, Andrew. “Tanzania’s Foreign Policy: The Socio-Economic Context.” In Politics and Administration in East Africa, edited by Walter O. Oyugi, 331–358. Nairobi: East African Educational Publishers, 1994. Lamtey, Gadiosa. “Ambassador: China Now Tanzania’s Largest Trading Partner.” The Citizen, April 17, 2019. https://www.thecitizen.co.tz/News/18403405076094-c10oxm/index.html. Léautier, Frannie A., Michael Schaefer, and Wei Shen. “The Port of Bagamoyo: A Test for China’s New Maritime Silk Road in Africa.” The Diplomat, December 1, 2015. https://thediplomat.com/2015/12/the-port-of-bagamoyo-a-testfor-chinas-new-maritime-silk-road-in-africa/. Machira, Polycarp. “Chinese Firm States New ‘Willingness’ to Invest Bagamoyo Port Project.” The Guardian, September 17, 2018. https://www.ippmedia. com/en/news/chinese-firm-states-new-%E2%80%98willingness%E2%80%99invest-bagamoyo-port-project. Makundi, Hezron, Huib Huyse, and Patrick Develtere. “Cooperation Between China and Tanzania on ICT: Fish, Fishing Tackle or Fishing Skills?” Journal of Chinese Economic and Business Studies 14, no. 2 (2016): 129–149. Makundi, Hezron, Huib Huyse, and Patrick Develtere. “Negotiating the Technological Capacity in Chinese Engagements: Is the Tanzanian Government in the Driving Seat?” South African Journal of International Affairs 24, no. 3 (2017): 331–353. Mead, Nick Van. “China in Africa: Win-Win Development, or a New Colonialism?” The Guardian, July 31, 2018. https://www.theguardian.com/cit ies/2018/jul/31/china-in-africa-win-win-development-or-a-new-colonialism. Minney, Tom. “Tanzania’s $10bn China-funded Port Will Start in 2015.” Africa Capital Markets, October 30, 2014. http://www.africancapitalmarketsnews. com/2506/tanzanias-10bn-china-funded-port-will-start-in-2015. Mirondo, Rosemary. “Chinese Company in $3 Billion Liganga-Mchuchuma Steel Project Reacts.” The Citizen, November 27, 2018. https://www.thecit izen.co.tz/News/Firm-speaks-out-on-Liganga-project/1840340-4870356d2hbwl/index.html.

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Monson, Jamie. Africa’s Freedom Railway: How a Chinese Development Project Changed Lives and Livelihoods in Tanzania. Bloomington and Indianapolis: Indiana University Press, 2009. Morisset, Jacques. “Opening the Gates: How the port of Dar es Salaam Can Transform Tanzania: Tanzania Economic Update.” World Bank Working Paper, no. 77729 (2013). http://www.worldbank.org/tanzania/econom icupdateWorldBank,Tanzania-Dar-es-Salaam-Maritime-Gateway-Project-P15 0496-Project-Appraisal-Document-FINAL-June-8-2017. Mpango, Philip I. “Maelezo ya Mheshimiwa Dkt. Philip I. Mpango (Mb), Waziri wa Fedha na Mipango, Akiwasilisha Mapendekezo ya Serikali ya Mpango wa Maendeleo wa Taifa na ya Kiwango na Ukomo wa Bajeti ya Serikali Kwa Mwaka 2020/21 [Explanations by Honourable Dr. Philip I. Mpango (MP), Minister of Finance and Planning, while Presenting of the Government Proposals for National Development Plan and for the Amount and Ceiling of Government Budget for the Year 2020/21].” May, 2020. https://www.parliament.go.tz/uploads/budgetspeeches/159188 6189-HOTUBAYABAJETIYASERIKALI.pdf. National Development and Reform Commission and the State Oceanic Administration, PRC. “Vision for Maritime Cooperation Under the Belt and Road Initiative.” June 20, 2017. https://eng.yidaiyilu.gov.cn/zchj/qwfb/16639. htm. Nyang’oro, Julius E. The JK Legacy: Politics and Public Policy in Tanzania. New Jersey: Africa World Press, 2016. Onyango, Emmanuel. “Tanzania gives Chinese firm Conditions for Bagamoyo Port.” The East African, October 21, 2019. https://www.theeastafrican. co.ke/business/Tanzania-gives-chinese-firm-conditions-for-bagamoyo-port-/ 2560-5318790-10s5do7/index.html. People’s Republic of China, Ministry of Foreign Affairs. “Treaty of Friendship Between the People’s Republic of China and the United Republic of Tanzania.” April 25, 2002. https://www.fmprc.gov.cn/mfa_eng/wjb_663 304/zzjg_663340/tyfls_665260/tyfl_665264/2631_665276/t15519.shtml. Ping, Ai. “From Proletarian Internationalism to Mutual Development: China’s Cooperation with Tanzania, 1965–95.” In Agencies in Foreign Aid: Comparing China, Sweden and United States in Tanzania, edited by Goran Hyden and Rwekaza Mukandala, 156–201. New York: St. Martin’s Press Inc., 1999. Putnam, Robert D. “Diplomacy and Domestic Politics: The Logic of Two Level Games.” International Organization 42, no. 3 (1988): 427–460. Reed, Tristan, and Sasha Trubetskoy. “Assessing the Value of Market Access from Belt and Road Projects.” World Bank Policy Research Working Paper, no. 8815 (2019).

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Reeves, Jeffrey. “Imperialism and the Middle Kingdom: The Xi Jinping Administration’s Peripheral Diplomacy with Developing States.” Third World Quarterly 39, no. 5 (2018): 976–998. Roberts, George. “‘China and the Devil Slaves’: Challenging Afro-Asian Solidarities in Tanzania.” Afro-Asian Vision, February 13, 2017. https://medium. com/afro-asian-visions/china-and-the-devil-slaves-challenging-afro-asian-sol idarities-in-tanzania-216ceefa090b. Roder, Kai. “‘Bulldozer Politics’, State-making and (Neo-) Extractive Industries in Tanzanian Mining Sector.” The Extractive Industries and Society 6, no. 2 (2018): 407–412. Servant, Jean-Christophe. “Will a New Port Make Tanzania ‘Africa’s Dubai’?” The Nation, February 19, 2019. https://www.thenation.com/article/tan zania-china-bagamoyo-port. Shangwe, Mhidini J. “China Soft Power in Tanzania: Opportunities and Challenges.” China Quarterly of International Strategic Studies 3, no. 1 (2017): 79–100. Sigalla, Huruma H. “Changing Trends in the Tanzania–China Relationship.” Österreichische Zeitschrift Für Soziologie 39, no. 1 (2014): 61–78. Soyres, François et al. “How Much Will the Belt and Road Initiative Reduce Trade Costs?” World Bank Policy Research Working Paper, no. 8614 (2018). Strauss, Julia C. “The Past in the Present: Historical and Rhetorical Lineages in China’s Relations with Africa.” The China Quarterly, no. 199 (2009): 777– 795. Swedlund, Haley J. “Is China Eroding the Bargaining Power of Traditional Donors in Africa?” International Affairs 93, no. 2 (2017): 389–408. Tan-Mullins, May. “Smoothing the Silk Road through Successful Chinese Corporate Social responsibility Practices: Evidence from East Africa.” Journal of Contemporary China 29, no. 122 (2020): 207–220. Tanzania Ports Authority (TPA). “Tanzania Ports Master Plan.” February, 2009. https://www.slideshare.net/jaekim522/final-report-tanzania-ports-masterplan-1-to-100. Tanzania Ports Authority(TPA). “Annual Report & Accounts for the Year Ended 30th June, 2014.” June, 2015. https://www.ports.go.tz/index.php/en/pub lications/reports-annual-reports-and-accounting/275. Tanzania Revenue Authority (TRA). https://www.tra.go.tz/index.php/113-sta tistics/94-trade-statistics. Tanzania, Ministry of Industry and Trade (MIT). “Speeches.” https://www.mit. go.tz/speeches. Tanzanian National Bureau of Statistics (NBS). https://www.nbs.go.tz/index. php/sw/machapisho/pato-la-taifa.

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“Tanzania’s China-Backed $10bn Port Plan Stalls.” The East African, May 23, 2019. https://www.theeastafrican.co.ke/business/Tanzania-port-plan/25605127662-10sv8emz/index.html. The United Republic of Tanzania, Ministry of Finance and Planning (MoFP). https://www.mof.go.tz/index.php. Trading Economics. “Tanzania Balance of Trade.” https://tradingeconomics. com/tanzania/balance-of-trade. Trading Economics. “Tanzania GDP Per Capital.” https://tradingeconomics. com/tanzania/gdp-per-capita. United Republic of Tanzania (URT). “National Five Year Development Plan 2016/17–2020/21: ‘Nurturing Industrialization for Economic Transformation and Human Development’.” June, 2016. http://extwprlegs1.fao.org/ docs/pdf/tan166449.pdf. United Republic of Tanzania, Ministry of Trade, Industry and Investment. “Bagamoyo Special Economic Zone.” https://tdu.or.tz/available-land/bag amoyo-special-economic-zone. United Republic of Tanzania, Ministry of Transport & Japan International Cooperation Agency (JICA). “Comprehensive Transport and Trade System Development Master Plan in the United Republic of Tanzania—Building an Integrated Freight Transport System—Final Report Volume 3.” March, 2014. https://openjicareport.jica.go.jp/pdf/12150504.pdf. United Republic of Tanzania. “Implementation Strategy for National Five Year Development Plan 2016/17–2020/21, Volume I—The Action Plan.” December, 2017. https://www.datocms-assets.com/7245/1556203426-theaction-plan-16-1-2018-kempa.pdf. World Bank. “Tanzania Could Boost Its Economy by Reforming the Port of Dar es Salaam.” May 21, 2013. http://www.worldbank.org/en/news/pressrelease/2013/05/21/tanzania-could-boost-its-economy-by-reforming-theport-of-dar-es-salaam-world-bank. World Bank. “Tanzania Dar es Salaam Maritime Gateway Project.” June 8, 2017. http://documents1.worldbank.org/curated/en/789801499047 361859/pdf. Yamba, Ibrahim. “Ndugai Asks Govt to Explain Lack of Progress on Bagamoyo Port Project.” The Citizen, May 13, 2019. https://www.thecitizen.co.tz/ News/Ndugai-asks-govt-to-explain-lack-of-progress-Bagamoyo-port-/184 0340-5113052-3jf61u/index.html.

Iran in China’s Maritime Silk Road Initiative (MSRI): Bounded Progress and Bounded Promise Manochehr Dorraj and Jean-Marc F. Blanchard

Introduction China’s twenty-first century Maritime Silk Road Initiative (MSRI) and the New Silk Road Economic Belt (SREB) initiative were launched in 2013. They later morphed into Belt and Road Initiative (BRI). The MSRI itself is an ambitious transcontinental project whose implementation requires the building, acquisition, or renovation of seaports, expanded shipping capacity, and the construction of railroads and highways as well as soft infrastructureinfrastructure to facilitate economic activity between the People’s Republic of China (PRC/China) and its partners.1 Economically, it aims inter alia to give China new markets and expand its economic

The authors would like to thank Pippa Morgan for her research assistance and Xu Jing for her work conforming the chapter to publisher style requirements. M. Dorraj (B) Texas Christian University, Fort Worth, TX, USA J.-M. F. Blanchard Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations, Los Gatos, CA, USA e-mail: [email protected] © The Author(s) 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8_6

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reach globally. While China’s leaders insist the MSRI is primarily an economic connectivity project, it “involves (the China-led) construction of economic institutions and linkages which potentially will have political consequences such as enhancing China’s soft power, increasing China’s geographic interests, and elevating China’s regional prominence vis-àvis others.”2 These outcomes lend the MSRI a significant geopolitical dimension. To achieve its diverse economic and political objectives, the MSRI has to surmount numerous obstacles. These include synchronizing multiple transportation systems, eliminating barriers to the flow of goods, services, and people, minimizing opposition to Chinese workers in host countries, mollifying resistance to Chinese-led institutions, concluding requisite agreements, combatting terrorism, and surmounting instability in partner countries. Additionally, the scheme will have to harmonize disparate dispute resolution mechanisms and devise effective policies to win the approval of countries with vastly different political, regulatory, and legal systems.3 As experts have observed, the challenges facing the MSRI/BRI vary cross-nationally. In some countries, such forces will catalyze strong interest in the MSRI and/or facilitate the scheme’s realization. In others, they may propel opposition or seriously hinder its implementation.4 On the surface, Iran is a country where the MSRI not only should progress rapidly, but also one where there should be major achievements. Historically, Iran’s relations with China date back to the ancient Silk Road. Politically, Iran shares many values and goals with China and obtains invaluable, albeit bounded, backing from China. Economically, China is a major Iranian energy customer, source of foreign direct investment (FDI), and contractor for Iranian infrastructure. The value of the above is magnified by United States (US) sanctions against Tehran. China also fits into Tehran’s plans to produce and sell more energy, attract FDI, and diversify its economy. As far as China is concerned, Iran has a key role in the MSRI (and the BRI writ large). It also has great economical appeal due to its geographic location, large market, and massive energy resources and diverse political attractions. The MSRI (and SREB) in Iran, however, is not witnessing dramatic and/or rapid accomplishments which is puzzling. As we show, the gap between expectations and reality results from domestic and international political and economic factors linked to both Iran and China. These influences are likely to persist despite the signing of the twenty-five-year 2020 Comprehensive Strategic Partnership (CSP), explained below.

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Broadly speaking, analyses of Iran in the MSRI/BRI are scant. This is undesirable given Iran’s significance as well as the impact its relations with China may have on other local MSRI participants such as Gulf Cooperation Council (GCC) states. There also is a dearth of systematic scholarly analysis. There are a few works examining Iran in the MSRI/BRI that consider political and/or economic factors weighing on the MSRI/BRI in Iran, but few contemplate them together or concurrently consider factors affecting China’s implementation of the MSRI in Iran. For students of the BRI, it is beneficial to analyze Iran in the MSRI because it provides a fertile environment for understanding the MSRI’s realization in a case where it is bounded despite a prima facie conducive setting. Beyond the above, the MSRI case sheds light on the political and economic variables mediating economic links between countries and thus should be of interest to students of China’s foreign economic relations, China in the Middle East, and Iranian foreign policy specifically as well as international political economy more generally. In this chapter, we first place Iran-China relationsrelations in historical context. Next, we give an overview of Iran’s economic relations with China looking at areas such as energy, FDI, and contracting. Thereafter, we detail Iran’s political and military relations with China. Following this, we discuss Iran in China’s MSRI. In this section, we discuss some SREB projects because Iran also is an integral part of the SREB. Still, we concentrate on MSRI projects in line with the focus of this volume.5 For our coverage of Iran in the MSRI, we also probe the implementation of the scheme and identify a number of factors affecting its realization. In the last section, we offer summary remarks and thoughts about the implications of our analysis.

Bilateral Ties in Historical Context Historical ties between the ancient Chinese and Persian Empires were significant. A shared sense of historical grandeur is bolstered by the legacy of “Silk Road” that tied ancient China to Persia as well as Central Asia, India, Arabia, and parts of Europe.6 This long history of mutually beneficial relations is complemented by a lack of any war or major conflict. Having no history of war and conflict and lacking any baggage of colonialism and neocolonialism, the relationship operates with a clean slate. Indeed, the shared humiliating experience of having suffered under neocolonial rule and Western domination provided a psychological basis

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for a common identity. The above (and China’s “respect for sovereignty” and “non-intervention” principles) provide a political asset that even today sustains and fuels their relations. Their numerous revolutions in twentieth century in which themes of anti-imperialism and nationalism were dominant and their mutual aspirations for creating a multipolar world provide yet more common ground for their relationship.7 Iranian and Chinese cultural and political ties go back to the reign of the Han and Parthian dynasties in 139 BCE with each country influencing the other culturally, economically, and scientifically.8 This backdrop of cooperative relations laid a solid foundation for the future expansion of bilateral ties. Nevertheless, from the birth of the PRC to the Iranian revolution in 1979, Iran’s links with China were limited due, among other things, its close alliance with the US and other aversions to normalizing relations with Communist China. The emergence of the Sino-Soviet conflict in the 1960s and the normalization of relations between US and China in 1971, however, created the space for Tehran to establish diplomatic relations with Beijing in 1972.9 Even so, a substantial expansion of relations only occurred after the 1979 Islamic revolution. Following the 1979 Iranian revolution, China quickly recognized the new Islamic Republic and expressed its aspirations for an expansion of relations between the two countries. Prospects were good because the imposition of sanctions by the US and several European countries on Iran in the aftermath of the 1980–1981 hostage crisis and a concerted attempt to isolate Iran internationally led the Islamic Republic to opt for an “Eastern Strategy”—that is, closer economic and political ties with China and the Soviet Union—to counter these pressures. One constraint on the growth of ties was the fact that during the Iraq–Iran war (1980– 1988), China sold weapons to both sides.10 For its part, China embraced Tehran’s new “anti-imperialist” stand, finding it consistent with its policy of resisting the “hegemonic policies” of Western powers. Calling itself, “the largest developing nations” and a champion of non-alignment and “Third World Solidarity,” Beijing also shared with Tehran the aspiration of creating a multipolar world. Aside from strategic considerations, China also prized Iran’s status as a major regional energy powerhouse and Iran’s large market. The fact that Western sanctions restricted Iran’s interactions with the global economy meant China would have uncontested access to Iran’s economy, increasing the potential rewards from broader and deeper ties with Iran.11

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The Ties That Bind: Iran-China Economic Links Energy Cooperation Due to the severe damage inflicted on its energy infrastructure during its war with Iraq, Iranian oil exports suffered throughout the 1980s and it was not until 1990s that the country was in a position to export substantial amounts to China. During this period, China helped Iran to rebuild its energy infrastructure, Iran’s production capacity gradually began to recover, and China started to become a major consumer of Iranian oil. Reflecting this, whereas in 1997 Iran exported 700,000 barrels/day (bpd) of crude to China, by 2000 this had expanded to 2.7 million bpd.12 Over the next ten years, as Table 1 shows, Iranian oil exports to China soared and were a vital source of demand in 2015 and 2016 when Iranian oil exports to the world notably dropped. With the opening created by the July 2015 nuclear agreement and subsequent removal of energy-related sanctions, Iranian energy sales to China and the world increased substantially, with China remaining not just a major buyer of Iranian oil, but the major buyer, taking much more than others such as India, Taiwan, South Korea, and Japan. In addition to oil, Iran sells a huge amount of natural gas to China. This is indicated by the numbers in Table 2. It also is clear that Iran relies heavily on China as a major consumer of its natural gas exports, with Iran Table 1 Iran’s oil exports to China and the World, 2000–2018 (select years) (amounts in United States/USD millions) Year

Exports to China

Total exports

Iranian imports from China (refined oil products)

China’s percentage share of Iranian exports (%)

2000 2005 2010 2015 2016 2017 2018

1,475.87 6,048.95 11,612.80 11,630.63 9,782.99 11,673.16 16,621.46

23,768.80 48,571.45 67,103.74 34,654.85 39,518.52 53,418.22 65,393.54

58.88 28.21 12.02 89.28 26.21 47.46 122.94

6.21 13.45 17.31 33.48 24.76 21.85 25.42

Source Compiled from United Nations Conference on Trade and Development (UNCTAD) (UNCTAD Stat, “Data Center,” n.d., https://unctadstat.unctad.org/wds/ReportFolders/reportFol ders.aspx [hereinafter UNCTAD Stat])

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Table 2 Iran’s natural gas exports to China and the World, 2000–2018 (select years) (amounts in USD millions) Year

Exports to China

Total exports

China’s percentage share of Iranian exports (%)

2000 2005 2010 2015 2016 2017 2018

94.87 306.96 921.72 1,597.62 633.08 661.55 857.37

421.33 1,073.44 3,285.74 3,047.03 2,283.55 2,735.95 4,343.01

22.52 28.60 28.05 52.43 27.72 24.18 19.74

Source UNCTAD Stat

routinely selling 20% or more of its natural gas to China during the period between 2000 and 2018. Iran and China have concluded various major deals pertaining to natural gas, but many have failed to come to fruition. For example, in 2004, Iran signed a $20 billion contract with China to sell it 2.5 million metric tons of natural gas over a 25-year period starting in 2008. This mega deal was followed by another one pursuant to which Iran would have exported 250 million metric tons of gas to China over a 25-year period, a deal worth an estimated $100 billion.13 This deal, however, did not take place due to Washington’s imposition of sanctions on Iran’s energy sector in 2012 and Iran’s technical inability to expand its production volumes. These sanctions and later ones, for instance those imposed in 2014, coupled with Beijing’s aversion to geopolitical risks and desire to diversify import sources were other important factors explaining why natural gas ties did not expand more substantially. As indicated by Table 3, Iran possesses massive energy reserves. As of the end of 2018, its proven oil reserves ranked fourth in the world, trailing, respectively, Venezuela, Saudi Arabia, and Canada. With a natural gas reserve of 31.9 trillion cubic meters, it possesses more than 16% of global natural gas reserves and ranks second in the world after Russia.14 However, despite its impressive oil and gas reserves, its production is comparatively poor. It produces far less oil than other major oil producers such as the US, Saudi Arabia, and Russia.15 Iran also produces far less

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Table 3

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Global oil reserves-top five countries as of 2018

Country Venezuela Saudi Arabia Canada Iran Russia

Billion barrels

Share of world total

303.3 297.7 167.8 155.6 106.2

17.5 17.2% 9.7 9.0% 6.1%

Source BP Statistical Review of World Energy 2019 (BP, “BP Statistical Review of World Energy 2019,” https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-eco nomics/statistical-review/bp-stats-review-2019-full-report.pdf, 14)

Table 4 List of World’s major natural gas producers, 2015–2018 (amounts in millions of tons oil equivalent) Country

2015

2016

2017

2018

Global share (as of 2018)

US Russia Iran Saudi Arabia

636.5 502.5 157.8 85.3

625.4 506.7 171.40 90.6

641.2 546.5 189.3 93.9

715.2 575.6 205.9 96.4

21.5 17.3 6.2 4.5

Source BP Statistical Review of World Energy 2019 (Ibid., 33)

natural gas than one would expect given its status as the owner of the second-largest natural gas reserves globally (see Table 4). Given the reserves-production gap, it is not surprising, therefore, that energy cooperation has been an integral part of ties with Iran seeking Chinese help to boost its oil and gas production as illustrated by its 2016 deal with Chinese companies to develop two giant fields, North Azadegan and Yadavaran. The next year, the Iranian National Oil Company concluded a $4.8 billion 20-year agreement with a partnership comprised of China’s National Petroleum Corporation (CNPC) and Total, the French energy giant, to develop phase two of the South Pars offshore gas field, the largest gas field in the world. Following the aforementioned US abrogation of the 2015 nuclear deal, Total pulled out. Moreover, CNPC, which was supposed to assume Total’s share, later bailed out.16 Aside from the South Pars deal, in 2017, the National Iranian Oil Refining and Distribution Company reached an agreement

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with China’s Sinopec to develop Phase one of the Abadan refinery located in the southwest of Iran.17 Iran-China energy cooperation also includes expanded dealings with respect to petrochemicals, especially methanol.18 Trade Prior to the 1979 Iranian revolution, the value of China’s trade with Iran was less than 1% of Iran’s total trade. By 1991, when Iran undertook its post Iran–Iraq war reconstruction, its trade with China had doubled, though it was far less than its trade with others. From 1990 to 2001, the annual growth of trade was dramatic, averaging 55%. By 2009, China became Iran’s number one trade partner, supplying 16% of the latter’s imports.19 However, after US-European Union sanctions were instituted against Iran and the US threatened to sanction Chinese companies doing business with Iran, Iranian trade with Beijing dropped. In the aftermath of the 2015 nuclear deal and the removal of sanctions on Iran, trade resumed its upward trend. Table 5 illustrates the ups and downs of Iran-China trade from 2010 to 2018. In 2016, there were hopes for a future explosion in trade because during Chinese President Xi Jinping’s visit to Iran that year the two countries pledged to expand trade to $600 billion by 2026.20 Two years later, however, such hopes proved unwarranted because the collapse of the nuclear deal and the Trump administration’s imposition of new sanctions on Iran, which included a ban on American businesses participating in the Table 5

Iran–China trade, 2010–2018 (amounts in USD millions)

Year

Exports to China

Imports from China

Total trade

Trade balance

2010 2011 2012 2013 2014 2015 2016 2017 2018

18,845.13 30,185.55 26,461.21 29,199.48 30,767.00 21,360.96 17,967.36 20,897.22 26,600.21

8,341.07 11,512.18 8,408.36 10,590.43 16,675.75 12,127.22 11,972.56 14,190.01 11,498.59

27,186.20 41,697.73 34,869.57 39,789.91 47,442.75 33,488.18 29,939.92 35,087.23 38,098.80

10,504.06 18,673.37 18,052.85 18,609.05 14,091.25 9,233.74 5,994.80 6,707.21 15,101.62

Source UNCTAD Stat

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Iranian market and pressure on European companies to stay away, negatively impacted the Iranian economy.21 On top of this, after the arrest of Sabrina Meng Wanzhou, Huawei’s Chief Financial Officer in December 2018, due to alleged violations of the Iran sanctions regime, the Bank of Kunlun, “the state-owned bank at the heart of China’s trade with Iran, announced a dramatic change in its policies, informing clients it would no longer process payments that contravened US secondary sanctions on Iran.”22 While in the last decade Iran has run a continuing trade surplus with China as shown by Table 5, the composition of trade is very neocolonial in its character. Iran essentially exports primary products such as natural resources and, to a much lesser extent, processed natural resources to China in exchange for medium- and low-tech manufactured goods, but also substantial volumes of automobiles. Iran also imports large volumes of electronic and electrical goods as well as substantial volumes of textiles, garments, and footwear from China.23 Investment Currently, China is the top foreign investor in Iran. Table 6 provides data Table 6 Chinese OFDI in Iran (amounts in USD millions)

2005–2006 2007 2008 2009 2010–2013 2014 2015 2016 2017 2018

0 (all years were 0) 2,010 0 1,760 0 (all years were 0) 350 0 600 730 0

Source American Enterprise Institute (AEI) and Heritage Foundation, “China Global Investment Tracker” (American Enterprise Institute [AEI] and Heritage Foundation, “China Global Investment Tracker,” https://www.aei.org/china-global-investmenttracker [hereinafter AEI-Heritage, Foundation CGIT]. The CGIT started in 2005 and does not include transactions under $100 million. The figures here differ from China-Med Chinese OFDI stock data. China-Med uses data from official Chinese publications, which do not take into account tax havens)

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on Chinese outward FDI (OFDI) flows to Iran from 2005 to 2018. In terms of non-energy Chinese OFDI (COFDI), we highlight several in the post-MSRI/SREB era. One was a $350 million investment by China Metallurgical Group Corporation (MCC) in 2014 to build a steel plant in Chaharmahal-Bakhtiari, in South-West Iran. This FDI initially was intended to be part of a larger $2.45 billion MCC investment in Iran.24 Another was a $2 billion joint venture (JV) in 2016 between China Railway Group Limited (CREC) and the Iran Aluminum Company to invest in a plant in Kheirabad.25 Over the next two years, Chinese companies including Sinosteel signed deals exceeding $215 million to produce solar panels and build solar power plants in Iran.26 Iran’s economy is vulnerable to fluctuations in the price of oil and US energy sanctions. Not surprisingly, then, Tehranwelcomes greater COFDI. Noteworthy in this regard, in an 2016 interview, the deputy head of the Iran-China Chamber of Commerce, said “Iran and China have so far had trade ties but from now on our expectation is to see Chinese investments in our infrastructure,” adding “We need between $30 bn to $50 bn foreign investments annually, a big chunk of which can be secured by China for such sectors like road, rail and air transportation, agriculture, and industries such as…textile and ceramics.”27 COFDI not only can help the Iranian government diversify the economy, but also reduce Iran’s unemployment rate and advance private sector growth. It also can improve the composition of Iran–China economic dealings. Infrastructure and Other Contracting Chinese involvement in Iranian infrastructure has a long history, intensifying after the eight-year Iraq–Iran war. In contrast to most Western countries which were hesitant to join Iranian reconstruction efforts due to their opposition to the Islamic regime and/or fears about irritating Washington, China and Chinese companies saw the Iranian market as an opportunity and the exodus of Western and other players from Iran as providing an opening. China became an active participant in rebuilding Iranian infrastructure, with Chinese contractors helping construct subway systems in Tehran and Mashhad, railways, dams and hydropower plants, roads, tunnels, bridges, fisheries, ports, oil refineries, automobile and cement factories, and telecommunications networks.28 Table 7 illustrates the substantial amount of contracts Iran awarded to China in the pre-BRI period.

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Table 7 Chinese contracting projects in Iran, 2005–2013 (amounts in USD millions)

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Year

Total value of contracts

2005 2006 2007 2008 2009 2010 2011 2012 2013

1,707.88 3,239.92 751.25 1,741.51 11,474.36 1,293.55 2,956.86 4,658.26 4,310.24

Source China-Med (China-Med Data, “Iran,” https://www. chinamed.it/chinamed-data/middle-east/iran. Unlike the AEIHeritage Foundation CGIT, this source covers projects of all amounts and is based on official Chinese statistics)

The expansion of Chinese infrastructure activities in Iran must be put in context. China was one of the few countries in the world buying Iranian oil during the sanction era. According to United Nations (UN) sanction rules, China had to maintain $22 billion worth of payments for Iranian oil in a special account. After sanctions were lifted, China did not release the money to Iran, but only allowed it to be used to finance Chinese infrastructure projects in Iran.29 Other Forms of Economic Cooperation Industrial cooperation started during the 1980–1988 war in the area of munitions. During the 1990s, it expanded to include establishing joint industrial design and engineering companies. Moreover, China transferred modern automobile technologies and design knowledge to Iran. Aside from manufacturing, mining and metallurgy were the other primary areas of economic cooperation. Cooperation in mining was vital because Iranian development plans featured it as a key pathway for achieving economic independence.30 More recently, Iran and China have concluded joint scientific and technological cooperation agreements entailing joint research, technology transfer, and training in drilling, fish farming, mining, and renewable energy.31 While economic variables are very important, Iran’s broad and deep economic ties with China indisputably reflect the opening flowing from sanctions and other political factors. Regarding the latter, to reiterate,

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unlike with the West and Russia, Iran has no history of war or conflict with China. Furthermore, it is attracted to China’s policies of respect for sovereignty and non-intervention in internal affairs of other nations and accentuating trade. Such policies have bought China a good deal of political capital in Tehran.

Iranian Political and Military Relations with China Iran has long had an Eastern or “Look East” strategy, which involves broader and deeper ties with China (and also Russia) as a way to deal with a challenging neighborhood and political and economic pressure from the United States and its allies.32 The strategy has gained greater appeal due to the Trump administration’s hostility and re-imposition of sanctions. In practice, closer ties with China emanating from Iran’s Eastern strategy have been reflected in meetings at the highest levels, the creation of regular ministerial meeting structures, and rhetorical support by one for the other. Illustrating the last point, during protests around January 2017 in several Iranian cities, Beijing declared it would allocate more than a billion dollar for investments in Iran.33 Furthermore, in reaction to former US Ambassador to the UN Nikki Haley’s call for Security Council hearings about Tehran’s crackdown on protestors that year, China’s UN envoy asserted: Demonstrations were a domestic affair that did not threaten international security and should not be taken up. If Haley’s logic were to be followed consistently, the security Council should have held hearings after the 2014 racial protest in Ferguson, Missouri, and the Occupy Wall Street demonstration in 2011!34

Revelations in summer 2020 that Iran and China had signed the aforementioned CSP spurred a flurry of excited commentary about the relationship shifting to a new plane. The CSP reportedly would expand China’s presence throughout the Iranian economy dramatically, involve an astounding $400 billion of COFDI, encompassing energy, infrastructure, broadband, transportation, and military and security cooperation. The new agreement entails more systematic and sustained cooperation intended to undercut US efforts to isolate Iran.35 Post-revelation analysis, though, was far calmer. Knowledgeable observers pointed out inter

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alia that the CSP lacked definitive obligations and targets, that some of the hyped forms of cooperation (e.g., military ties) already existed, that CSP COFDI goals were disconnected from current realities and past results, that the development of China’s ties with Iran would be constrained by China’s strong relations with GCC states and Israel, and continuing worries about US sanctions (an issue we highlight throughout this chapter), and that there was fierce domestic opposition to the deal within Iran.36 Cooperation with China also facilitates Iran’s trade and other economic dealings with the EU. As well, it helps boost Iranian economic interactions with neighboring countries in Central Asia, the Caucuses, and South Asia.37 It needs to be understood that this is not just about economics. By supporting increased Iranian trade, access to funds, infrastructure projects, industrialization and sectoral diversification, and scientific and technical cooperation, China also is helping the regime generate the resources it needs to stay in power. It does not hurt that China and Chinese companies, within limits, are a willing partner. Due to its frictions with the US, China is more willing to stand up to perceived US “bullying” over China’s international economic relationships. As for Chinese companies, some remain willing to invest in and contract with Iran because of factors such as limited vulnerability to US sanctions.38 Iran further has benefitted from China’s rhetorical backing, support in the UN and other global bodies, and collaboration in international venues.39 A more specific example of political cooperation was China’s help in bringing Iran into the Shanghai Cooperation Organization (SCO) as an observer in 2005. More recently, in 2016 and 2017, China expressed support for Iran’s full membership in the SCO.40 For Iran, having a major power like China on its side is crucial for the survival of the regime, security of the country, and Iran’s greater regional aspirations. The Islamic Republic has many enemies and very few friends in the region and beyond. Having the US as a persistent nemesis is very threatening to the regime given that the US is a military giant, an economic superpower, and a major player in almost every international organization. Iran and China have noteworthy military cooperation, too. For instance, Iran has obtained fast attack boats, anti-ship cruise missiles, and long-range missiles from China. Furthermore, China has played an important role in developing Iranian missile systems. Such aid has been critical because, lacking a viable air force, Iran’s missile systems serve as its ultimate weapon for deterrence and defense. China also played a significant

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role in development of Iran’s nuclear program, especially in its early stages of development.41 A prominent aspect of Iran–China security cooperation is naval ties. For example, in 2014, a high-ranking Iranian delegation visited China to solicit the latter’s assistance in modernizing Iran’s surface and submarine fleets. This was followed by joint naval exercises in the Persian Gulf the same year. In 2015, People’s Liberation Army Navy Admiral Sun Jianguo visited Tehran. During his visit, a Memorandum of Understanding (MoU) was signed on joint training, cyber warfare, the sharing of classified information, and “counter terrorism.”42 Iran has tried to be a good naval partner to China. Evidencing this, in 2012 and 2014, it rescued Chinese ships from Somali pirates in, respectively, the Arabian Sea and the Gulf of Aden.43 In 2017, the two countries held a joint naval exercise and discussed the possibility of Iran buying 150 J-10 multirole military aircraft.44 As noted, the 2020 CSP calls for military and security cooperation between Iran and China, specifically in areas like training and exercises, weapons development, and intelligence sharing.45 However, at this point, it is not clear if it entails anything qualitatively new. China’s political and security cooperation with Iran is logical given the latter is a major Middle Eastern power. In terms of geography, Iran appeals because it has the largest coastline of any Persian Gulf nation, controls the Strait of Hormuz, and is a gateway to Central Asia and, through Turkey, to Europe. If we add the proximate energy-rich Caspian Sea and the potential of Iran’s northern ports to handle the influx of commerce from Eurasia to this picture, Iran’s value is even more apparent. Indeed, as one observer put it, “For China’s Global Ambitions, ‘Iran is in the Center of Everything.’”46 Relatedly, some opine that Chinese leaders regard relations with Iran as so significant that they place it among East Asian countries in terms of foreign policy priorities. Still, China’s policy toward Iran involves a delicate balancing act: protecting its vital interest in Iran without substantially damaging its more significant ties with the US.

Iran in China’s MSRI For the most part, Iran has been an enthusiastic participant in the MSRI and the BRI more generally.47 This is what one would expect given the broad and deep bases for Iranian cooperation with China that we have detailed, the principles associated with the BRI (e.g., support for state sovereignty), and Iran’s longing for a more inclusive global economy

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and polity.48 In line with this, in January 2016, during President Xi’s visit to Iran, Iran and China signed an MoU on “Jointly Promoting the Silk Road Economic Belt and the 21st Century Maritime Silk Road.” Concurrently, the two countries signed 17 other accords calling for cooperation in nuclear energy, mining, and civil and commercial affairs, and spoke on dealing with terrorism problems in the Middle East.49 Subsequently, Iranian leaders have shown strong support for China’s scheme. For example, during a 2019 visit to Beijing, Iran’s Parliament Speaker Ali Larijani and Foreign Minister Javad Zarif both expressed support for and reiterated its importance to Iran. As well, Iran sent ministerial level delegations to both major BRI Forums in 2017 and 2019.50 The 2020 CSP is suggestive of a new level of Iranian involvement in the BRI because of its heavy emphasis on connectivity (ports, railways, and telecommunications). Yet, it is far from certain a new level of substantially expanded bilateral ties will be reached given, among other things, past history, US sanctions, the political cost of doing business with Iran, and Chinese interests elsewhere. As far as purer MSRI projects are concerned, the two sides agreed to build jointly a $550 million oil loading terminal on Qeshm Island, the largest Island in the Persian Gulf. Once operational, the project’s first stage will be able to store 10 million barrels of crude oil and ultimately will be able to handle tankers up to 140 meters deep and store 30 million barrels of crude. After the completion of the terminal, Qeshm Island will become a financial and banking center that would serve as a gateway for foreign banks and investors to enter its market, with Chinese, Russian, and Japanese banks having expressed interest in opening offices there.51 China also has played an important role in enhancing Iran’s Neka port on the Caspian Sea, which will facilitate increased trade between Iran and Central Asia and Iran and China. In addition, with varying degrees of Chinese help, Iran is modernizing, expanding, and improving the connectivity of ports such as Bandar Imam Khomeini, Bandar Abbas, Bushehr, and Chabahar to facilitate the transport of goods inside as well as from Iran.52 There also is vague mention in the 2020 CSP about Chinese involvement in other southern seaports such as Jask Port and linked seaport features such as free trade zones (FTZs).53 On the land front, Iran has begun to expand its transportation network to better align it with the SREB part of the BRI, enhance transportation within and between its own major cities and seaports , and improve connections with neighboring Central Asian countries, Europe, and

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Turkey. Major projects include the electrification of the Tehran-Mashhad trunk line, a high-speed railway linking Tehran and Isfahan via Qom, and railways connecting Tehran, Hamedan, and Sanandaj.54 Although information is lacking on the progress of many projects, all have expanded Iran’s need for massive amounts of Chinese credit and COFDI, as well as Chinese engineering skills, construction capabilities, and construction supplies. In 2016, the two countries inaugurated the railway from Yiwu (China)-Tehran railway, which dramatically cuts transport times between the two countries.55 Other projects of note, some which have a clear link to the MSRI/BRI and others a more tenuous one, include large-scale gas, aluminum, steel, petrochemical, and rail projects worth more than $6 billion involving numerous Chinese firms. English-language, public sources generally do not reveal the proportion of COFDI in these projects, though it is known that the $6 billion above includes a roughly $1.8 billion investment by China’s CNTIC in a petrochemical plant in Mehran.56 Aside from this, Iran’s Ambassador to China also has spoken vaguely about a BRI network of pipelines which includes the already constructed Iran–Pakistan pipeline which might eventually run to China through Pakistan.57 The above shows there are many MSRI and SREB projects in Iran. It would be wrong to conclude, however, that all enumerated projects will be realized or completed in line with their original, eye-catching headlines.58 Indeed, what strikes us is the relatively dearth of realized maritime infrastructure projects, major COFDI in developments like FTZs, and mega-billion-dollar emerging industry, road, and telecommunications ventures (hallmarks of the MSRI elsewhere) and the relatively slow progress of many projects. The preceding is not what one would expect given the vast reasons that Iran has to embrace and accelerate the realization of the BRI. Beyond this, China welcomes Iran deep involvement because it is a vital transport and logistic hub for China’s MSRI and BRI.59 For China, Iran also is an appealing partner because its conflict with the US keeps the US navy bogged down in Persian Gulf. Compared to countries like Syria, Libya, Iraq, and Yemen, despite occasional protests, in a region plagued with turmoil, conflict, war, terrorism, relatively speaking, Iran is more stable. While Iran has its own internal political issues and challenges, it, arguably, is politically a safer bet for long-term projects than many other Middle Eastern countries, assuming the Trump administration does not launch an all-out military assault on Iran! A combination of international and domestic political and economic

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factors on the Iranian and Chinese sides explain witnessed outcomes. It is to these factors that we now turn. On the political front, general Iranian sentiments toward China are largely positive. However, they are not positive about all aspects of the relationship even among backers of the Look East policy. First, without meaning to exaggerate, there are policymakers that do not like their country’s lop-sided dependence on China. This is made clearer by the domestic reaction to the 2020 CSP. Second, it is well recognized that as much as Iran’s partnership with China empowers it, China’s MSRI— e.g., China’s dealing with Pakistan under the China-Pakistan Economic Corridor (CPEC) and separate interactions with the UAE—also dilutes Iran’s regional centrality, relative bargaining power over others previously more dependent on it, and the centrality of Iranian seaports and land routes. Third, there are concerns about the adverse competitive impacts of COFDI and Chinese goods on Iranian manufacturers, small businesses, and workers. Fourth, trade with China has increased smuggling, though China is not its cause per se. Fifth, more reformist Iranian elites, even while treasuring the political gains accruing from Iran’s political ties with China, concomitantly dislike the uncritical support Tehran’s authoritarian rulers derive from Beijing’s backing.60 Turning to economics, despite its immense energy resources, Iran lacks capital to finance MSRI and SREB projects itself and borrowing huge sums of money for projects often is not a viable or preferred option due to a paucity of lenders, their conditions, or the economics of individual projects.61 Iran also confronts a number of daunting domestic economic problems limiting the resources it can devote to BRI ventures or diminish the appeal of them. One is negative or relatively slow (and volatile) growth, partly due to sanctions, with the situation likely worsening in the near- to medium-term. A second is very high rates of inflation. A third is declining trade surpluses resulting from falling energy prices, US-imposed sanctions, and the deleterious economic impact of Covid-19 pandemic that hit Iran hard. A fourth is budget deficits, which have recently soared. A fifth is a very troubled banking system. Lastly, Iran suffers from very high unemployment rates, which limits domestic consumption and stresses the government budget.62 As we have noted, there are ample reasons for China to cooperate with Iran independently and under the auspices of the BRI. China, though, has various constraints. As far as Iran is concerned, Chinese companies with major global activities (especially with the US), worry greatly about

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incurring penalties due to dealings with Iran. This is reflected more recently by plunging energy trade that is unlikely to recover even after China’s economic situation improves post-Covid-19 and the previously mentioned Bank of Kunlun’s decision to stop “‘any business settlement in construction, mining, manufacturing, and textile industries.’”63 More generally, China faces economic and political constraints in advancing the MSRI and SREB in Iran. Regarding the former, China confronts slowing growth, high domestic debts, and debt troubles in BRI participant countries. With respect to the latter, there has been a domestic political backlash in some MSRI countries and considerable pushback from third parties like India, Japan, and the US.64 The MSRI’s progress in Iran also faces challenges from third parties as Chinese economic activity in Iran and the region has not gone unnoticed among parties, like India, with their own intense interest in Iran. Not to be left out and fearing encirclement by China’s BRI/MSRI, India has tried to help modernize and expand Iran’s deepwater port of Chabahar on the southeastern coast of the Persian Gulf. Since India cannot transit goods to Central Asia through Pakistan, Chabahar is important because it would provide India with alternative secure transit routes to Iran, Afghanistan, Central Asia, and the Gulf region and would enable it to better compete with China in these markets. As for Iran, Chabahar helps it compete against Gwadar port in Pakistan and expands its international partners. Indian delays in advancing Chabahar, providing timely financing, and compliance with US sanctions, though, appear to have pushed Iran to give China a larger role in project components such as an associated connecting railway and duty free zone.65 Even so, Iran has opted to work with India (and Russia) on an alternative to the Suez Canal, specifically a transit corridor that would connect Iran to Russia and beyond via the Caspian Sea region.66

Conclusion This chapter probes Iran in the MSRI, focusing on the potential for the realization of China’s scheme. We first provided a brief historical review of Iran–China ties, before supplying a detailed discussion of multiple aspects of their relationship. Our treatment made amply clear not only the breadth and depth of ties, but also the myriad of factors driving it. Energy trade, FDI, and contracting are critical, but that is not the only part of the story even if the major one. Following this, we examined the

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development of the MSRI and associated SREB in Iran. Surprisingly given the strong bases for cooperation, potent reasons for Iran to participate aggressively in the BRI and its lack of alternatives, and a panoply of logics for China to provide major backing for the advancement of the MSRI in Iran, we witnessed fewer projects or slower progress than expected so far. Our study shows that the preceding patterns can be explained with reference to political and economic factors on the Iranian and Chinese side. To reiterate a few, while optimistic about the payoff of the MSRI/BRI, Iran seems to worry about potential political downsides, too. As well, it sees certain negatives to a continuing one-sided and expanded economic relationship with China and faces constraints on what it can finance. For China, boosting its political and economic ties with Iran, whether or not under the umbrella of the MSRI/BRI, presents considerable risks. Beyond this, there are a number of broader political and economic challenges weighing on China’s ability to implement the MSRI and SREB. In terms of policy implications, we certainly are not arguing the MSRI or SREB in Iran is failing. The two sides have reason to push it forward and the 2020 CSP makes clear the two sides want to continue advancing ties under the BRI’s rubric. Our analysis demonstrates, however, there should be more realistic expectations about what can or will be accomplished. This, in turn, suggests fewer anxieties may be warranted. It also suggests countries and companies waiting to piggyback on the MSRI and SREB in Iran may have to temper their expectations. If the Trump administration assumes an even more hostile posture toward Tehran, Iran’s inclination no doubt will be to link itself more closely with China and embed itself more deeply into the MSRI and SREB. But, as we have shown, Iranian concerns, Iran’s economic situation, and Chinese caution may make this easier said than done. From a theoretical standpoint, our piece shows the value of a political economy perspective, the problem with assuming potential economic stimuli (aka headlines) alone ensure outcomes, and the need to consider domestic factors. There are some limits to our study that future work will need to address. One is that information shortcomings hinder us from examining deeply the progress of a number of MSRI and SREB projects in Iran. Another is that the thinking of top Iranian leaders is often opaque which makes it difficult to know their true views—though internal debates occasionally appear in public. A third issue is the fluid nature of US pressure

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on Iran which propels forward the MSRI and SREB in Iran while also hindering it. The Iran–China relationship is a rich one in multiple realms and on numerous levels. However, history, need, and aspirations only go so far. For now, concrete economic and political variables at both the domestic and international levels chronicled above, present somewhat of a Great Wall to the restoration of the ancient Silk Road in modern form in Iran.

Notes 1. Jean-Marc F. Blanchard and Colin Flint, “The Geopolitics of China’s Maritime Silk Road Initiative,” Geopolitics 22, no. 2 (2017): 223–245. 2. Jean-Marc F. Blanchard, “Probing China’s Twenty-First-Century Maritime Silk Road Initiative (MSRI): An Examination of MSRI Narratives,” Geopolitics 22, no. 2 (2017): 247. 3. Ibid., 253–259. 4. For discussion in the Middle Eastern context, see Jonathan Fulton, “Domestic Politics as Fuel for China’s Maritime Silk Road Initiative: The Case of the Gulf Monarchies,” Journal of Contemporary China 29, no. 122 (2019): 175–190. For coverage of relevant issues in other contexts, see Shaofeng Chen, “Regional Responses to China’s Maritime Silk Road Initiative,” Journal of Contemporary China 27, no. 111 (2018): 344–361; and Jean-Marc F. Blanchard, ed., China’s Maritime Silk Road Initiative and Southeast Asia (Singapore: Palgrave, 2019). 5. There is no list of official MSRI projects per se (there is no official list of SREB projects either) so we mainly focus on post-2013 projects that have a direct or indirect link to the seas. 6. Peter Frankopan, The Silk Roads: A New History of the World (New York: Vintage Books, 2017). 7. John W. Garver, China and Iran: Ancient Partners in A Post-Imperial World (Seattle and London: University of Washington press, 2006), 3–12. 8. Ibid., 14. 9. Mohamed Bin Huwaidin, China’s Relations with Arabia and the Gulf: 1949–1999 (London: Routledge-Curzon, 2002), 154–160. 10. Garver, China and Iran, 57–68. 11. Ibid., 69–94. 12. Huwaidin, China’s Relations with Arabia and the Gulf , 165–172. 13. “Report: China, Iran Sign US$20b Gas Deal,” China Daily, March 19, 2004, http://www.chinadaily.com.cn/english/doc/2004-03/ 19/content_316354.htm; and “Araghchi: China Not Cutting Oil Purchase from Iran,” Islamic Republic News Agency, August 7,

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14. 15. 16.

17.

18.

19.

20.

21.

22.

23. 24.

25.

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2012, https://en.irna.ir/news/80266277/Araghchi-China-not-cuttingoil-purchase-from-Iran. Ibid., 30. Ibid., 17. Emma Scott, “Defying Expectations: China’s Iran Trade and Investments,” MEI , April 6, 2016, https://www.mei.edu/publications/def ying-expectations-chinas-iran-trade-and-investments; “Chinese Firms Face Competition to Maintain Role in Developing Iranian Oilfields,” Reuters, December 25, 2016, https://www.reuters.com/article/us-iran-oil-ten ders/chinese-firms-face-competition-to-maintain-role-in-developing-ira nian-oilfields-idUSKBN14D0DW; and Benoit Faucon, “China Pulls Out of Giant Iranian Gas Project,” The Wall Street Journal, October 6, 2019, https://www.wsj.com/articles/china-pulls-out-of-giant-iranian-gas-pro ject-11570372087. “Sinopec Signs $1b Abadan Refinery Expansion Deal,” Financial Tribune, December 29, 2017, https://financialtribune.com/articles/ene rgy/78896/sinopec-signs-1b-abadan-refinery-expansion-deal. Hale Turkes, “Iran, China Sign Major Petrochemicals Agreement,” AA, April 25, 2018, https://www.aa.com.tr/en/energy/general/iran-chinasign-major-petrochemicals-agreement-/19782. Manochehr Dorraj, Iran’s Expanding Relations with China and their Strategic Dimensions (Abu Dhabi: The Emirates Center for Strategic Studies and Research, 2013), 21–22. Golnar Motevalli, “China, Iran Agree to Expand Trade to $600 Billion in a Decade,” Bloomberg, January 23, 2016, https://www.bloomberg.com/ news/articles/2016-01-23/china-iran-agree-to-expand-trade-to-600-bil lion-in-a-decade. Casper Wuite, “European Companies Driven Out of Iran,” The Interpreter, October 19, 2018, https://www.lowyinstitute.org/the-interp reter/european-companies-driven-out-iran. Maziar Motamedi, “Policy Change at China’s Bank of Kunlun Cuts Iran Sanctions Lifeline,” Bourse & Bazaar, January 2, 2019, https://www. bourseandbazaar.com/articles/2019/1/2/policy-change-at-chinas-bankof-kunlun-cuts-sanctions-lifeline-for-iranian-industry. UNCTAD Stat. AEI-Heritage Foundation CGIT; “China’s MCC to Invest $347m in Iranian Steel Project,” Zand News, May 20, 2014, http://zandnews. com/2014/05/20/chinas-mcc-to-invest-347m-in-iranian-steel-project; and “Pledged China Investment in Steel Doesn’t Show Up,” Iran Times, December 26, 2014, http://iran-times.com/pledged-china-investmentin-steel-doesnt-show-up. “Iran, China Aluminum Firms sign $2bn Joint Venture Investment Deal,” Iran Daily, May 4, 2016, https://en.irna.ir/news/82062057/Iran-

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27.

28.

29.

30. 31.

32.

33.

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Mazarei, Adnan. “Iran has a Slow Motion Banking Crisis.” PIIE Policy Brief 198, June, 2019. https://www.piie.com/publications/policy-briefs/iran-hasslow-motion-banking-crisis. “Minister Welcomes Idea of Reviving Silk Road.” Islamic Republic News Agency, May 11, 2017. https://en.irna.ir/news/82526012/Minister-welcomes-ideaof-reviving-Silk-Road. Mollman, Steve. “Iran Plans to Boost Trade with China by About 1,000% over the Next 10 Years.” Quartz, January 25, 2016. https://qz.com/601831/ iran-plans-to-boost-trade-with-china-by-about-1000-over-the-next-10-years. Motamedi, Maziar. “Policy Change at China’s Bank of Kunlun Cuts Iran Sanctions Lifeline.” Bourse & Bazaar, January 2, 2019. https://www.bourse andbazaar.com/articles/2019/1/2/policy-change-at-chinas-bank-of-kunluncuts-sanctions-lifeline-for-iranian-industry. Motevalli, Golnar. “China, Iran Agree to Expand Trade to $600 Billion in a Decade.” Bloomberg, January 23, 2016. https://www.bloomberg.com/ news/articles/2016-01-23/china-iran-agree-to-expand-trade-to-600-billionin-a-decade. Nasseri, Ladane. “Iran Planning to Set Up New Financial Center on Qeshm Island.” Bloomberg, June 14, 2016. https://www.bloomberg.com/news/ articles/2016-06-14/iran-in-talks-with-chinese-and-russian-banks-on-financehub-plan. Nasseri, Ladane. “Iran’s Door to the West Is Slamming Shut, and That Leaves China.” Bloomberg, May 10, 2018. https://www.bloomberg.com/news/art icles/2018-05-10/iran-s-door-to-the-west-is-slamming-shut-and-that-leaveschina. Ng, Teddy. “Iran Backs Pipeline to China Under ‘One Belt, One Road’ Initiative: Ambassador.” South China Morning Post, April 23, 2015. https:// www.scmp.com/news/china/policies-politics/article/1774422/iran-wantshelp-energy-pipeline-expansion-part-chinas. “Pledged China Investment in Steel Doesn’t Show Up.” Iran Times, December 26, 2014. http://iran-times.com/pledged-china-investment-in-steel-doesntshow-up. Ramachandran, Sudha. “Iran, China and the Silk Road Train.” The Diplomat, March 30, 2016. http://thediplomat.com/2016/03/iran-china-and-the-silkroad-train. “Report: China, Iran Sign US$20b Gas Deal.” China Daily, March 19, 2004. http://www.chinadaily.com.cn/english/doc/2004-03/19/content_3 16354.htm. Republic of Iran, Ministry of Industry, Mining, and Trade. “Iran, China Sign MoU to Boost Industrial, Mineral and Investment Cooperation.” January 23, 2016. https://en.mimt.gov.ir/news/301881-Iran-China-sign-MoU-toboost-industrial-mineral-and-investment-cooperation.html?t=News.

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Republic of Iran. “Full Text of Joint Statement on Comprehensive Strategic Partnership Between I.R. Iran, P.R. China.” Iranian Presidential Records, January 23, 2016. http://www.president.ir/EN/91435. Scita, Jacopo. “The China-Iran 25-Year Cooperation Agreement Needs a Sober Assessment.” ISPI , July 15, 2020, https://www.ispionline.it/it/pubbli cazione/china-iran-25-year-cooperation-agreement-needs-sober-assessment26949. Scott, Emma. “China’s Naval Diplomacy Balances Iran With Saudi Arabia.” World Politics Review, December 8, 2015. https://www.worldpoliticsre view.com/articles/17402/china-s-naval-diplomacy-balances-iran-with-saudiarabia. Scott, Emma. “Defying Expectations: China’s Iran Trade and Investments.” MEI , April 6, 2016. https://www.mei.edu/publications/defying-expectati ons-chinas-iran-trade-and-investments. “Shahid Rajaee Port’s Development Plan to Use e107m Chinese Finance.” Tehran Times, June 22, 2015. https://www.tehrantimes.com/news/247 551/Shahid-Rajaee-Port-s-development-plan-to-use-107m-Chinese-finance. Shariatinia, Mohsen. “Iran Hedges Bets on EU, China with Focus on Trade with Neighbors.” Al-Monitor, October 15, 2018. https://www.al-monitor. com/pulse/originals/2018/10/iran-us-sanctions-economy-iraq-afghanistanturkey-trade.html. Shariatinia, Mohsen, and Hamidreza Azizi. “Iran–China Cooperation in the Silk Road Economic Belt: From Strategic Understanding to Operational Understanding.” China & World Economy 25, no. 5 (2017): 46–61. Shariatinia, Mohsen, and Hamidreza Azizi. “Iran and the Belt and Road Initiative: Amid Hope and Fear.” Journal of Contemporary China 28, no. 120 (2019): 984–994. Sharma, Kiran. “Iran to Help India Make an End-Run Around China and Pakistan.” Nikkei Asian Review, February 17, 2018. https://asia.nikkei. com/Politics-Economy/International-Relations/Iran-to-help-India-make-anend-run-around-China-and-Pakistan. Sheng, Yang. “SCO to Expand as Xi Attends Summit.” Global Times, June 6, 2017. http://www.globaltimes.cn/content/1050352.shtml. “Sinopec Signs $1b Abadan Refinery Expansion Deal.” Financial Tribune, December 29, 2017. https://financialtribune.com/articles/energy/78896/ sinopec-signs-1b-abadan-refinery-expansion-deal. Turkes, Hale. “Iran, China Sign Major Petrochemicals Agreement.” AA, April 25, 2018. https://www.aa.com.tr/en/energy/general/iran-china-signmajor-petrochemicals-agreement-/19782. UNCTAD Stat. “Data Center.” https://unctadstat.unctad.org/wds/ReportFol ders/reportFolders.aspx.

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World Bank. “Islamic Republic of Iran.” October 2018. https://www.worldb ank.org/en/country/iran/overview. World Bank. “World Bank Data.” https://data.worldbank.org. Wuite, Casper. “European Companies Driven Out of Iran.” The Interpreter, October 19, 2018. https://www.lowyinstitute.org/the-interpreter/europeancompanies-driven-out-iran.

The Missing MSRI in Iraq: The Southern Opportunity Jeffrey Payne

The Belt and Road Initiative (BRI) offers Iraq a chance to invigorate an economy wrecked by conflict. Emerging from a hard fought campaign to overcome the forces of the Islamic State of Iraq and the Levant (ISIL), the government of Iraq needs to repair the damage inflicted by civil strife.1 Iraq received considerable Chinese investment over the past several decades, but Iraq is hoping it can draw greater flows of capital from the People’s Republic of China (PRC/China). Yet, Iraq still remains an unstable state plagued by separatism, corruption, outside influence, and regime weakness. Caution was always needed by Beijing when engaging with Iraq, as was flexibility in how it dealt with Iraqi politics. That remains true today. Of the BRI’s two pathways, the Silk Road Economic Belt (SREB) and the Maritime Silk Road Initiative (MSRI), the SREB historically has been more relevant to Iraq and Iraq has featured more prominently in the SREB. Iraq, spoken of alongside Iran, was a connective pathway linking China’s already developed presence throughout Central Asia to the Levant and onward to SREB’s eventual termination point in Europe.

J. Payne (B) Near East South Asia Center for Strategic Studies, National Defense University, Washington, DC, USA © The Author(s) 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8_7

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The MSRI, also announced in 2013, revealed a primary focus on Southeast Asia and the littoral states of the Indian Ocean. The Persian Gulf region did not feature prominently.2 Yet, the BRI as a comprehensive vision for Eurasia has evolved over time. As the MSRI has matured within the BRI and the component parts of the vision vetted more comprehensively, the opportunities of increased maritime engagement in the Gulf proved viable.3 This analysis focuses on the ways in which Iraq views and seeks to engage with China’s BRI. Like with much of the Middle East, Iraq’s relationship with China revolves around economic projects and the public and private diplomacy associated with trade. What makes Iraq unique, however, is that the security crises and government fragility that defined much of country’s recent history routinely complicated Chinese economic engagement. The Iraqi government and business interests, therefore, seek to enhance the attractiveness of their country for Chinese economic interests. Iraq has not found solutions for many internal problems and much of its efforts aimed toward China are at best described as workarounds. It is the MSRI, not SREB, that offers the greatest guarantee to Chinese interests given current conditions and therefore it is the Gulf that offers the greatest promise for the MSRI in Iraq. Iraq’s coastline is removed from many of the problems in the country and exists in a state of underdevelopment that has become a hallmark for BRI-linked projects. In total, the Iraq case speaks to the implementation issue or the ways in which extant economic and political relations coupled with the situation in participant countries as well as China hinder and/or facilitate the realization of the MSRI. Section “Historical Evolution of Iraqi-Chinese Ties” presents a historical review of Iraq–China relations leading up to the BRI era and details the ways in which relations have ebbed and flowed over time. Section “The Expansion of Iraqi-Sino Economic Ties” tracks the intensification of trade that begins in 2007, marking the beginning of a brief period of relative stability in Iraq after the US-led invasion of Iraq and before the rise of ISIL that established the configuration of ties that persists until today. Section “Gauging the Depth of the BRI in Iraq” examines the manner in which Chinese investment under the umbrella of the BRI is being directed toward projects within Iraq. Infrastructure and the energy sectors have received the most intense Chinese interest, reflecting areas in which Iraqi needs and Chinese expertise overlap. The final section of the chapter details the security complications that pose a continuing problem

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for the implementation of the BRI in Iraq and also explains how these challenges, paradoxically, create an opening for the MSRI. The MSRI could become a transformative force for bilateral economic engagement, though that future has not yet arrived.

Historical Evolution of Iraqi–Chinese Ties Relations between Iraq and China were formalized following the overthrow of the Iraqi monarch in 1958.4 Like many of its Middle Eastern neighbors, Iraq’s relationship with China was friendly, but in terms of economic deliverables proved largely inconsequential to both states. The only area during the early Iraqi republic where ties with China deepened was in the security realm, particularly arms sales. China sold arms to Iraq throughout the 1960s and into the 1970s that would in turn be used to support Iraq’s assistance to Arab allies during the Six Day War and its subsequent involvement in the Yom Kippur War.5 China’s arm sales to Iraq served the Chinese Communist Party’s (CCP) standing policy of supporting Palestinian political aims in the Levant and corresponded with directives created by Mao Zedong during the 1950s on assisting the rise of the developing world against the capitalist West.6 Any further direct engagement with Iraq was constrained, both due to Beijing’s limited reach beyond East Asia and the continual coups that were a feature of Iraq at the time. China’s arms sales to the Iraqi military during the 1960s and 1970s did nonetheless create goodwill, which became apparent on numerous occasions when Iraq supported a greater international role for the PRC. For example, Iraq was a vocal proponent of the PRC taking a permanent seat at the United Nations (UN), which took place in 1971 during the twenty sixth session of the UN General Assembly.7 China’s sale of arms to Iraq and the latter’s support for China’s UN accession signaled the growing prospect of deeper ties, but, the oil price shock in 1973 pushed Iraq closer to the West.8 The trust developed between Iraq and China, as well as a general ideological commitment to one another, were not powerful enough a force to counter the economic forces of the region that were increasingly oriented toward the resource thirsty states of the West.9 During the brutal Iran-Iraq War (1980–1988) that became a conflict of attrition on both sides and served as a flashpoint for global politics, China sold arms to both Tehran and Baghdad.10 Comparatively speaking,

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China’s arms sales proved far more important to the Iranian military than to the Iraqi armed forces, as Tehran was internationally isolated and relied upon intermediaries to receive arms shipments. Iraq’s military was principally supported by the states of the GCC and the United States (US), allies that had the financial and military strength to lend considerable support to the regime of Saddam Hussein. Even so, China sold considerable arms to Iraq throughout the war. During the years from 1980 to 1989, China exported nearly USD $15 billion worth of arms.11 Over the same period, as shown in Table 1, Iraq received $4.258 billion in arms shipments from China while Iran received $2.018 billion. Arms sales to Iraq essentially ended after the cessation of hostilities in the Iran-Iraq War. Hussein, the leader of Iraq, recognized that his country possessed a surplus of military equipment, supplies, and personnel following a war that had devastated Iraq’s economy. Hussein’s efforts to invigorate the economy and address the debt Iraq incurred led to the decision to invade Kuwait in 1990. The invasion of Kuwait erased any support Hussein enjoyed in the West and throughout the GCC and in turn led to the international coalition to expel Iraqi forces. Iraq’s non-military trade with China developed consistently, if slowly, throughout the 1980s. The Iran-Iraq War weighed on the entire Iraqi economy, but Iraq still sent agricultural and refined minerals to China.12 As well, Iraq gave the PRC Construction Corporation contracts to build irrigation systems, petroleum refining support facilities, housing complexes, and power plants during the Iran-Iraq War.13 China’s footprint in Iraq during the 1980s was tied to efforts by the Hussein regime Table 1

Major Chinese arms sales in the 1980s

Bangladesh Egypt Iran Iraq North Korea Pakistan

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

Total

53 270

20

112 304 219 587 79

9 578 180 788 77

61 209 126 698 29

163 516 755 224

28 539 826 24

230 28 184 192 273

301 28 60 23 160

846 2013 2018 4258 1673

418

289

10

68

422

123

324

2276

243

57

59 405 193 389 307

245

207

77

1

Source Stockholm International Peace Research Institute’s Arms Trade Databasea a Compiled from Stockholm International Peace Research Institute’s Arms Trade Database, http:// armstrade.sipri.org/armstrade/page/values.php

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to modernize the economy. During the same period, Iraqi oil production, which increased consistently over the course of the decade, was predominately sent to the West.14 Ultimately, as far as Iraq–China economic ties are concerned, the 1980s will be remembered as the period during which China first began to invest in infrastructure and energy sector-related projects. The 1990 Gulf War destabilized ties between Iraq and China. The regional instability that Iraq unleashed as a result of its invasion of Kuwait and the international consensus against Iraq due to its invasion drove Beijing away.15 The aftermath of the war brought sanctions and pariah status to Iraq. Iraq found Beijing focusing on deepening its relationship with Iran, a state where trade and diplomatic ties had remained steady during a time of regional instability.16 It also witnessed China investing in its newly formalized relations with Saudi Arabia and in enhancing ties with other Middle Eastern states such as Egypt, the United Arab Emirates, and Sudan.17 The increasing unsteadiness of the Hussein regime meant there was little for China to gain during the 1990s by bolstering its links with Iraq. Not only would China face substantial international criticism for doing so, but the Hussein regime proved itself an unreliable partner. China’s stance toward Iraq changed following the 2003 invasion of Iraq by the US-led coalition. While initially opposed to an invasion of Iraq by the US and its coalition partners, China eventually softened its stance and did not oppose UN Security Council Resolution 1441 that provided the legal basis for the George W. Bush administration to invade.18 Later, however, the resultant chaos the invasion unleashed inside Iraq and its political ramifications throughout the Gulf region validated China’s concerns relating to the overthrow of the Hussein regime. As a result of the US 2003 invasion, long-existing sectarian tensions among Iraqis rose to the surface.19 By 2004 and 2005, most major Iraqi cities were divided along sectarian lines (see Fig. 1). The Shia majority emerged as the most powerful political force from Baghdad south to Basra. Central Iraq, including parts of Baghdad and the socalled Sunni Triangle, saw the heaviest fighting of the occupation, as the Sunni majority in this region sought to hold on to some form of political influence after the fall of Hussein’s Baathist party and the dismissal of the Iraqi army. The Kurds, constituting the third-largest sectarian group in Iraq, concentrated their efforts at stabilizing and gaining some type of administrative control over the northeast. The sectarian competition all over Iraq proved disastrous for the country’s economy. Baghdad had

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Fig. 1 Distribution of ethnoreligious groups and major tribes in Iraq (Source US Central Intelligence Agency, 1992)

always been the political heart of the country and no faction could allow another to gain absolute control over the mechanics of the state. Basra, in the south, is Iraq’s primary gateway city that serves as the primary transit point for the natural resource wealth of the country. Finally, the Kurdish north encapsulated most of Iraq’s active petroleum fields. To put it mildly, Iraq was a mess politically, socially, and economically.

The Expansion of Iraqi-Sino Economic Ties Around 2007, Iraq began to stabilize to a degree that allowed the government to put more resources toward economic development and trade. Iraq was still a high risk, but China’s position by the end of the 2000s was different than at its start. Now the world’s second largest economy and possessing increasingly deep relations with many Middle Eastern states, China could enter Iraq without the weight of being a part of the coalition that most Iraqis viewed as a disaster. Besides, China’s massive need for fossil fuels, Iraqi resource deposits (Table 2 shows Iraqi oil and gas

THE MISSING MSRI IN IRAQ: THE SOUTHERN OPPORTUNITY

Table 2 Iraq oil and gas reserves vs. select other energy rich nations (as of the end of 2018)

Country Venezuela Saudi Arabia Iran Iraq Country Russia Iran Iraq

Billion barrels (oil) 303.3 297.7 155.6 147.2 Natural gas (trillion cubic feet) 1375.0 1127.7 125.6

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% share of world total 17.5 17.2 9.0 8.5 % share of world total 19.8 16.2 1.8

Source BP Statistical Reserve of World Energy 2019a a BP, “BP Statistical Review of World Energy 2019,” https://

www.bp.com/content/dam/bp/business-sites/en/global/corpor ate/pdfs/energy-economics/statistical-review/bp-stats-review-2019full-report.pdf, 13, 30

reserves in comparison with the countries possessing the 1st and 2nd largest oil and gas reserves and Iran), and the opportunity Iraq offered to China to diversify further its energy suppliers made Iraq an attractive energy partner.20 Recognizing its needs, limitations, and China’s thirst for resources, Iraq welcomed Chinese energy overtures.21 Indeed, in 2010, Iraq sold $778 million of oil to China. In 2015, it delivered $13.52 billion of oil to China. In 2018, it sent $21.04 billion of oil to China.22 The potential for Iraq to build a stronger economic relationship with China was facilitated, too, by its economic recovery over the course of the 2000s. For example, in 2009, Iraq’s gross national income was $12,630, an uptick of nearly 1,300 percent since 2007. Other national economic statistics also indicated a dissipation of postwar economic weakness. For instance, electricity usage increased 32% between 2008 and 2010 and the urban growth rate returned to pre-invasion levels by 2009.23 The composite data showed a country exiting a period of conflict and entering one of relative stability. Another factor making Iraq an increasingly attractive economic partner was the fact that Iran’s influence inside Iraq had grown following the fall of Hussein and Beijing’s long-standing ties with Tehran mitigated some of the risks of Chinese firms increasing their involvement in Iraq.24 Table 3 provides information on trade between Iraq and China in 2010, 2015, 2017, 2018, and 2019. While trade between Iraq and China

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Table 3 Iraq exports to and imports from China, 2005–2018 (select years) (all amounts in USD millions) Year

Exports to China

Imports from China

Total trade

Trade balance

2005 2010 2015 2017 2018

519.61 6,213.54 13,520.32 12,318.79 21,039.08

855.21 4,006.98 10,885.46 9,613.79 9,688.87

1,374.82 10,220.52 24,405.77 21,832.58 30,727.95

(335.60) 2,206.56 2,634.86 2,705.00 11,350.21

Source UNCTAD Stat

pales versus some of its neighbors, China remains one of Iraq’s most important trade partners. To enhance the security of its energy position in Iraq, Beijing began to invest resources in building relations among Iraq’s influential political actors.25 This meant that Baghdad would not be the sole focus of outreach efforts. A footprint in the Iraqi capital would always be important, but China’s most substantial opportunities were found by nurturing investment prospects in the reaches near Iraq’s southern refineries and ports, and in carefully developing a rapport with local/regional political leaders among the Kurdish northeast. From an energy perspective, this made ample sense since the majority of purchased petroleum was piped from Kurdistan to Basra where it was placed onto transport. China tested the waters and found them opportune for greater engagement. In 2008, China National Petroleum Company (CNPC) signed the first contract by an overseas entity in Iraq since the 2003 US invasion. That contract, which involved the development of various oil and gas reserves in the Al-Ahdab field located southeast of Baghdad, was the end result of a negotiation process that withstood numerous crests and troughs. From 2008 onward, China was a major bidder for nearly every energy contract offered by Iraq. By 2014, China was the end point of nearly 50% of Iraqi petroleum and its deep expansion throughout the energy sector brought Chinese firms into direct contact with deep-seated political issues, such as sectarian divisions over who controlled northern oil fields.26 Table 4 gives data on Chinese contracts in Iraq and Chinese foreign direct investment (FDI) in Iraq for 2005–2013 (the pre-BRI period).

THE MISSING MSRI IN IRAQ: THE SOUTHERN OPPORTUNITY

Table 4 Iraq’s contracts with and FDI from China, 2005–2013 (amounts in USD millions)

207

Year

Total value of contracts

Total value of Chinese FDI in Iraq

2005 2006 2007 2008 2009 2010 2011 2012 2013

66.93 67.97 73.58 162.53 1,276.69 1,720.55 1,966.22 3,641.01 5,246.20

0 0 0 0 8,580 0 0 700 1,250

Source Contracting data comes from China-Med while FDI data comes from the American Enterprise Institute (AEI) and Heritage Foundation, “China Global Investment Tracker”a a China-Med Data, “Iraq,” https://www.chinamed.it/chinameddata/middle-east/iraq; and American Enterprise Institute (AEI) and Heritage Foundation, “China Global Investment Tracker,” https://www.aei.org/china-global-investment-tracker [hereinafter AEI-Heritage, Foundation CGIT]. China-Med data draws upon official Chinese data and includes contracts of all sizes. AEIHeritage Foundation CGIT excludes FDI less than $100 million, but has the advantage of accounting for money coming from tax havens

The very extensive economic, and especially energy, relationship between Iraq and China, led American writer James Fallows to sarcastically sum up the cynical viewpoint held among many within the US foreign policy community when he stated in 2013 that it, “would be crude & reductionist to say U.S. fought Iraq, and China won. But wouldn’t be wrong.”27 Iraq is not the primary focus of China in the wider Middle East, but economic connectivity is on the rise with the maturation of the BRI. The next section turns to an examination of the depth of connectivity.

Gauging the Depth of the BRI in Iraq28 After the BRI was formally announced, Beijing made capital available to Chinese ministries, state-owned enterprises (SOEs), and private firms to intensify economic ties to Iraq as contracting and Chinese outward FDI (OFDI) statistics make clear. Diplomacy intensified, as the Iraqi government was made aware of the BRI vision and how that vision would

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be of great assistance to the Iraqi state and its people. Since 2013, China has signaled clearly that Iraq is very much a component of the BRI. There have been numerous bilateral agreements, Memorandums of Understanding (MoUs), and meetings relating to the BRI or where the BRI has featured prominently.29 Yet, how real are the promises of the BRI and how much does the MSRI, instead of SREB, factor into actual economic picture? Furthermore, how seriously does Iraq treat the BRI? Chinese thinking surrounding countries like Iraq within the BRI still primarily revolves around the transport of natural resources to China.30 Whereas states like Kazakhstan, Pakistan, and Myanmar represent nodes for a trans-Asian trade network or key stopovers for transcontinental transport systems, Iraq is mostly about getting resources to market and developing the delivery mechanisms to make that process more efficient.31 Iraqi oil production has suffered waves of inefficiency over the past 45 years that correspond with periods of political instability in the country. Starting in 2007, the calming internal situation allowed the government to expand public services and welcome greater FDI in the energy sector. Increased stability led to oil production steadily increasing from approximately 140 million tons of oil equivalent (Mtoe) to 195 Mtoe, an impressive increase but still far below the maximum potential production rate. Given China’s oil consumption rate is over 600 Mtoe and quickly approaching the scale of the US, Iraqi oil will remain attractive to Chinese firms given Iraqi deposits are not fully exploited due to Iraq’s lack of refining capacity and insufficiently modernized oil field extraction. The majority of Iraq’s established petroleum infrastructure is located along the clusters of deposits in the center and northern provinces of the country (see Map 1). Geological factors allowed fields located in the north to be more easily mapped and tapped for extraction. Yet, the majority of Iraqi oil is found in the petroleum superfields of southeastern Iraq. The instability of the north and national lags in production encouraged the Iraqi government to set objectives to more adequately tap the large fields that rest near the Iranian border northeast of Basra. Extraction is not the only component needed to enhance production. New refineries are needed to meet increased supply, as are modern and efficient transport systems and drilling support services.32 Competing for contracts among these southern fields and assisting in the modernization of the Iraqi energy sector became attractive to Chinese firms.

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Map 1 Key Iraqi energy resources and port facilities (Source Base Map—Central Intelligence Agency, 1996; Map Icons—Author Generated)

In December 2015, the Iraqi and Chinese governments signed a MoU pertaining to a long-term, stable energy partnership. Considered an accomplishment of the BRI, the agreement promised: more investment will be channeled to the energy sector and governments and enterprises will be encouraged to cooperate in the areas of crude oil trade, oil-gas exploration and development, oilfield engineering service technology, construction of storage and transportation facilities, chemical refining engineering, and energy equipment.33

The MoU signaled China’s intention to assist in Iraq’s reconstruction and further economic development through infrastructure and communications investment. Similar to MoUs signed with many of the other Gulf States, the 2015 MoU is distinct because it remains a largely ceremonial effort compared to Iraq’s neighbors, which attracted substantial Chinese OFDI following “Track 1” agreements.34

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The 2015 MoU was followed by promises to assist in the development of Iraq’s railway network. Iraq’s railways are a 15-year-old problem, impacting everything from the provision of basic goods and services throughout the country to the yield of oil fields. Iraq’s Transportation Ministry has met regularly with their Chinese equivalents since 2015 on ways in which Chinese investment could be routed into Iraqi rail projects. Chinese firms Chinese Railway Engineering Corporation, China Railway Shanhaiguan Bridge Group Co Ltd., China Tiesiju Civil Engineering Group Co., Ltd., and various partner firms showed interest in investment opportunities during this time. Exploratory talks advanced in 2018 as state officials from both states signaled that plans regarding routing, resource requirements, and construction timetables were in the review phase.35 Former Prime Minister Adel Abdul-Mahdi’s visit to Beijing in the summer of 2019 included discussions on further railroad development, included a much needed direct route from the northern oil fields to the Basra region.36 Since the collapse of the Abdul-Mahdi government in October 2019, there have been no further announcements regarding Chinese assistance in the rail industry. Pursuant to a contract awarded in 2017, Chinese SOE Zhenhua Oil is developing the southern part of the East Baghdad oil field. The project’s timetable is five years in length with the goal of developing the capacity of the field to reach 40,000 barrels per day. Iraq’s Oil Ministry spokesman stated that “Under the deal, the Chinese firm is to build housing for the workers, a nursery school, and a clinic.”37 The East Baghdad oil field is a target locale by which the Iraqi state can increase revenues from petroleum rents and sponsor the expansion of local employment due to the support services that shall be needed to maintain oil field workers and technicians. It is a new undertaking whose success or failure could determine how Iraq approaches future opportunities with Chinese investment. Thus far, the development of this project remains on target. Also in the petroleum sector, China Oil HBP Group received notification in August of 2017 that it had won the Engineering, Procurement, and Construction (EPC) bid amounting to over $32.5 million for interwell crude oil gathering and transportation projects.38 This is the first instance of a Chinese energy firm partnering with an existing major international petroleum firm operating inside Iraq. The firm is contracted to handle Phase III functions related to the Garraf Oil Field. Garraf is one of the major oil fields in southern Iraq, a region of the country that faced fewer hardships during the post-2003 invasion era and the incursion by

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ISIL forces. Its location makes the transport of crude to Iraq’s main port of Basra less complicated logistically.39 Halfaya oil field near Basra in southern Iraq is a focal point for production expansion by Chinese interests. Overlapping development projects managed by PetroChina and overseen by the Iraqi regional energy interest, Maysan Oil Company, targeted a production goal of 400,000 bpd in a $1 billion deal.40 Halfaya oil field is a success story of the bilateral relationship, providing Iraq new revenue streams and jobs while providing China higher production from developed petroleum fields in the southern Maysan province. Progress continued at Halfaya through 2019 with 650,000 bpd production reached, but domestic political complications have delayed further progress. In 2020, China Petroleum Engineering & Construction Corporation and Iraqi government representatives concluded a $1.07 billion agreement to develop natural gas extraction alongside existing petroleum facilities in the Halfaya field.41 The most prominent project of recent vintage was a multi-billiondollar agreement in 2018 for the construction of an oil refinery and related support/logistical services at the Port of Faw, one of Iraq’s key oil transport hubs located near the border with Kuwait. Upon completion, the refinery is planned to have a capacity of 300,000 barrels per day, which is imagined as one of the keys for reenergizing Iraqi oil production after the problems stemming from the ISIL incursion. The Port of Faw is also an attractive location for a refinery for Chinese interests, as its location near the Gulf positions it near three other ongoing CNPC-led projects.42 Chinese investment constitutes nearly half of the approximately $7.5 billion investment associated with the Faw Port modernization and construction. Over the past few years, the pace of development at the Faw Port remains slow. Projects are underway for road construction to facilitate the transport of goods and personnel easily to various components of the port, breakwater project contracts have been awarded, and the port has become a target for GCC energy connectivity.43 Chinese investment in Iraq’s transportation and energy sectors is welcomed by Baghdad, but Iraq has yet to formalize any membership application within the Beijing-led Asian Infrastructure Investment Bank (AIIB). As an alternative source of funding for needed infrastructure projects, membership in the bank would seemingly be an ideal opportunity for Baghdad to address its capacity and development shortfalls. Iraq’s energy-rich neighbors, including Iran, Saudi Arabia, and Qatar,

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are all members of the AIIB. Accounts from regional experts present Iraq’s decision not to join the bank as the result of the pressures upon the government from ongoing conflict and the requisite procedures for joining the bank were not pursued.44 Yet, Iraq continues to signal its intent to join the AIIB.45 Looking at existing projects, there is no pattern that emerges other than that Iraq sees China as a reliable partner in economic development. Yet, analysts are starting to ponder how Chinese investment might be even more transformative for Iraq’s economy.

Security and How the MSRI Matters While China’s economic footprint in Iraq is projected to grow substantially over the coming years, it cannot be overstated to say that politics impeded their maturation. If the societal and political systems of Iraq had remained stable, then bilateral economic cooperation would be substantially deeper. Instead, the past decade in Iraq has been defined as periods of stability interrupted by massive political upheavals. This has kept China’s interest in Iraq primarily confined to the natural resource sector. ISIL used the civil strife in Syria following the Arab Spring to become a powerful militia force. The organization’s leaders are veterans of the Iraqi insurgency that followed the 2003 overthrown of Saddam Hussein and its ideology espoused a violently extremist Islamist perspective anchored to a sectarian commitment to Sunni groups throughout the Levant.46 Operations inside Iraq began in earnest in 2013 and by the end of 2014 ISIL controlled significant swaths of Iraqi territory and was particularly powerful in Sunni-majority regions of the country.47 The Iraqi government eventually expelled ISIL from Iraq’s borders, but not before ISIL destroyed or debilitated roadways, bridgeworks, power plants, and water/sewage utilities, and devastated an already fragile economy. Added to these troubles, ISIL brought a spotlight to the lingering sectarian divisions inside Iraq. For China, the emergence of ISIL was a pointed problem. Not only did it force the evacuation of Chinese nationals working in the areas around Mosul, but also undermined the productivity of ventures tied to Iraqi oil production.48 Further, China chose not to take part in security efforts to both defeat and expel ISIL from Iraq’s borders. Foreign Minister Wang Yi stated in February 2016 after a major powers meeting in Munich that, “China won’t take part in any coalition fighting ‘terrorist groups’ in the Middle East, but it will do its fair share in its own way and is already

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helping Iraq.”49 Beijing took no part in the Global Coalition to Defeat ISIS, a US-led organization initiated in 2014 that has 75 participating members.50 The decision not to take part in effort against ISIL was curious to some in the GCC given the release of China’s Arab Policy Paper in January 2016 that stated, We resolutely oppose and condemn all forms of terrorism and oppose coupling terrorism with any specific ethnic group or religion as well as double standards. We support the efforts of Arab States in countering terrorism and support their counter-terrorism capacity building… China is ready to strengthen anti-terrorism exchanges and cooperation with Arab countries to establish a long-term security cooperation mechanism, strengthen policy dialogue and intelligence information exchange, and carry out technical cooperation and personnel training to jointly address the threat of international and regional terrorism.51

Despite China’s resistance to becoming a party in the fight against ISIL, bilateral ties did not suffer. ISIL’s defeat allowed Iraq to turn its attention once again to the development of its economy and providing jobs to the population. Discussions of how Iraq could factor more prominently within the BRI also began to feature in prominent public forums like the Abu Dhabi Strategic Debate. China had proven to Iraqis that it could deliver on its contracted duties and had the financial and technical resources to assist Iraq in key areas. Also, the strategic dimensions of China’s presence in Iraq also are being increasingly mentioned. While cooperation with the West is unavoidable in the security realm due to deep military-to-military relations developed in the 15 years since the invasion, non-Western economic partners could balance out the West’s influence.52 Iraq “would stand to benefit more from engaging in bilateral projects…to connect its infrastructure…to gain access to the Belt and Road….The fact that Chinese officials themselves built the Initiative with the goal of being flexible…suggests that this is a feasible option.”53 Iraq’s geographic position initially made it a logical stage along SREB.54 Yet, Iraq’s recent instability and the potential regional political implications of Iraq factoring substantial in SREB has diminished the probability of Iraq mattering much to the overland route.55 Iraq’s diminished prospects within SREB have not diminished Iraqi interest in the BRI and greater interest is emerging in a workaround to the problem by emphasizing Iraq within the MSRI.56

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Since the fall of the Hussein regime, Iraq’s petroleum sector has been a frustrating industry in which to operate. There are strict guidelines regarding the exploration, drilling, and extraction of petroleum deposits, which in turn dramatically increased cost for any firm willing to operate inside Iraq. On top of this, the security situation in Iraq during the post invasion period was extremely dangerous for workers. Iraq’s opaque government structure also increases corruption.57 The instability of the past 15 years taxed government institutions with responsibility over economic matters to a near breaking point. Iraq had ample laws on the books to secure business arrangements between foreign interests and local stakeholders, but lacked the manpower to monitor such agreements. All of the above made few countries and fewer private firms willing to take the risk of operating inside Iraq.58 To some extent, Chinese state firms and private interests with ties to the Chinese state were willing to take on greater risk, in part because of their experiences with other countries with complicated political situations.59 The MSRI’s relevance to Iraq is about leveraging opportunities within limited options. “China’s infrastructure-led development model and its Belt and Road Initiative presents major opportunities for Iraq. …it is surrounded by countries that are part of it…”60 Iraq wants BRI projects, it wants closer ties with China, and it is actively seeking formal inclusion in the BRI politically.61 Overland connectivity with the BRI, though, is not yet real. Thus, the only option available is the MSRI. Existing major petroleum projects that China is constructing or involved in managing are concentrated increasingly in the fields outside of Basra. The maritime experience of China throughout the Gulf is increasing substantially, revealing China’s increasing comfort with the complexities of maritime trade and security and Beijing’s increased interest in the UAE, Saudi Arabia, and Qatar.62 The ISIL incursion reinforced the fragility of the Sunni center of the country and the relative stability of the Shia south, at least given how the country is currently structured. Oil fields in the south are the biggest potential boon to the Iraqi economy of any known resource deposits. China’s current investment in southern provinces and its work on developing Iraqi ports creates a logical flow to the Gulf’s shores. From an Iraqi vantage point, aspiring to be a greater part of the MSRI makes abundant sense. The BRI may seek to integrate much of Asia and Africa together, but China is not running a global economic aid program. “Chinese investment, however, is often a mixed blessing. The Chinese Government

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and China’s state-led corporations are deeply pragmatic entities and will view their own self-interest as paramount. The Iraqi Government has the responsibility to do the same.”63 Furthermore, while the southern provinces are more stable than most of the rest of Iraq, the prospect of economic investment there will be interpreted along sectarian lines. It will be viewed as empowerment for the Shia, who still control much of the central state, at the expense of other Iraqi groups. Even with the need to develop Basra and its surrounds to a much greater degree, this will be an ongoing issue that will feature inside Iraqi politics.64 Iraq finds itself in a situation where Chinese investment is concentrated in a particular geographic area within its boundaries. This concentration can be and is being utilized to assist in the development of its port facilities, which in turn could help Iraq become an active actor in Gulf trade. Iraq’s small southern coastline has never been a priority for the country beyond its usefulness for petroleum export, but with the BRI the south can be the first concentrated point for wide scale economic recovery. Currently, there are no major indications Iraq has become a point of interest along the MSRI. People’s Liberation Army Navy (PLAN) vessels have not made a port of call to either Basra or Faw and there appear no indications of plans for a future visit.65 There appear no indications of significant changes to Chinese operated or owned maritime commercial operations in Iraq’s ports, though commercial shipping traffic could increase steadily if Faw investments mature and are met with increased petroleum refinement in the south. China’s footprint in the south is already visible and will increase in future years. Iraqis are beginning to imagine a more substantial Chinese-assisted transformation for its southern provinces beyond isolated projects.66

Conclusion Iraq’s involvement with the BRI remains primarily theoretical. Chinese investment is a reliable source for Iraqis to leverage in the development of the country, but the projects that exist or being developed are not generally discussed within Iraq beyond the importance to in-country concerns. This is widely the result of the strains that Iraq has faced over the past decade that has tempered Iraqi expectations. Yet, China’s involvement in the Iraqi economy, especially its energy sector, matters a great deal and points to where Iraq may integrate into the BRI.

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Chinese investment has been a source by which Iraqis can reinforce their sovereignty. In this way, China matters much more to Iraq than as a source of lending and technical assistance. The way in which Chinese investment has become concentrated in the southern provinces around Basra is the result of risk management and growth projections on the part of Beijing, but it also facilitates domestic growth for areas that are keys to growth for Iraqis. Chinese investment has yet to be truly transformative for Iraq, but it is a possibility. Chinese major investment is now focused on the south, near the Gulf and nearest the most ample resource deposits. Iraqi ports are undergoing modernization and expansion in part through Chinese financing and management. The major projects where China is an actor all point to the increasing viability of maritime domain as key for the future bilateral relationship. Positive views of China in its engagement within Iraq present no near-term problems with a deeper Chinese footprint and increasingly, Iraqi analysts are imagining a prominent place for Iraq within the BRI. Taken together, if Iraq is to factor into the BRI, it will do so as an area of interest along the MSRI. If Iraq becomes a consistent component of the MSRI, then it will further reveal the degree to which the MSRI is concentrating on the larger Persian Gulf region. Iraqi ties to China in this scenario will matter to its GCC neighbors to the south and to other non-regional actors that are heavily involved in the Persian Gulf, like the US. In many ways, an Iraq that is a part of the MSRI will create new complications for China in the region, but for Iraq it is the logical extension of existing structure of Chinese investment that also bypasses several major domestic impediments. Thus, from an economic and political standpoint, the Iraq–China relationship can be better understood by examining what is transpiring in and around Basra. That is where the future of the bilateral relationship will mature. The south will continue to be the location of major Chinese investment and the potential economic windfall for this part of Iraq will likely have both positive and negative implications for the country’s politics. Taken altogether, Iraq wants to factor into the BRI and it will explore any opening to do so that emerges, but increasingly the direction of the relationship and the means by which Iraq can temper Chinese concerns over stability point to the probability of Iraq as integrating into the MSRI.

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Disclosures and Acknowledgements The views expressed in this chapter are the author’s alone and do not represent the official policy or position of the NESA Center, the US Department of Defense, or the US government. The author expresses his appreciation to Xu Jing for her work conforming this chapter to Palgrave style requirements.

Notes 1. Emma Graham-Harrison, “Iraq Announces ‘Victory’ over Islamic State in Mosul,” The Guardian, July 9, 2017, https://www.theguardian.com/ world/2017/jul/09/iraq-announces-victory-over-islamic-state-mosul. 2. The Middle East is predominately divided into two sub regions based upon geographic location and cultural evolution: the Levant and the Gulf. The Levant includes the states in proximity to the Mediterranean Sea, while the Gulf references those states surrounding the Persian Gulf. Iraq, due to its historical evolution, can be classified as being of either sub region. 3. This can be seen in the discussions in Manochehr Dorraj and JeanMarc F. Blanchard’s and Jonathan Fulton’s respective chapters in this edited volume which look at, respectively, Iran in the MSRI and the Gulf Cooperation Council (GCC) states in the MSRI. 4. Bingbing Wu, “Strategy and Politics in the Gulf as Seen from China,” in China and the Persian Gulf: Implications for the United States, eds. Bryce Wakefield and Susan L. Levenstein (Washington, DC: Woodrow Wilson International Center for Scholars, 2011), 10–11. 5. Jin Liangxiang, “Energy First-China and the Middle East,” Middle East Quarterly 15, no. 2 (2005): 3–10. 6. Andrew Scobell and Alireza Nader, China in the Middle East: The Wary Dragon (Santa Monica: Rand Corporation, 2016). 7. United Nations, “Restoration of the Lawful Rights of the People’s Republic of China in the United Nations,” October 25, 1971, https:// digitallibrary.un.org/record/192054?ln=en. 8. Wu, “Strategy and Politics in the Gulf as Seen from China,” 13. 9. Ibid. 10. Jon B. Alterman and John W. Garver, The Vital Triangle: China, the United States, and the Middle East (Washington, DC: Center for Strategic and International Studies, 2008). 11. Except as otherwise noted all figures herein are in United States dollars (USD). 12. Yitzhak Shichor, “Decisionmaking in Triplicate: China and the Three Iraqi Wars,” in Chinese Decisionmaking under Stress, eds. Andrew Scobell and Larry M. Wortzel (Carlisle: Strategic Studies Institute, US Army War College, 2005), 191–228.

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13. Ibid. 14. U.S. Department of Energy, “U.S. Imports from Iraq of Crude Oil,” June 29, 2018, https://www.eia.gov/dnav/pet/hist/leafhandler.ashx?n= pet&s=mcrimiz2&f=m. 15. Nicholas D. Kristoff, “War in the Gulf: China; Beijing Backs Away from Full Support of War,” The New York Times, February 1, 1991, https://www.nytimes.com/1991/02/01/world/war-in-the-gulfchina-beijing-backs-away-from-full-support-of-the-war.html. 16. Joel Wuthnow, “Posing Problems Without an Alliance: China-Iran Relations After the Nuclear Deal,” National Defense University Strategic Forum, February 2016, https://apps.dtic.mil/dtic/tr/fulltext/u2/100 4293.pdf. 17. Wu, “Strategy and Politics in the Gulf as Seen from China,” 22–24. 18. United Nations, “Security Council Resolution 1441,” November 8, 2002, https://www.un.org/Depts/unmovic/documents/1441.pdf. 19. Alterman and Graver, The Vital Triangle: China, the United States, and the Middle East. 20. John Calabrese, “China-Iraq Relations: Poised for a Quantum Leap?” Middle East Institute, October 8, 2019, https://www.mei.edu/publicati ons/china-iraq-relations-poised-quantum-leap. 21. Jon B. Alterman, “The Other Side of the World: China, the United States, and the Struggle for Middle East Security,” Center for Strategic and International Studies, March 14, 2017, https://www.csis.org/analysis/otherside-world-china-united-states-and-struggle-middle-east-security. 22. UNCTAD Stat, “Data Center,” https://unctadstat.unctad.org/wds/Rep ortFolders/reportFolders.aspx [hereinafter UNCTAD Stat]. 23. World Bank, “Iraq: World Development Indicators,” July 15, 2019, https://databank.worldbank.org/reports.aspx?source=2&country=IRQ. 24. Tim Arango, “Iran Dominates in Iraq After U.S. ‘Handed the Country over’,” The New York Times, July 15, 2017, https://www.nytimes.com/ 2017/07/15/world/middleeast/iran-iraq-iranian-power.html. 25. Erica Downs et al., “Asia’s Energy Security and China’s Belt and Road Initiative,” The National Bureau of Asian Research Special Report, no. 68 (2017). 26. Calabrese, “China-Iraq Relations: Poised for a Quantum Leap?” 27. James Fallows, “@JamesFallows Twitter Feed,” issued on Twitter, at 07:58, June 3, 2013. 28. This analysis looks only at major economic projects initiated between Iraq and China within the timeline of the BRI, which means projects agreed upon after 2013 and projects initiated prior to that date that are considered part of the BRI’s portfolio of accomplishments and plans. 29. Jean-Marc F. Blanchard, “Problematic Prognostications About China’s Maritime Silk Road Initiative (MSRI): Lessons from Africa and the Middle East,” Journal of Contemporary China 29, no. 122 (2020): 170.

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30. Christopher Len, “China’s 21st Century Maritime Silk Road Initiative, Energy Security and SLOC Access,” Maritime Affairs 11, no. 1 (2015): 1–18. 31. Nadege Rolland, China’s Eurasian Century? Political and Strategic Implications of the Belt and Road Initiative (Seattle: The National Bureau of Asian Research, 2017). 32. “Iraq Expands Basra Oil Refinery After GE and Baker Hughes Gas Deal,” The National, April 3, 2018, https://www.thenational.ae/business/ene rgy/iraq-expands-basra-oil-refinery-after-ge-and-baker-hughes-gas-deal-1. 718361. 33. Shatha Khalil, “Al-Hareer Road … An Economic Belt Linking Iraq with China,” Rawabet Center for Research and Strategic Studies, December 14, 2017, https://rawabetcenter.com/en/?p=4650. 34. Track 1 is an international government term that signals high level meetings between government representatives in order to craft agreements and solve disputes. Often misunderstood as referring solely to diplomatic efforts, Track 1 encapsulates both public and private diplomacy. Beyond Track 1, Track 1.5 refers to meetings that feature a mixture of government and private interest representatives and Track 2 refers to meetings that are of value to governments, but are constituted solely of private interests. 35. Zhang Yunbi and Wu Jiao, “Iraq Looks to Chinese Companies for Rail Expansion,” China Daily, December 24, 2015, http://www.chinadaily. com.cn/business/2015-12/24/content_22790891.htm. 36. Jo Harper, “Beijing Beckons as Babylon Burns,” DW , October 8, 2019, https://www.dw.com/en/beijing-beckons-as-babylon-burns/a50729801. 37. “Chinese Firm ZhenHua Oil to Develop Oil Field Near Iraqi Capital Baghdad,” Money Control, December 25, 2017, https://www.moneyc ontrol.com/news/world/chinese-firm-zhenhua-oil-to-develop-oil-fieldnear-iraqi-capital-baghdad-2468183.html. 38. EPC refers to a comprehensive agreement where detailed design of engineering and construction, as well as end delivery of service, is handled by a single firm. 39. “China HBP Group Wins RMB 400 Mln Oil EPCC Project in Iraq,” Xinhua Silk Road Database, August 25, 2017, https://en.imsilkroad. com/p/64178.html. 40. “Iraq Begins Final Expansion Phase at Halfaya Oil Field Aiming to Double Output,” Middle East Monitor, April 25, 2017, https://www. middleeastmonitor.com/20170425-iraq-begins-final-expansion-phase-athalfaya-oil-field/. 41. “Iraq, China’s CPECC in $1.07 BLN Deal to Process Gas from Halfaya Oilfield,” Al Arabiya, May 8, 2019, https://english.alarabiya.net/en/

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business/energy/2019/05/08/Iraq-China-s-CPECC-in-1-07-bln-dealto-process-gas-from-Halfaya-oilfield. “Iraq to Build New Refinery with Major Chinese Investment,” The New Arab, January 29, 2018, https://www.alaraby.co.uk/english/news/ 2018/1/29/iraq-to-build-new-refinery-with-major-chinese-investment; Unknown. “Iraq to Build Oil Refinery in Faw with Chinese Firms, Plans 3 Others,” Hyrdrocarbon Processing, January 29, 2018, http://www.hyd rocarbonprocessing.com/news/2018/01/iraq-to-build-oil-refinery-infaw-with-chinese-firms-plans-3-others. Unknown. “ISIS, Chinese Investment in Focus as Iraqi PM Heads to China,” BRICS Post, December 21, 2015, http://thebricspost.com/isis-chinese-investment-in-focus-as-iraqipm-heads-to-china/#.Wuvp8YgvyUm. “US Lauds Deal to Connect Iraq to GCC Electric Grid,” Middle East Eye, July 17, 2020, https://www.middleeasteye.net/news/landmark-deal-con nect-iraq-gcc-electric-grid-moves-forward. Author interviews with government-affiliated scholars in the United Arab Emirates, April 7, 2018. “Iraq Discusses Possibility of Joining Asian Infrastructure Investment Bank,” Xinhua, March 4, 2019, http://www.xinhuanet.com/english/ 2019-03/04/c_137866422.htm. Barack Obama, “Statement by the President on ISIL,” September 10, 2014, https://obamawhitehouse.archives.gov/the-press-office/2014/ 09/10/statement-president-isil-1. “The Rise and Fall of ISIL Explained,” Al Jazeera, June 20, 2017, https://www.aljazeera.com/indepth/features/2017/06/rise-fallisil-explained-170607085701484.html. “China Says Still Trying to Evacuate Workers from Iraq,” Reuters, June 26, 2014, https://www.reuters.com/article/us-iraq-security-china/ china-says-still-trying-to-evacuate-workers-from-iraq-idUSKBN0F10T B20140626. John Irish, “The World’s Largest Military Will Not Join the Fight Against ISIS,” Reuters, February 12, 2016, http://www.businessinsider. com/r-china-rules-out-joining-anti-terrorism-coalitions-says-helping-iraq2016-2. For more on the Global Coalition to Defeat ISIS please visit, http:// theglobalcoalition.org/en/home. The homepage details not only the security-oriented work of the coalition, but also the humanitarian and economic assistance of partners. People’s Republic of China, Ministry of Foreign Affairs, “China’s Arab Policy Paper,” January 13, 2016, https://www.fmprc.gov.cn/mfa_eng/ zxxx_662805/t1331683.shtml. Abbas Jawad Kadimi, “The Reality of Iraqi-Chinese Relations and Their Future Prospects,” Al Mada Newspaper, 29 April, 2018.

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53. “China’s Belt and Road Initiative: An Opportunity for Iraq,” Al-Bayan Centre for Planning and Studies, 2018, http://www.bayancenter.org/en/ wp-content/uploads/2018/04/867563522.pdf, 42. 54. Joel Wuthnow, Chinese Perspectives on the Belt and Road Initiative: Strategic Rationales, Risks, and Implications (Washington, DC: National Defense University Press, 2017). 55. Jeffrey S. Payne, “The G.C.C. and China’s One Belt, One Road: Risk or Opportunity?” Middle East Institute, August 11, 2016, https://www.mei. edu/publications/gcc-and-chinas-one-belt-one-road-risk-or-opportunity. 56. Wuthnow, Chinese Perspectives on the Belt and Road Initiative. 57. Based on data obtained from “2017 Trace Bribery Index: Iraq,” Trace International, 2017, https://traceinternational.org/Uploads/Matrix Files/2017/Reports/Iraq-TRACE%20Matrix%20Individual%20Coun tries.pdf. 58. Sujata Ashwarya Cheema, “Investing in Iraq: Prospects and Challenges,” Middle East Institute, February 20, 2013, http://www.mei.edu/content/ investing-iraq-prospects-and-challenges. 59. Andrew Small, The China-Pakistan Axis: Asia’s New Geopolitics (Oxford: Oxford University Press, 2015). 60. “China’s Belt and Road Initiative: An Opportunity for Iraq,” 47. 61. “Iraq to Join China’s Belt and Road Project,” Asia Times, September 25, 2019, https://asiatimes.com/2019/09/iraq-to-join-chinas-belt-androad-project/. 62. Author interviews with government-affiliated scholars in the United Arab Emirates, April 7, 2018. 63. “China’s Belt and Road Initiative,” 47. 64. Ibid., 43. 65. Those interested in where the Chinese Navy is regularly making ports of call should look to the burgeoning ties between China and Oman. 66. Author interviews with government-affiliated scholars in the United Arab Emirates, April 7, 2018.

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Len, Christopher. “China’s 21st Century Maritime Silk Road Initiative, Energy Security and SLOC Access.” Maritime Affairs 11, no. 1 (2015): 1–18. Obama, Barack. “Statement by the President on ISIL.” September 10, 2014. https://obamawhitehouse.archives.gov/the-press-office/2014/ 09/10/statement-president-isil-1. Payne, Jeffrey S. “The G.C.C. and China’s One Belt, One Road: Risk or Opportunity?” Middle East Institute, August 11, 2016. https://www.mei.edu/pub lications/gcc-and-chinas-one-belt-one-road-risk-or-opportunity. People’s Republic of China, Ministry of Foreign Affairs. “China’s Arab Policy Paper.” January 13, 2016. https://www.fmprc.gov.cn/mfa_eng/ zxxx_662805/t1331683.shtml. Rolland, Nadege. China’s Eurasian Century? Political and Strategic Implications of the Belt and Road Initiative. Seattle: The National Bureau of Asian Research, 2017. Scobell, Andrew, and Alireza Nader. China in the Middle East: The Wary Dragon. Santa Monica: Rand Corporation, 2016. Shichor, Yitzhak. “Decisionmaking in Triplicate: China and the Three Iraqi Wars.” In Chinese Decisionmaking Under Stress, edited by Andrew Scobell and Larry M. Wortzel, 191–228. Carlisle: Strategic Studies Institute, US Army War College, 2005. Small, Andrew. The China-Pakistan Axis: Asia’s New Geopolitics. Oxford: Oxford University Press, 2015. Stockholm International Peace Research Institute. “Arms Trade Database.” http://armstrade.sipri.org/armstrade/page/values.php. “The Rise and Fall of ISIL Explained.” Al Jazeera, June 20, 2017. https:// www.aljazeera.com/indepth/features/2017/06/rise-fall-isil-explained-170 607085701484.html. “2017 Trace Bribery Index: Iraq.” Trace International, 2017. https://tracei nternational.org/Uploads/MatrixFiles/2017/Reports/Iraq-TRACE%20M atrix%20Individual%20Countries.pdf. UNCTAD Stat. “Data Center.” https://unctadstat.unctad.org/wds/ReportFol ders/reportFolders.aspx. United Nations. “Restoration of the Lawful Rights of the People’s Republic of China in the United Nations.” October 25, 1971. https://digitallibrary.un. org/record/192054?ln=en. United Nations. “Security Council Resolution 1441.” November 8, 2002. https://www.un.org/Depts/unmovic/documents/1441.pdf. United States, Department of Energy. “U.S. Imports from Iraq of Crude Oil.” June 29, 2018. https://www.eia.gov/dnav/pet/hist/leafhandler.ashx? n=pet&s=mcrimiz2&f=m.

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“US Lauds Deal to Connect Iraq to GCC Electric Grid.” Middle East Eye, July 17, 2020. https://www.middleeasteye.net/news/landmark-deal-con nect-iraq-gcc-electric-grid-moves-forward. World Bank. “Iraq: World Development Indicators.” July 15, 2019. https://dat abank.worldbank.org/reports.aspx?source=2&country=IRQ. Wu, Bingbing. “Strategy and Politics in the Gulf as Seen from China.” In China and the Persian Gulf: Implications for the United States, edited by Bryce Wakefield and Susan L. Levenstein, 10–26. Washington, DC: Woodrow Wilson International Center for Scholars, 2011. Wuthnow, Joel. “Posing Problems Without an Alliance: China-Iran Relations After the Nuclear Deal.” National Defense University Strategic Forum, February, 2016. https://apps.dtic.mil/dtic/tr/fulltext/u2/1004293.pdf. Wuthnow, Joel. Chinese Perspectives on the Belt and Road Initiative: Strategic Rationales, Risks, and Implications. Washington, DC: National Defense University Press, 2017. Zhang, Yunbi, and Wu Jiao. “Iraq Looks to Chinese Companies for Rail Expansion.” China Daily, December 24, 2015. http://www.chinadaily.com.cn/bus iness/2015-12/24/content_22790891.htm.

The Gulf Cooperation Council’s “Visions” of Maritime Silk Road Initiative Cooperation Jonathan Fulton

Introduction The Gulf Cooperation Council (GCC) member states are well-positioned to benefit from participation in projects associated with the Maritime Silk Road Initiative (MSRI).1 Each GCC state has enjoyed strong preMSRI political and economic relations with China, and as such the initiative provides opportunities for increased coordination with a state that has become the group’s largest trading partner and is becoming an important regional political actor as well. Therefore, participation in MSRI addresses two important concerns for leaders in GCC states. First, it is a means of addressing domestic economic—and by extension political—pressures. Each of them has embarked upon development projects that require significant levels of infrastructure development and flows of foreign direct investment (FDI). These projects—Saudi Vision 2030, New Kuwait 2035, Oman Vision 2040, Abu Dhabi Vision 2030, Bahrain Vision 2030, and Qatar Vision 2030—present opportunities to coordinate GCC initiatives with China’s Belt and Road Initiative (BRI) cooperation priorities, contributing to a greater level of Chinese integration into the Gulf region and deeper ties with the GCC.2 This leads

J. Fulton (B) Zayed University, Abu Dhabi, United Arab Emirates © The Author(s) 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8_8

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directly to the second concern: great power support. By taking advantage of Beijing’s initiative, the Gulf monarchies continue with a long and successful tradition of omnibalancing, or using cooperation with external powers to consolidate state power and regime stability.3 Defense and facility access agreements with the United States (US) have long been key pillars of GCC security, but in recent years they have used economic engagement with other extra-regional powers to deepen their pool of international support in a very competitive regional security complex, and in this China has become an important partner.4 As this chapter demonstrates, GCC states’ participation in MSRI is uneven. Oman, Saudi Arabia, and the UAE appear to be the early adopters, using distinct geographic or economic advantages to align their development plans with the MSRI. Qatar and Kuwait have not to the same extent, and Bahrain has made minimal gains with regards to MSRI participation. This can partly be attributed to Chinese initiatives such as the “Industrial Park–Port Interconnection, Two-Wheel and Two-Wing Approach,” discussed below, that target cooperation with specific states. Another factor that explains the uneven level of participation is the differing types of MSRI projects: those that support domestic development projects and those that facilitate intra-regional connectivity. The GCC states that are more deeply engaged with the MSRI are involved in both types of projects, while the lesser engaged states are primarily focused on their own domestic development projects. This chapter begins with an overview of the political and economic relations between China and the GCC. It then provides an overview of MSRI projects on a state-by-state level.

Political Relations Between the GCC States and China Leaders in the Gulf monarchies were reluctant to pursue official relations with the People’s Republic of China (PRC), evident in the fact that it took more than forty years before Saudi Arabia became the last GCC state to formally recognize it.5 This can partly be attributed to being on opposing sides in the Cold War system, as all of the Gulf monarchies had dense security and political relationships with the United Kingdom or US. Beyond these systemic pressures, Gulf societies, deeply religious and socially hierarchal, had an especially strong aversion to communism. They had also heard several accounts from Chinese Muslim emigres to

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the Middle East, who spoke of their poor treatment under communism, complaining of a “large-scale offensive against the Muslims,” and “a wave of trials and executions.”6 Their negative perceptions were reinforced when China became the sole international source of material support for a rebellion in the Dhofar province of Oman from the mid1960s to the early 1970s, with the stated goal of overturning the Gulf monarchies. Chinese leaders ultimately came to the conclusion that the rebellion had little chance of success, and adopted a policy supporting the regional status quo.7 Kuwait became the first Gulf monarchy to establish diplomatic relations with China in 1971, followed by Oman in 1978. Throughout the 1980s the others slowly followed suit, with the UAE recognizing China in 1984, Qatar in 1988, Bahrain in 1989, and finally Saudi Arabia in 1990. From 1990 and throughout the 2000s, the Gulf monarchies focused on developing stronger political and trade relations with China. Leaders from each GCC state—except Oman—paid a state visit to Beijing, and notably, in 2006, former Saudi King Abdulla made China his first overseas destination as king. These visits were reciprocated, and the GCC states became frequent destinations for Chinese officials; every Chinese president since Yang Shangkun in 1989 has had at least one state visit. In recent years these visits have been used to establish higher levels of engagement across political, economic, and to a much smaller degree, security concerns. In 2016, President Xi Jinping visited Saudi Arabia and the two states signed a comprehensive strategic partnership, China’s highest level of diplomatic relations. The UAE was also made a comprehensive strategic partner during President Xi’s 2018 visit. Qatar (2014), Oman (2018), and Kuwait (2018) have all established strategic partnerships with China, the second-highest level of Chinese partnerships.8 These increasingly frequent visits and intensifying partnerships indicate that both China and the GCC states perceive bilateral relations as not simply economic; they are increasingly strategic as well. Security issues first appeared on the agenda during President Hu Jintao’s visit to Saudi Arabia in 2006, and since then Qatar and the UAE have pursued nascent security arrangements with China, most notably with the Qatari purchase of Chinese SY-400 short range ballistic missiles, paraded during Qatar’s national day celebration in December 2017.9 Gulf leaders, long concerned about the durability of their asymmetrical alliances with the US, have looked to other external powers as potential security partners,

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and as China’s interests in the Persian Gulf grow, a more active regional presence is anticipated.10 The importance of this point cannot be understated. The intense political rivalries in the Persian Gulf contribute to a regional security complex in which the foreign and security policies of all eight states—the GCC, Iran, and Iraq—are focused on each other.11 The GCC states, with significantly smaller populations and militaries, are especially vulnerable to threats—both material and ideological—from their larger neighbors, and as such have relied upon relationships with extra-regional powers to maintain regime security.12 This is consistent with the logic of omnibalancing, in which smaller states make decisions about alliances or partnerships by determining which is most likely to help address external and/or internal pressures.13 More multifaceted relationships with China therefore can help address regional security pressures by establishing a deeper preference for a Persian Gulf status quo that favors the GCC member states.

Economic Relations Between the GCC States and China The Gulf monarchies’ economic relations with China are substantial and diverse, based largely on trade, but increasingly on investment and finance as well. Trade Trade is the most well-developed aspect of the GCC states’ relationship with China. As seen in Table 1, trade with the GCC as a bloc and as individual states has increased significantly in recent years. Energy trade represents the bulk of Gulf exports. Over 40% of China’s crude oil imports come from the Middle East, the bulk of which comes from the GCC.14 The significance of this for China’s energy security became more apparent in the wake of US sanctions against Iran after the Donald Trump administration abandoned the Joint Comprehensive Plan of Action. With greatly reduced access to Iranian oil, China’s imports from Saudi Arabia nearly doubled between July 2018 and August 2019, from 921,811 barrels per day to 1,802,788.15 Qatar natural gas exports to China are also substantial, providing 34% of the latter’s total imports.16

34,624.02 45,411.93 69,208.1 110,452.14 70,638.49 93,949.51 133,022.17 169,198.82 178,585.1 193,586.84 130,298.43 111,900.94 148,279.51 155,176.11 170,478.53

1,648.97 2,785.69 4,614.77 7,575.21 5,725.55 9,145.22 11,934.95 13,085.18 13,038.18 13,888.91 12,152.58 10,664.99 13,911.97 6,271.24 17,142.1

4,465.92 6,043.44 7,020.10 12,179.34 5,689.24 10,220.61 15,287.29 18,590.93 21,622.58 24,302.09 15,883.05 12,369.91 15,670.79 20,408.52 16,553.95

676.25 998.31 1,701.66 2,777.51 2,890.01 4,329.13 6,649.69 9,276.89 11,110.28 12,708.04 9,055 7,806 10,640.73 13,525.55 12,571.09

China–Qatar 16,111.28 20,140.91 40,211.76 64,971.51 39,971.51 51,198.18 74,629.08 84,413.01 82,559.14 80,386.55 57,834.38 47,297.29 45,550.6 59,434.88 72,850.22

China–Saudi Arabia

11,465.71 15,094.14 15,144.31 21,721.23 15,462.49 17,705.11 22,757.08 42,103.51 48,398.63 59,682.45 33,487.06 31,798.37 59,742.44 53,326.67 49,258.96

China– UAE

Source International Monetary Fund, “Direction of Trade Statistics,” https://data.imf.org/?sk=9D6028D4-F14A-464C-A2F2-59B2CD424B85&sId= 1409151240976 [hereinafter IMF DOTS]

255.89 349.44 515.5 1,227.34 899.69 1,351.26 1,764.08 1,729.3 1,856.29 2,618.8 1,886.36 1,964.38 2,762.98 2,209.25 2,102.21

China–Oman

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

China–Kuwait

China–GCC

Year

China–Bahrain

China–GCC trade, 2005–2017 (amounts in USD millions)

Table 1

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As for the other GCC states, energy trade has made China a very important market. With 67% of Gulf energy exports going to East Asia, China is the center of their energy trade.17 The importance of this cannot be overstated, given the centrality of energy exports to government budgets for GCC states. In the case of Oman, this reliance makes China an especially important trade partner, with 44% of its export revenue coming from China alone in 2017, giving China an outsized role in its economy.18 Chinese trade is important for each of the Gulf monarchies, consistently ranking as one of the top six import or export markets for all GCC member states.19 Financial and Monetary Cooperation Beyond trade, cooperation in the realm of finance is becoming an increasingly important component of the GCC states’ relationship with China. In this, the UAE has used its financial infrastructure, unparalleled in the Middle East, to establish itself as a hub for Chinese institutions. There are an estimated 300,000 Chinese citizens in Dubai alone and more than 4,200 Chinese companies in the UAE.20 Dubai’s Jebel Ali Free Zone Authority (JAFZA) has been central to this. Established as a free zone in 1985, JAFZA offers a range of incentives to draw international firms, including 100% foreign ownership, streamlined visa processing for foreign employees, and subsidized energy and utilities services. Its status as the preeminent regional logistics and infrastructure hub has made it home to more than 7,300 international companies. Chinese firms have taken advantage of JAFZA with over 230 setting up regional headquarters to service contracts throughout the region. As a result, the financial infrastructure to support the bilateral economic activity is especially strong in the UAE, with China’s four largest banks—Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China, Bank of China, and China Construction Bank—operating in Dubai, and ICBC has a branch in Abu Dhabi as well. Abu Dhabi Global Market, the capital city’s international financial center, has announced the approval of a Chinese state-owned financial services firm that would “provide strategic investment and financial support as part of the Belt-and-Road initiative.”21 Taken together, the UAE’s two largest cities have developed an important niche as a regional financial center for Chinese projects in the Middle East.

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Monetary cooperation features in the financial relationship as well. GCC trade and investment is heavily dollar dominated, and GCC currencies are pegged to the dollar as well. Increased Chinese trade and investment in the region means the RMB is being used more often. Chinese currency swap agreements with the UAE and Qatar facilitate greater RMB use. During Premier Wen Jiabao’s visit to the UAE in 2012 the Chinese and Emirati Central Banks signed a three-year $5.5 billion currency swap agreement. Finally activated in 2017, it quickly yielded promising results, with over $6.5 billion worth of transactions cleared in 2018.22 Qatar signed a slightly larger currency swap agreement in 2014, valued at $5.7 billion, although this can also be seen as a means of facilitating payment and investment in the more than $8 billion in construction and infrastructure contracts signed between Qatari and Chinese firms that year.23 Investment Investment is the other pillar in China’s economic relations with the GCC, and also has demonstrated a significant increase in recent years. Chinese outward FDI (COFDI) and contracting into the Gulf region increased significantly in the first decade of the twenty-first century, from $2 billion in 2001 to over $60 billion by 2008.24 Between 2005 and 2017 GCC states have been the recipients of more than $62 billion COFDI (see Table 2). This is consistent with the larger trend throughout the Middle East, where China became the largest extra-regional source of FDI in 2016.25 During his visit to Kuwait in August 2017, Vice Premier Zhang Gaoli called on China and Kuwait to integrate development strategies, describing the BRI and New Kuwait 2035 as “highly compatible” and said China is “ready to encourage Chinese companies to participate in building railways, ports, roads, bridges, housing and other projects related to Silk City and islands development projects.”26 Future investment in Kuwait will build upon already strong foundation of COFDI. Between 2015 and 2017, Kuwait attracted $7 billion of inward FDI (IFDI), and Chinese firms accounted for nearly half of that.27 Kuwait’s Minister of Commerce and Industry visited China in August 2017 to attend the China-Arab States Expo in Yinchuang and met with the Chinese Vice Minister of Commerce as well as representatives from Chinese firms specializing in financial services, investment, and transportation. Traveling

2005

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Total

650 3,550

670

130

450 3,150

730

640

760 4,150 5,260 8,010 4,320 33,300

– – – – – – – – – – – – 1,420 1,420 840 0 390 570 260 510 0 100 2,480 1,620 1,330 2,070 220 10,430 0 160 720 0 0 0 0 0 300 700 0 320 970 5,490 0 140 740 0 1,850 0 600 560 1,400 1,110 0 230 0 7,050 5,770 1,170 4,230 2,060 4,320 1,830 1,080 4,260 1,390 1,250 1,720 4,710 5,500 38,210

2007

Source “China Global Investment Tracker” (data for Bahrain not available)

300

0 0 540 0

–

2006

Contracting and COFDI in GCF states, 2005–2017 (all amounts in USD millions)

Bahrain – Kuwait 0 Oman 150 Qatar 100 Saudi 1,100 Arabia UAE 0

Table 2

234 J. FULTON

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with him were officials from Kuwait Direct Investment Authority, which offered incentives to Chinese firms to facilitate FDI opportunities.28 The UAE has also been a destination for significant COFDI, consistent with the Emirates’ reputation as an “FDI magnet,” as it is undertaking a series of large infrastructure and development projects for its 2030 plan as well as for the Dubai 2020 World Expo. China has been especially active in the Dubai real estate market, investing $2.72 billion between 2013 and 2017.29

MSRI Projects and the GCC States While China–GCC relations are dense and multifaceted and leaders in all GCC states have articulated support for and interest in participating in the BRI, there is no dedicated economic corridor on the Arabian Peninsula. That said, China–GCC relations have developed in a manner consistent with the five BRI cooperation priorities of policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds. Given the depth of existing cooperative endeavors and the Arabian Peninsula’s geostrategic importance, further MSRI coordination is expected. The Vision and Action document specifically refers to the ChinaGulf Cooperation Council Strategic Dialogue as an important diplomatic mechanism that contributes to developing BRI cooperation, but beyond this does not specify how the Gulf or broader MENA region features in the BRI. The China Arab Policy paper, released in 2016, is a more specific document, introducing the “1+2+3” cooperation pattern, under which the PRC and Arab countries “upgrade pragmatic cooperation by taking energy cooperation as the core, infrastructure construction and trade and investment facilitation as the two wings, and high and new technologies in the fields of nuclear energy, space satellite and new energy as the three breakthroughs.”30 Since releasing this policy paper, the shape of SinoGCC relations has taken a much more specific form, clearly following this 1+2+3 pattern and clearly aligning with the MSRI, with energy technology an especially important component of relations. For their part, GCC leaders have come to see BRI/MSRI cooperation with China as an important factor in their own economic development programs. Each GCC member state is in the process of trying to diversify its economy from a one resource rentier model to a post-oil one, a necessary transition if they are going to manage their dependencies

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on expatriate labor, public sector employment for nationals, and heavily subsidized utilities. Successful implementation of these “Vision” programs is not only important for development but support the continued legitimation programs that maintain popular support for current regimes, a concern all the more important given regional instability since the Arab uprisings began in 2010. Saudi Crown Prince Mohamed Bin Salman explicitly linked the BRI to Saudi development, describing it as “one of the main pillars of the Saudi Vision 2030 which would seek to make China among the Kingdom’s biggest economic partners.”31 The push to coordinate MSRI projects with GCC development plans is being grafted upon preexisting infrastructure and construction projects that China has pursued in the Gulf in recent years. The American Enterprise Institute-Heritage Foundation found that between 2005 and 2014, China had signed $30 billion in construction and infrastructure projects with the GCC, accounting for 8% of its global total during that period.32 Among these were some strategically important and high-profile projects that have rebranded China from a manufacturer of cheap retail products to a provider of quality projects. The asymmetry inherent in most countries’ economic relations with China generates considerable domestic tension, most commonly described through “debt trap diplomacy” narratives or issues of local labor forces being denied opportunities for employment as Chinese companies often staff MSRI projects with Chinese employees. For example, in the Maldives, Sri Lanka, Malaysia, and Pakistan the perception of Chinese dominance in their economies contributed to election victories for opposition parties. In the cases of the Gulf monarchies neither resonates. Their substantial energy wealth and sovereign wealth funds make for a less one-sided bilateral relationship that is seen in states overwhelmed by Chinese debt. They are also attractive destinations for FDI, making them less vulnerable to unfavorable terms. It is unlikely that other investors would be willing to commit the same kind of money to Pakistan that China has through the China-Pakistan Economic Corridor, giving China an outsized leverage in the Pakistani economy. GCC states, on the other hand, enjoy a diversity of international FDI, making them less reliant on any single state’s investments. In terms of labor, the GCC states have peculiar demographics that rely heavily on expatriate labor for much of the private sector. That MSRI projects would result in employment for Chinese rather than locals would not be a problem in states where expatriates make up between 63 and 95% of the workforces.33

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MSRI Projects Within the GCC, there has been interest in MSRI participation, but levels of cooperation have thus far been uneven. This may have more to do with Chinese designs for the MSRI than local agency. During the 2018 China–Arab States Cooperation Forum Ministers’ Meeting, Foreign Minister Wang Yi announced the “Industrial Park–Port Interconnection, Two-Wheel and Two-Wing Approach” as part of the BRI in the Middle East.34 This plan is expected to create business clusters and link supply chains in areas hosting key Chinese investments. In this, Emirati, Omani, and Saudi facilities have been identified by China as important hubs, and as a result there has been a significant gap between these three and the other Gulf monarchies. Among the other three GCC members, Kuwait appears likely to increase its MSRI participation, as its Madinat Al-Hareer (Silk City) project will require IFDI and Chinese officials have indicated an interest in coordination on this development. Qatar has already seen some Chinese infrastructure development projects, with $8 billion in deals signed in 2014 alone. Bahrain has made minimal strides toward greater MSRI coordination, although it would no doubt benefit from coordinating its development with China. United Arab Emirates The UAE has capitalized on MSRI projects with China, both in terms of projects that support domestic development initiatives as well as those that support interregional connectivity. As such it appears to have the strongest position vis-à-vis MSRI/BRI cooperation among the Gulf monarchies.35 In terms of those programs that support domestic development, Dubai has been aggressive in coordinating with Chinese companies. This may be because of its large Chinese community and may also be attributed to the Dubai World Expo 2020, an international event that has required significant infrastructure construction since being announced in 2013. Dubai’s ruler Sheikh Mohammad bin Rashid Al Maktoum attended the 2019 Belt and Road Forum in Beijing, where major new Chinese investments were announced. The first, the Merchant’s Market, is a $2.4 billion storage and shipping station to be built in Jebel Ali, used to export Chinese goods and will also include warehouses and wholesale retail outlets. The second is a

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$1 billion investment in a project that will import, process, and package food products for export.36 These investments build upon other BRI/MSRI-linked projects signed in recent years. The UAE’s Union Properties and the China State Construction Engineering Corporation (CSCEC) signed an MoU in September 2017 to build the Dubai Motor City residential building development, a project valued at $2.17 billion and scheduled for completion by 2022.37 Also in 2017, the Dubai government announced that a joint bid from Saudi Arabia’s Acwa Power and China’s Shanghai Power won a contract to build an extension for the Mohamed bin Rashid Al Maktoum Solar Complex, which will make it the world’s largest solar power plant, estimated to cost $3.86 billion. It will come online in stages, beginning in 2020, and is part of the Dubai government’s commitment to generate 75% of its energy needs from renewables by 2050.38 Another major development in UAE–China relations that impacted both Abu Dhabi and Dubai was the 2017 winning bid for China National Petroleum Company (CNPC) to purchase an 8% stake in ADCO, Abu Dhabi’s onshore oil concession, worth $1.77 billion, representing a 40year commitment. Chairman Wang Yilin described CNPC’s objective in the concession as playing “an active role in defining and developing technology applications in mature oilfields by planning to establish a tailormade technology hub in ADCO.”39 Shortly after, CNPC announced that it will build a new complex in JAFZA to house staff and operations for sixteen CNPC subsidiaries working on projects throughout the Gulf. The complex will include offices, a warehouse for storage, and facilities for maintenance and repair of oil and gas equipment.40 In terms of projects that support regional interconnectivity goals, Abu Dhabi has taken a leading role in the UAE, as per the “Industrial Park–Port Interconnection, Two-Wheel and Two-Wing Approach.” Abu Dhabi’s Khalifa Port complex is one of the hubs targeted by China for cooperation in this approach, including investment in the Khalifa Industrial Zone Abu Dhabi (KIZAD) and Khalifa Port Free Trade Zone (KPFTZ). COSCO Shipping signed a 35-year concession agreement with KIZAD in 2016, an investment valued at $738 million that will double the container-handling capacity of the port and is expected for completion in 2020.41 Less than a year later the Jiangsu Provincial Overseas Cooperation and Investment Company Limited (JOCIC), a consortium of five Chinese companies, invested $300 million in KIZAD in a deal announced in July 2017 for a 50-year lease in KIZAD.42 JOCIC established the

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China-UAE Industrial Capacity Cooperation Construction Management Co, Ltd., based in Abu Dhabi, and through it invested $1.1 billion into the port.43 This was followed by an investment of nearly $615 million from Chinese tire manufacturer Roadbot to build a factory in KIZAD, announced in 2019 and under construction at the time of writing.44 The most significant sign of KIZAD’s potential importance in the MSRI came in early 2019 when Shanghai-based East Hope Group, one of China’s largest companies, announced that it is considering a $10 billion investment there. To be implemented in three stages over fifteen years, the East Hope investment would begin with an alumina facility, to be followed by a red-mud research center and recycling project, and finish with large upstream and downstream facilities to process nonferrous metals. East Hope chief executive officer Liu Yongxin described the project as “the benchmarking project along the BRI between China and the UAE.”45 Taken together with the COSCO move to KIZAD, Abu Dhabi is increasingly looking like a pivot city in the MSRI. Oman Oman is also playing an important role in MSRI regional interconnectivity through the Duqm Special Economic Zone Authority (SEZAD). Also included in the “Industrial Park–Port Interconnection, Two-Wheel and Two-Wing Approach,” Duqm includes both the SEZAD Port as well as the China-Oman Industrial Park, a 1172-hectare site that upon completion will host Chinese firms across several sectors, including industrial, petrochemical, manufacturing, and hospitality. This is the flagship project for China-Omani MSRI cooperation and highlights the geostrategic significance that Oman can play in the MSRI. Oman shares with Iran the Hormuz Strait, the world’s most important chokepoint for global energy, with 35% of seaborne traded oil and approximately 20% of globally trade oil crude passing through each day.46 As such, Hormuz access is a longstanding concern for the GCC exporters, who are vulnerable to Iranian threats to close the Strait. Omani co-management of Hormuz is therefore perceived as a stabilizing influence. At the same time, Oman’s 3,100-km Indian Ocean coastline, with ports in Sohar, Muscat, and Salalah, present alternative access points for the Arabian Peninsula. The Omani government has been developing SEZAD since 2007, when construction began with South Korea’s Daewoo Engineering and Construction, but Chinese firms have recently taken the lead. SEZAD

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is already projected to be an important energy port, with a $4.6 billion crude oil storage facility being built at Ras Marqaz. With a capacity to store 26 million barrels, this will be the largest such facility in the Middle East.47 MSRI Projects are being initiated by Oman Wanfang, a consortium of Chinese firms from Ningxia, with support from the Ningxia government. Projects will receive financing from Chinese banks, and the initiative is promoted by the Ministry of Commerce and the National Development and Reform Commission, giving the project significant weight. By 2022, 30% of Duqm is projected to be built, and the development will support a population of 25,000, with schools, hospitals, hotels, office space, and a sports center.48 The first batch of SEZAD projects has resulted in commitments of over $3 billion from Chinese firms.49 Among the contracted projects at this stage of SEZAD for Oman Wanfang, the largest is a $2.8 billion contract with Dalian Mingyuan Holding Group Co, Ltd., to build a methanol plant to manufacture olefin which, in turn, will provide lower-cost raw materials to petrochemical bases at Dalian Changxingdao Economic Zone.50 Hebei Electric Power Design and Research and Ningxia Power Design Institute have a joint $406 million contract to build a power plant that will generate 300 megawatts of electricity.51 Ningxia Zhongke Jiaye New Energy and Technology Management Co and the Oman Investment Fund are jointly developing a $94 million solar panel project that will be used for power plants and residential buildings. The project is expected to be online by the end of 2019.52 Ningxia, Ningqiao Commercial Investment and Operation Ltd is building a distribution facility for building materials, an investment of $46 million. The facility will provide materials for the construction sector, supplying SEZAD projects, and is projected to be operational in 2019.53 The next batch of projects are anticipated to bring the total Chinese investment into Duqm up to $10.7 billion.54 One project under consideration is a second major refinery in Duqm that would have the capacity to produce 230,000 bpd and cost approximately $5.65 billion. This project is currently undergoing a year-long feasibility study. If the project is approved, the refinery would take between five and eight years to complete.55

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Saudi Arabia China has been actively involved in several key construction and infrastructure projects in Saudi Arabia, and this is set to intensify under the MSRI with the inclusion of the Jazan City for Primary and Downstream Industries (JCPDI) in the “Industrial Park–Port Interconnection, TwoWheel and Two-Wing Approach.” As the only Gulf monarchy with a Red Sea coastline, Saudi Arabia is geographically situated in a way that offers unique support to the MSRI. Jazan, located on Saudi Arabia’s west coast, provides linkage to the Red Sea and Mediterranean Sea ports and parks that China is developing: The People’s Liberation Army Support Base in Djibouti, and Port Said and Ain Sokhna, both in Egypt. As such, JCPDI will likely become an important site of China–Saudi cooperation. Beyond regional interconnectivity projects, Saudi Arabia is also linking its Saudi Vision 2030 program with the BRI to address domestic development issues, with energy as an important focus. Since January 2016 there have been several major visits between the two countries, and each one has led to significant bilateral agreements, contracts and memorandums of understanding (MoUs) to this end. President Xi’s visit in January 2016 established the comprehensive strategic cooperation partnership, and a visit from Vice Premier Zhang Gaoli the following year was used to develop the direction of the partnership. Describing the goal of his trip as “to implement the important consensus reached between President Xi and the King so as to continuously deepen the China-Saudi comprehensive strategic partnership,” nearly $70 billion in deals were signed.56 Following the energy focus in the 1+2+3 cooperation pattern, nuclear energy cooperation was a central focus. China National Nuclear Corp signed an MoU with Saudi Geological Survey to promote cooperation in exploring and assessing uranium and thorium resources.57 This is especially significant, as Saudi Arabia is currently in the early stages of a feasibility and design study for two commercial nuclear reactors. However, Saudi Arabia is considering a larger move toward nuclear energy, with a plan being discussed to build 17.6 gigawatts of nuclear capacity by 2032.58 This in turn is part of a larger strategy to develop a large-scale renewable energy plan that is expected to draw between $30 and $50 billion in investments by 2023.59 As such, China is expected to pursue a contract for this first set of reactors aggressively, and can draw upon other nuclear energy projects, such as an MoU signed between Saudi Technology Development and Investment Co and China Nuclear Engineering

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Group Corp to develop seawater desalination using gas-cooled nuclear reactors.60 Kuwait Despite the relatively high percentage of COFDI into Kuwait discussed above, Chinese firms have not played as large a role as would be expected. To date, the most significant contract is a joint venture between China’s Aric International Holding Corporation and Kuwait’s Al Dar (HOT) Engineering and Construction to construct a new runway and extend an existing one at Kuwait International Airport. This contract is valued at $492 million and is expected to be complete by 2020.61 Bahrain The China-Bahrain MSRI cooperation is not as well-developed as with the other GCC states. Since 2014 there has been talk of Chinese construction firms being contracted to build as many as 40,000 low-rent residential buildings, but the project has not gone forward.62 Qatar China’s and Qatar signed a strategic partnership in 2014 during a state visit from Emir Tamim bin Hamad Al Thani. This represents the high water mark for the bilateral relationship. During the visit several contracts were signed that gave Chinese firms a high-profile role in addressing Qatari development projects. For example, China Harbor Engineering Co Ltd won a $880 million contract in the New Doha port expansion project, and China Gezhouba Group won a bid to build a mega reservoir, a project that includes five main reservoirs and 33 kilometers of pipelines.63 Perhaps symbolically most important, China Railway Construction Corp and Qatar’s HBK Contracting Co formed a joint venture to build the 92,000 seat Lusail Stadium, which will be the opening and closing venue for the 2022 FIFA World Cup. The $767 million contract was awarded in December 2016, and work is scheduled to be completed in 2021.64 However, since then the regional political situation has had an adverse effect on Qatar’s ability to take advantage of any regional connectivity projects, limiting the scope of a larger Qatari role in the MSRI. In June

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2017 the Anti-Terror Quartet (ATQ) of Saudi Arabia, UAE, Bahrain, and Egypt withdrew their ambassadors to Qatar, implemented a trade and diplomatic embargo, and issued a 13-point ultimatum which included demands that Qatar close Al Jazeera, decrease cooperation with Iran, remove Turkish forces from their Qatari base, and end all cooperation with the Muslim Brotherhood.65 This was in response to several points of contention between Qatar and its neighbors; relations with Qatar and the ATQ states had long been difficult, but tensions had been managed in Washington.66 Under the Trump administration, the US has declined to play the leadership role in maintaining Gulf stability that has been the pillar of each GCC state’s foreign policy. The crisis has shown no sign of being resolved at the time of writing in mid-2020, but the GCC is weaker than it has ever been since its creation in 1981. Beijing has called for a diplomatic solution and Foreign Minister Wang offered to mediate, giving the impression of neutrality.67 At the same time, President Xi’s visit to the UAE in 2018 saw the bilateral strategic partnership upgraded to a comprehensive strategic partnership, the highest in the hierarchy of China’s diplomatic relations. In contrast, Emir Al Thani’s 2019 visit to China resulted in a commitment to continue to develop the strategic partnership signed in 2014, rather than the upgrade he no doubt would have preferred. The inclusion of Abu Dhabi in the “Industrial Park–Port Interconnection, Two-Wheel and Two-Wing Approach” with the immense investment that followed indicates that China has quietly sided with the ATQ in the Gulf dispute. This is not a surprise; the underlying goal of the BRI is to promote international connectivity, and the ATQ bloc provides Beijing with strategically located, resource rich states. Qatar, on the other hand, is isolated within its own region, providing China with trade and investment opportunities but little in the way of connectivity, for the time being at least.

Conclusion The lack of a dedicated economic corridor on the Arabian Peninsula may give the impression that the GCC states have not been active partners in the MSRI. As this chapter has demonstrated, however, the framework for denser MSRI cooperation does exist, and the preexisting pattern of China–GCC relationship building fits with the BRI’s cooperation priorities. Furthermore, dense levels of interdependence between China and each of the GCC states have translated into the recognition that the two

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sides have much to offer each other in achieving ambitious development goals on the GCC side and the MSRI on China’s. The UAE, Oman, and Saudi Arabia have been active in linking domestic projects to MSRI, and also taken advantage of Chinese connectivity projects throughout the greater Middle East. This presents opportunities for deeper political and economic cooperation and seems to indicate that Beijing perceives these three to be the most strategically important GCC states. With Kuwait’s development of Silk City there is room for a larger Kuwaiti role in the MSRI. For the time being, Bahrain has made little headway, and Qatar’s political isolation appears to limit its opportunities for participation in a project that is largely about connectivity.

Notes 1. Established in 1981, the GCC is a political and economic grouping of the six Gulf monarchies: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE). The GCC was created in response to regional political upheaval in the wake of the Iranian Revolution (1979) and the outbreak of the Iran-Iraq War (1980). While there have long been political differences between GCC states, they tended to cooperate in the face of threats from their larger regional neighbors, Iran and Iraq. Since the Arab Uprisings began in late 2010, fissures in the GCC have become more apparent, as seen in the dispute between Qatar and the Anti-Terror Quartet of Saudi Arabia, UAE, Bahrain, and Egypt. Despite animosity at the time of writing in mid-2018, the GCC had been the most successful international organization in the Middle East. With similar political systems (absolute monarchies), economic models (rentier economies based on energy exports), and a shared Gulf Arab culture, it still makes sense to analyze China’s relations with the Gulf monarchies as a group, although as this chapter demonstrates, there is variation in levels of political and economic engagement between China and the individual GCC states. 2. The five cooperation priorities are policy coordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds. See National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road,” March 28, 2015, http://en.drc.gov. cn/newsrelease/201503/t20150330_669367.html. 3. The definitive work on omnibalancing remains Steven R. David, “Explaining Third World Alignment,” World Politics 43, no. 2 (1991):

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5.

6.

7.

8.

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10. 11.

12. 13. 14. 15.

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233–256. For a GCC context, see Gerd Nonneman, “Determinants and Patters of Saudi Foreign Policy: ‘Omnibalancing’ and ‘Relative Autonomy’ in Multiple Environments,” in Saudi Arabia in the Balance: Political Economy, Society, Foreign Affairs, ed. Gerd Nonneman and Paul Aarts (London: Hurst & Company, 2005), 314–351. See Jonathan Fulton and Li-Chen Sim, “Quo Vadis? External Powers in a Changing Gulf Region,” in External Powers and the Gulf Monarchies, ed. Jonathan Fulton and Li-Chen Sim (London: Routledge, 2018), 1–16. For an analysis of the development of China–GCC relations, see Jonathan Fulton, China’s Relations with the Gulf Monarchies (London: Routledge, 2018): 140–168. Yitzhak Shichor, The Middle East in China’s Foreign Policy: 1949–1978 (Cambridge: Cambridge University Press, 1979), 18; Yitzhak Shichor, East Wind over Arabia: Origins and Implications of the Sino-Saudi Missile Deal (Berkley: Berkley Center for Chinese Studies, 1989), 1. On the Dhofari Rebellion and China’s role in it, see Hashim Behbehani, China’s Foreign Policy in the Arab World, 1955–1975: Three Case Studies (London: KPI, 1981), 134–188. On China’s strategic partnerships in the Persian Gulf, see Jonathan Fulton, “Friends with Benefits: China’s Partnership Diplomacy in the Gulf,” in Shifting Global Politics and the Middle East, ed. Marc Lynch and Amaney Jamal (Washington: Project on Middle East Political Science, 2019), 33– 38. Ankit Panda, “Qatar Parades New Chinese Short-Range Ballistic Missile System,” The Diplomat, December 19, 2017, https://thediplomat. com/2017/12/qatar-parades-new-chinese-short-range-ballistic-missilesystem/; Kim Ghattas, “Chinese Leader Ends Saudi Visit,” BBC News, April 24, 2006, http://news.bbc.co.uk/2/hi/middle_east/493847 4.stm. Abdullah Al Shayji, “The GCC-U.S. Relationship: A GCC Perspective,” Middle East Policy 21, no. 3 (2014): 62. On regional security complexes, see Barry Buzan and Ole Waever, Regions and Powers: The Structure of International Security (Cambridge: Cambridge University Press, 2003). See Jonathan Fulton and Li-Chen Sim, eds., External Powers and the Gulf Monarchies (London: Routledge, 2018). David, “Explaining Third World Alignment,” 238. International Trade Centre, “China Country Brief,” Continually updated, http://www.intracen.org/country/china/. Natasha Turak, “Saudi Arabia Dramatically Changing Its Oil Exports to China and the U.S.,” CNBC, August 15, 2019, https://www.cnbc. com/2019/08/15/saudi-arabia-dramatically-changing-its-oil-exports-tochina-and-the-us.html.

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https://www.thenational.ae/business/energy/sheikh-mohammed-bin-rashidannounces-winning-contract-for-world-s-largest-csp-solar-project-1.628906. International Monetary Fund. “Direction of Trade Statistics.” https://data.imf. org/?sk=9D6028D4-F14A-464C-A2F2-59B2CD424B85&sId=140915124 0976. International Trade Centre. “China Country Brief.” Continually updated. http://www.intracen.org/country/china. Jabarkhyl, Nawied. “Oman Counts on Chinese Billions to Build Desert Boomtown.” Reuters, September 5, 2017. https://www.reuters.com/article/usoman-china-investment/oman-counts-on-chinese-billions-to-build-desert-boo mtown-idUSKCN1BG1WJ. James, A.E. “Chinese Firms to Set Up Projects in Duqm Free Zone.” Times of Oman, October 2, 2017. http://timesofoman.com/article/118465/Bus iness/Chinese-firms-to-set-up-25-projects-in-Duqm-free-zone. James, A.E. “Chinese Firm to Start $94m Solar Project Work in Oman by Year-End.” Times of Oman, September 17, 2017. http://timesofoman.com/ article/117327/Business/Chinese-firm-to-start-94m-solar-project-work-inOman-by-year-end. James, A.E. “Chinese Group Seeks Crude from Oman, Other GCC States for Its Planned Refinery.” Times of Oman, August 22, 2017. http://tim esofoman.com/article/115618/Business/Chinese-group-seeks-crude-fromOman-other-GCC-states-for-its-planned-refinery. “Jiangsu Government Establishes State-Owned Financial Services Firm in Abu Dhabi Global Market to Support Belt and Road Initiative.” Abu Dhabi Global Market, July 20, 2019. https://www.adgm.com/media-center/ann ouncement-listing-page/media-releases/jiangsu-government-establishes-stateowned-financial-services-firm. Kader, Binsal Abdul. “Chinese Community in UAE Grows Fourfold in 10 Years.” Gulf News, August 10, 2016. https://gulfnews.com/going-out/society/chi nese-community-in-uae-grows-fourfold-in-10-years-1.1877034. Kemp, Kim. “Chinese Firm Launches Mega Water Project in Qatar.” Construction Week, January 5, 2016. http://www.constructionweekonline.com/art icle-36889-chinese-firm-launches-mega-water-project-in-qatar. Kuwait Direct Investment Promotion Authority. “KDIPA Takes Part in the Kuwaiti Official Delegation to the People’s Republic of China.” September 14, 2017. https://kdipa.gov.kw/en/archives/13930. “Kuwait Signs $492 Million Contract for Airport Expansion.” The Big Five Hub, March 30, 2017. https://www.thebig5hub.com/news/2017/march/kuwaitsigns-492-million-contract-for-airport-expansion. McAuley, Anthony. “China’s Cosco to Build and Operate New Container Terminal at Khalifa Port.” The National, September 28, 2016. https://www.

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thenational.ae/business/china-s-cosco-to-build-and-operate-new-containerterminal-at-khalifa-port-1.201120. McAuley, Anthony. “CNPC to Consolidate with Complex Based at Jafza.” The National, April 11, 2017. https://www.thenational.ae/business/cnpc-to-con solidate-with-complex-based-at-jafza-1.53618. National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China. “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road.” March 28, 2015. http://en.ndrc.gov.cn/newsrelease/201503/ t20150330_669367.html. Nonneman, Gerd. “Determinants and Patters of Saudi Foreign Policy: ‘Omnibalancing’ and ‘Relative Autonomy’ in Multiple Environments.” In Saudi Arabia in the Balance: Political Economy, Society, Foreign Affairs, edited by Gerd Nonneman and Paul Aarts, 314–351. London: Hurst & Company, 2005. “OTTC to Build Ras Markaz Crude Oil Storage Terminal.” Oman Tribune, July 5, 2017. http://omantribune.com/details/42804/. Panda, Ankit. “Qatar Parades New Chinese Short-Range Ballistic Missile System.” The Diplomat, December 19, 2017. https://thediplomat.com/ 2017/12/qatar-parades-new-chinese-short-range-ballistic-missile-system. People’s Republic of China, Embassy of the PRC in the Republic of Malta, “Wang Yi: China and Arab States Should Jointly Forge the Cooperation Layout Featuring ‘Industrial Park–Port Interconnection, Two-Wheel and Two-Wing Approach’.” July 10, 2018. http://mt.chineseembassy.org/eng/ zyxwdt/t1576567.htm. Pillai, Rajiv Ravindran. “Chinese Building Material Facility in Duqm to Be Ready in 2019.” Construction Week Online, August 27, 2017. http://www. constructionweekonline.com/article-46055-chinese-building-material-facilityin-duqm-to-be-ready-in-2019/1/print. Shamsedding, Reem, and Jane Chung. “Saudi Arabia Said to Plan Nuclear Power Tender in October.” Reuters, September 14, 2017. https://www.reu ters.com/article/us-saudi-nuclear-exclusive/exclusive-saudi-arabia-plans-tolaunch-nuclear-power-tender-next-month-sources-idUSKCN1BP1M7. Shichor, Yitzhak. The Middle East in China’s Foreign Policy: 1949–1978. Cambridge: Cambridge University Press, 1979. Shichor, Yitzhak. East Wind over Arabia: Origins and Implications of the SinoSaudi Missile Deal. Berkley: Berkley Center for Chinese Studies, 1989. “Saudi Arabia Signs Cooperation Deals with China on Nuclear Energy.” Reuters, August 25, 2017. https://www.reuters.com/article/saudi-china-nuclear/ saudi-arabia-signs-cooperation-deals-with-china-on-nuclear-energy-idUSL8 N1LB1CE. “Saudi to Launch $30-50 Billion Renewable Energy Program Soon.” Reuters, January 16, 2017. http://www.reuters.com/article/us-saudi-energy-renewa

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bles/saudi-to-launch-30-50-billion-renewable-energy-program-soon-ministeridUSKBN1501HE. Shayji, Abdulla Al. “The GCC-U.S. Relationship: A GCC Perspective.” Middle East Policy 21, no. 3 (2014): 60–70. “Sheikh Mohammed Announces $3.4bn Investment in Dubai Via China’s Belt and Road Initiative.” The National, April 26, 2019. https://www.thenat ional.ae/uae/government/sheikh-mohammed-announces-3-4bn-investmentin-dubai-via-china-s-belt-and-road-initiative-1.854063. The Economist Intelligence Unit. “GCC Trade and Investment Flows.” 2014. http://www.economistinsights.com/sites/default/files/GCC%20Trade% 20and%20investment%20flows.pdf. Turak, Natasha. “Saudi Arabia Dramatically Changing Its Oil Exports to China and the U.S.” CNBC, August 15, 2019. https://www.cnbc.com/2019/ 08/15/saudi-arabia-dramatically-changing-its-oil-exports-to-china-and-theus.html. “UAE, China Join Efforts to Develop Dubai Motor City.” Xinhuanet, September 11, 2017. http://news.xinhuanet.com/english/2017-09/11/c_1 36601289.htm. “UAE’s Yuan Clearing Centre Clears $6.5 Billion in Transactions.” Reuters, December 11, 2018. https://www.reuters.com/article/emirates-china-yuan/ update-1-uaes-yuan-clearing-centre-clears-6-5-billion-in-transactions-idUSL8 N1YG3OB. United States, Energy Information Administration. “Strait of Hormuz is Chokepoint for 20% of World’s Oil.” September 5, 2012. https://www.eia.gov/tod ayinenergy/detail.cfm?id=7830. Ulrichsen, Kristian Coates. “What’s Going on with Qatar?” The Washington Post, June 1, 2017. https://www.washingtonpost.com/news/monkey-cage/ wp/2017/06/01/whats-going-on-with-qatar/?noredirect=on. Wintour, Patrick. “Qatar Given 10 Days to Meet 13 Sweeping Demands by Saudi Arabia.” The Guardian, June 23, 2017. https://www.theguardian. com/world/2017/jun/23/close-al-jazeera-saudi-arabia-issues-qatar-with-13demands-to-end-blockade. Zhang, Xiaomin. “Dalian Company to Build Petrochemical Project in Oman.” China Daily, September 12, 2013. http://www.chinadaily.com.cn/business/ 2017-09/12/content_31902670.htm. Zhong, Nan. “CRCC Nets Contract for Qatar Stadium.” China Daily, December 1, 2016. http://www.chinadaily.com.cn/business/2016-12/01/ content_27535600.htm.

Egypt in China’s Maritime Silk Road Initiative: Relations Cannot Surmount Realities Mordechai Chaziza

Introduction This chapter analyzes Egypt in the People’s Republic of China (PRC/China) Maritime Silk Road Initiative (MSRI), which, in tandem with the Silk Road Economic Belt (SREB), links Asia with Europe and Africa through the sea- and land-based Belt and Road Initiative (BRI), China’s most ambitious integration project to date. As will be shown, Egypt is an important hub for the realization of the MSRI projects, which, prima facie, is to be expected given that the strategic Suez Canal traverses Egypt. However, while there has been a notable increase in Chinese involvement, as an investor and contractor, in diverse Egyptian MSRI projects, there remain significant internal, largely economic, and external challenges to its successful implementation even despite the

The author would like to thank Xu Jing for aid in conforming this chapter to Palgrave style requirements and the editor for his guidance throughout the process. M. Chaziza (B) Department of Politics and Governance, Ashkelon Academic College, Ashkelon, Israel © The Author(s) 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8_9

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steady development of political and economic relations between Egypt and China. As suggested, the BRI is comprised of two components: a maritimeoriented one, the MSRI, and a more land-based one, the SREB.1 Each component has the potential to transform the global geopolitical landscape through the construction of interrelated infrastructure projects such as air and seaports, highways, high-speed railways, pipelines, and trunk roads.2 According to some estimates, China’s vision promises more than USD $1 trillion in infrastructure, spans more than 60 countries and regions, and includes about 63% of the world’s population. Given this, it has the potential to establish a new order not only in Eurasia, but throughout the entire international system as well.3 In general, Middle East and North Africa (MENA) countries have welcomed the MSRI (and the SREB) because it promises greater volumes of Chinese foreign direct investment (FDI), loans, and infrastructure construction, more economic cooperation with China, and new opportunities for growth.4 There are very few works about Egypt’s relationship with China, though Egypt is often discussed in conjunction with treatments of Middle Eastern or Mediterranean counties with China. The paucity of research is even starker with respect to Egypt in China’s MSRI and BRI.5 This dearth of analysis is problematic given Egypt has a comprehensive strategic partnership and extensive economic ties with China and also is a major political force in MENA. Relevant for students of the MSRI, Egypt has wholeheartedly embraced the MSRI and SREB, is the home of some large projects, and is proximate to major water bodies including the Mediterranean and Red Sea. Egypt sees the MSRI as a pathway to obtain badly needed capital, boost its economy and infrastructure, and gain valuable political benefits. For China, advancing the MSRI in Egypt is attractive given Egypt is a “‘strategic pivot,’” and “‘regional priority,’” one of the most attractive countries in the Middle East for the MSRI, and the MSRI syncs with Egyptian development plans.6 The policy value of examining the Egypt MSRI case is quite clear. As mentioned, Egypt is a heavyweight in MENA. Furthermore, as noted, Egypt plays an important role in connecting Eastern Africa with the Mediterranean region and, beyond this, Europe, a key Chinese market. Looking to the future, if the MSRI/BRI in Egypt succeeds it could have important implications for Egypt’s development prospects which, in turn, affect Egypt’s internal stability. The success of the project will have implications for the political economic situation throughout the entire Middle

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East, too. The progress of the MSRI in Egypt further is relevant because the variables shaping it have direct and indirect ramifications for the realization of the MSRI elsewhere. In analytical terms, the Egypt MSRI case can shed light on the myriad of domestic and international political economic factors driving the embrace of the MSRI and its implementation, a useful corrective to analyses that emphasize political or economic variables. This chapter shows that the MSRI in Egypt is progressing, though not to the extent and not with the speed that many dramatic headlines imply. It further shows that many MSRI projects are not attracting substantial Chinese FDI and that China’s most visible role is as a contractor, which is problematic given Egypt’s financial situation, an issue we later discuss. The MSRI’s realization in Egypt is hindered by several factors including political risks, the government’s fiscal and debt situation, and the uncertain economics of certain projects. Although it is not a central focus, this chapter also demonstrates quite clearly that while the MSRI (and the larger BRI) have served to solidify Egyptian-Sino ties that already were strengthening due to various Egyptian international and domestic political and economic imperatives such as Egypt’s desire to diversify its foreign policy. The MSRI has hardly ensnared Cairo. In toto, then, this chapter adds to debates about the political economy of the MSRI’s implementation as well as its political economic ramifications, debates covered by other chapters in this book as well as other books on the MSRI.7 This chapter begins with a review of Egypt’s political relationship with China, focusing the period from 2014 after al-Sisi assumed the reins of power. It then delves into Egypt-China economic ties with respect to trade, FDI, and contracting. Following this, it contemplates the state of MSRI projects such as the Suez Canal Economic Zone (SCZone) in Egypt and Egypt’s interest in China’s ambitious initiative. Subsequently, it enumerates the political and economic challenges influencing the realization of the MSRI in Egypt. It ends with some summary remarks as well as observations about the policy and theoretical implications of this chapter’s findings.

Egypt–China Political Relations The Arab Republic of Egypt and the PRC established diplomatic relations in 1956. Of note, Egypt was the first Arab and African country to recognize and establish diplomatic ties with China. Egypt also was an early

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and strong supporter of the PRC’s right to reclaim its seat at the United Nations and has continuously backed the “One China” principle and Beijing’s reunification aspirations.8 For more than 60 years, Egypt and China have maintained equal and friendly relations, traditionally focused on promoting six major fields: “political trust and mutual support, practical cooperation in all fields, promoting exchanges and cooperation, strengthening cooperation in anti-terrorism and law enforcement security, and improving cultural exchanges, tourism and other fields.”9 Cooperation has remained solid despite shifts in the international environment and inside Egypt as well as occasional disagreements.10 Bilateral political relations have featured frequent diplomatic exchanges and high-level visits. To illustrate, in 1983, former President Hosni Mubarak made his first official visit out of four (the others were in 1999, 2002, and 2006) to China. This also was the first time an Egyptian president visited China. During his second visit, Egypt and China established a strategic cooperative relationship. In parallel, China’s President and other high-ranking Chinese officials visited Egypt. For example, in 2000, Chinese President Jiang Zemin made a special trip to Alexandria to meet his Egyptian counterpart.11 About four years later, Chinese President Hu Jintao paid a state visit to Egypt as part of his first trip to Africa.12 In post-Mubarak Egypt (2011–), such high-level visits have continued and even expanded. One example was a trip in August 2012 by the thennew Egyptian president, Mohammed Morsi. This trip was highly symbolic because it was Morsi’s first official trip outside the Middle East and was made to Beijing rather than to the United States (US) to signal his intent to reduce Cairo’s closeness to Washington.13 Morsi’s visit to China laid the groundwork for a renewed partnership between the two countries, at a time when Beijing’s position was posing an increasing challenge to US influence and its role as a major economic actor in the MENA region.14 After Egyptian President Abdel Fattah al-Sisi took office in June 2014, following a military coup against Morsi, Egypt continued to move closer to China, with Sisi visiting the country every year (in some cases multiple times) between 2014 and 2018.15 In December 2014, President al-Sisi met with Chinese President Xi Jinping and they upgraded the relationship to a “Comprehensive Strategic Partnership.” In tandem, they pledged to boost “‘political, economic, military, cultural, and technological cooperation’” and “to coordinate policies at the regional and international level.” During their meeting,

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they agreed their countries would work together on the MSRI and SREB while al-Sisi solicited FDI for a second Suez Canal.16 About six months after this, Egypt and China signed a framework agreement for 15 projects worth $10 billion, to be funded with loans and Chinese outward FDI (OFDI). These projects related to Egypt’s power transmission network and transportation such as railways, the expansion of the port of Alexandria, and the electrification of a railway line and Chinese OFDI (COFDI) in fiberglass, leather, and tire factories.17 Not long after the conclusion of the framework agreement, al-Sisi traveled to China to attend celebrations for the 70th anniversary of World War II V-Day. The two sides spoke positively about relations and boosting cooperation; Egypt expressed enthusiasm about the BRI; and they concluded a few deals in areas such as production capacity.18 2016 represented a significant year in the relationship because it was the 60th anniversary of the establishment of diplomatic ties. In January, Chinese President Xi paid a state visit to Egypt, the first visit to Egypt by a top Chinese leader in 12 years. At the start of his visit, he encouragingly stated, “China stands ready to boost cooperation with Egypt in infrastructure construction and continue pushing ahead industrial capacity cooperation.”19 Furthermore, he suggested the two countries should work to make Egypt a pivot or hub for the BRI, with both country’s leaders waxing positively about the BRI. Xi further encouraged Chinese companies to participate in the SCZone, discussed below, and Egypt’s New Administrative Capital. The two countries further concluded more than 20 MoUs encompassing $15 billion in deals relating to electricity, energy, finance, infrastructure, technology, and space as well as $1.7 billion in loans for Egyptian financial institutions.20 About nine months following this, al-Sisi went to Hangzhou upon the invitation of China to attend the G20 Summit and stressed his country’s willingness to increase economic cooperation with China in areas such as agriculture, industry, and technology.21 Less than a year later, al-Sisi went to Beijing to attend the inaugural Belt and Road Forum. Egypt and Egyptian companies signed a number of financing agreements with institutions such as the China Development Bank, the Export-Import Bank of China (China ExIm Bank), and China Export and Credit Insurance Corporation relating to the funding of projects, export support, and technical cooperation.22 More specifically, agreements were signed relating to Egypt’s electrical grid, investments in

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the Ain Sokhna port, and funding to Egypt’s Banque Misr.23 Approximately four months after this, al-Sisi traveled to China to attend the 9th BRICS Summit.24 In 2018, he journeyed to China for the Beijing Summit of the Forum on China-Africa Cooperation. There, he lauded the BRI and Egypt struck a reported $18.3 billion in deals with Chinese companies.25 Intense diplomatic exchanges between the top leaders and frequent high-level reciprocal visits illustrate the depth of bilateral relations. There are two reasons why Cairo considers strong relations with Beijing essential: strategically, it wants to send a message to its American partner that it has strategic alternatives and is frustrated with Washington’s continuing interference in its internal affairs (meaning human rights pressures). More generally, a solid relationship and “strategic cooperation with Beijing fits with Cairo’s desire to forge a sovereign foreign policy based on purely Egyptian interests and not bound to any international or regional axes.” Of course, it hardly hurts that Beijing has been implicitly supportive of all measures, coercive and noncoercive, that Cairo uses to deal with its own internal challenges.26 The relationship further enhances the regime’s legitimacy partly because of China’s stature, but also because it suggests better economic times to a populace frustrated by the country’s economic situation. Egypt’s economic relations with China are detailed below, but it is worth noting here that Egypt has been actively seeking Chinese FDI and funding, which is particularly attractive since it lacks the demanding conditions often associated with Western loans and FDI. It sees a huge potential for cooperation with China in fields like trade, energy, minerals, tourism, transportation, port logistics, and aerospace science and technology. China also presents a useful development model.27 To preview the forthcoming discussion of Egypt in the MSRI, Egypt believes, too, Chinese contracting, expertise, FDI, loans, and other economic support, can help it advance its massive SCZone project specifically and spur growth and job creation generally. The latter two are politically important for regime stability, especially since Egypt has millions of unemployed.28 For China, multiple reasons drive its interest in Egypt. Politically, ties with Egypt, a major regional political and military power, the largest Arab country, and an influential player in the Sunni axis and the Arab-Islamic world, can help it strengthen its influence and power in MENA generally and the Arab World specifically, and boost its strategic standing at the expense of the US.29 Moreover, Beijing views Egypt as a key partner

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in the war against terrorism because of Egypt’s struggle against jihadist groups operating in the Sinai Peninsula and its central role within the traditional Sunni camp. China wants to keep terrorist threats as far away as possible and Egypt can help it combat terrorism and extremism in various ways.30 Economically, Egypt matters to China because of its strategic location. Relatedly, Egypt is a critical transit point for trade flowing between the Indian Ocean, Red Sea, and Mediterranean because it is the home of the Suez Canal, of which China is the largest user. Additionally, Egypt has Africa’s largest GDP and one of its largest African populations and provides a gateway to African markets and natural resources because of its location as well as the trade agreements it has with African countries. Regarding Africa, it has been an increasingly important Chinese trade partner over the past few decades and COFDI in Africa has surged.31 The story is not just about Africa, however. Egypt also provides a gateway for Chinese goods to enter Europe, one of the main destinations for Chinese low-cost goods, through the Suez Canal and infrastructure being built pursuant to the MSRI and other schemes.

Egypt-China Economic Ties This section initially examines Egypt’s trade with China. Following this, it discusses non-MSRI/non-SREB COFDI in Egypt. Subsequently, it looks at non-BRI related contracting.32 Some major examples of COFDI and contracting are provided for illustrative purposes. This section also briefly treats other forms of Egyptian-Chinese economic cooperation. Trade For a long time, the US was Egypt’s main trade partner. However, this changed in 2012 when China became Egypt’s largest trading partner.33 Although the US remains an important source of goods and an important market for Egypt, China continues to be Egypt’s main trade partner in recent years. Table 1 shows Egypt’s trade with China for select years during the period between 2005 and 2018. The trade balance has consistently run in China’s favor, with the situation generally having deteriorated over time. World Bank World Integrated Trade Solution data show the composition of trade has shifted from one where Egypt was exporting consumer

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Table 1 Egypt–China Trade, FOB, 2005–2018 (select years) (Amounts in USD Millions)

2005 2010 2015 2016 2017 2018

Exports to China

Imports from China

Total Trade

108.52 452.51 425.19 348.10 218.20 386.94

908.42 4,884.39 9,093.92 4,533.90 4,584.20 6,621.78

(799.91) (4,431.88) (8,668.73) (4,185.80) (4,366.00) (6,234.84)

Source International Monetary Fund, “Direction of Trade Statistics” (hereinafter IMF DOTS) (a This is specifically drawn from IMF DOTS “Exports and Imports by Areas and Countries.” See https://data.imf.org/regular.aspx?key=61013712)

goods, stone and glass, and raw materials to China in 2005 to one where Egypt, in 2018, was sending greater amounts of fuel and raw materials and a notable (relatively speaking) amount of consumer goods to China while it buys an increasing amount of capital goods, machinery and electrical goods, and intermediate goods from China.34 Some of this shift may relate to COFDI or Chinese contracting in Egypt as Chinese firms often import their supplies from China while Chinese loans typically mandate the purchase of Chinese goods and services. Investment Looking at non-MSRI, non-SREB Chinese OFDI (COFDI) in Egypt, it is clear the figures are not that impressive. For the period 2005–2018, the American Enterprise Institute-Heritage Foundation “China Global Investment Tracker” (hereinafter AEI-Heritage Foundation CGIT ) shows only $5.57 billion of COFDI flows into Egypt, with a large energy investment by Sinopec in 2013 representing almost 55% of this total. The balance has gone into industry, metals, and real estate.35 Another source states that there are more than 1450 Chinese companies now operating in Egypt in areas like construction, industry, IT, services, and telecommunications with FDI in industry dominant.36 In regard to industry, Chinese firms have invested in fiberglass plants, storage silos construction, automobile assembly lines, motorcycle production, and glass factories, as well as garment, textiles, and chemicals. Although COFDI in Egypt is low, it should increase because some Chinese companies reportedly

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view Egypt as attractive due to its location, preferential trade deals with Europe and other regions, and abundant human and natural resources.37 Furthermore, Beijing “encourages and supports qualified companies to participate in Egyptian mega-projects.”38 In March 2015, the Egyptian government announced plans to build a New Administrative Capital, a massive project east of Cairo whose first phase would cost $45 billion and take up to seven years to complete.39 Pursuant to this, it later signed agreements with Chinese state-owned enterprises (SOEs) China State Construction Engineering Corporation (CSCEC) and China Fortune Land Development Company (CFLD) to develop parts of the new capital city including a new parliament, twelve ministerial buildings, a national convention center, and an exhibition complex. CSCEC, though, subsequently withdrew from these ventures due to a disagreement about deal terms and subcontracting. CFLD, however, remained in the project, planning to invest up to a reported $20 billion to build an “upmarket residential district, an industrial zone, schools, a university, and recreational centers in the new capital, along with supporting infrastructure.”40 Fueling optimism, in late 2017, Egypt’s Ambassador to China said Beijing had invested $3.2 billion in the second phase of the project and would invest an additional $8 billion by 2027.41 Yet, in 2018, talks between Egypt and CFLD collapsed due to disagreements over revenue sharing terms, leading to the postponement of the project’s second and third phases.42 Still, CSCEC has continued to work on buildings in the New Administrative Capital’s Central Business District (CBD).43 Contracting China has a long history of serving as a contractor for Egyptian projects.44 Prior to the launch of the BRI, between 2007 and 2012, Egypt awarded $3.5 billion of contracts to Chinese companies such as Sinoma, China Communications Construction, China State Shipbuilding, Power Construction Corp., and Dalian Shipbuilding for various projects in shipping and oil and gas. Much of China’s non-MSRI/non-SREB contracting work pertains to CSCEC’s role in the New Administrative Capital’s CBD as well as a massive chemical plant (involving CSCEC and China Wengfu Group).45 The largest contract during the aforementioned period was a nearly $2 billion contract awarded to Rongsheng Holding and China

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National Chemical Engineering in 2010 to build and operate an oil refinery for 25-years after which it would be returned to Egypt.46 Other Economic Cooperation Egyptian-Sino economic relations has entailed cooperation in many other spheres. For instance, as far back as 1964, the two countries struck a technical and economic cooperation agreement. In the 1980s, they established a joint committee “to enhance cooperation in technical and electrical projects” and also initiated cooperative ventures relating to agriculture, medical equipment, and pharmaceuticals. The next decade saw the two countries reaching accords on electricity and rural development and a joint project by Egypt and the Tianjin Economic-Technological Development Area (TEDA) to develop the Suez Economic Zone North-west Gulf, commonly known as the TEDA special economic zone (SEZ) or TEDA SEZ. In 2014, Cairo and Beijing agreed to establish a joint laboratory for renewable energy projects, seen as an important channel for technology transfer.47 Important for capital-deficit Egypt, China has provided or indicated a willingness to supply significant funding to the Arab state. Historical examples include a $200 million soft loan from the China Development Bank to the National Bank of Egypt and grants for joint ventures (JV) in areas like electricity and the environment.48 In 2017, China agreed to contribute $64 million to the Egyptian earth observation satellite program (EgyptSat) and a $23 million grant for an Egyptian satellite test, integration, and assembly facility.49 The same year, the Egyptian Minister of Investment and International Cooperation Sahar Nasr met with the chair of China’s $40 billion Silk Road Fund to discuss the possibility of the latter providing funding for infrastructure and industrial projects as well as joint private-public sector endeavors in the SCZone and other areas in Egypt.50 Not long thereafter, Egypt signed a MoU with the China ExIm Bank to finance Egyptian projects and investments in sectors such as electricity, transportation, and seaports.51

Egypt in the MSRI As Chinese Foreign Minister Wang Yi made amply clear in 2017, China views Egypt as an important partner of China in the construction of the MSRI as well as the larger BRI.52 Similar to other authors in this

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volume, we label as MSRI projects those projects initiated after 2013 that have an explicit maritime link such as seaports and also include projects like railways that relate directly to connectivity. For us, power project as well as industrial parks and special economic zones (SEZs) also may be deemed MSRI projects because they support other MSRI components like transportation infrastructure or have close links to Chinese goals such as boosting FDI, supply, service, and other activities of Chinese companies.53 The maritime dimension of Chinese involvement in Egypt is longstanding. For instance, in 2005, Hutchinson Port Holdings took a stake in a JV involving the construction, operation, and management of container terminals in Egypt’s Alexandria and El Dekheila ports while three years later COSCO Pacific invested in a JV to manage a container terminal in Port Said East Port.54 More recently, China Harbour Engineering Company (CHEC) has been working on a new terminal basin in Sokha Port south of the Suez Canal, which is in the SCZone.55 The maritime project in Egypt which links most obviously to the MSRI is the SCZone. Although the SCZone has its roots in the Suez Canal Corridor Project proposed in the 1970s, it was given new life by Egyptian President al-Sisi. The SCZone envisions building the Suez Canal area into a major global commercial hub with industrial, technology, and agricultural zones, residential and retail complexes, and modern seaports. Among other things, it entails projects such as bridges, tunnels, a second canal parallel to the existing one, better telecommunications systems, industrial parks and SEZs, improved logistics, and the better terminals, shipbuilding facilities, and new docks at ports such as Port Said and Adabiya.56 Chinese firms such as CHEC and Sino Hydro Group were involved in various aspect of the new canal and, according to one source, China already is the largest investor in the SCZone, with TEDA having been very active in building up the TEDA SEZ in the Ain Sokhna district of the SCZone where it has attracted 68 firms.57 Aside from this, as noted earlier, CHEC is working on seaport facilities in Sokha Port. These port facilities are intended to service the SCZone and will be in full operation by the end of the year.58 Railways are another important facet of Egypt-China MSRI cooperation. According to the Head of the Egyptian Transport Association, China can be a key player in developing Egypt’s railway system because it offers both expertise and funding for, usually, more affordable projects.59 Chinese railways activity in Egypt is extensive and includes a 2014 MoU

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and agreement between Aviation Industry Corporation of China (AVIC) and Egypt’s Ministry of Transportation to develop an 80 km electric railway from El-Salam City to Bilbeis and Sharqeya in greater Cairo that also will link with the third line of Cairo’s metro.60 In 2014, Egypt also signed an initial agreement with CHEC for the construction of a $10 billion high-speed rail (HSR) between Alexandria and Aswan.61 Two years later, Egypt signed a MoU with China Railway Construction Corporation (CRCC) to construct Cairo’s sixth metro line, a $3.5 billion 30 km metro line involving 24 stations, from New Maadi in southern Cairo to Al-Khosous in Al Qalyubia.62 In 2017, Egypt awarded a $1.24 billion contract to AVIC and China Railway Group to build a light rail system connecting Cairo, Egypt’s new administrative capital, and various districts of greater Cairo.63 Egypt–China interactions under the aegis of the MSRI and larger BRI also entail energy cooperation, something Egypt values given its frequent power outages and desire to industrialize.64 In 2017, it signed an agreement with China for a $1 billion project to boost the capacity of the electricity local grid as a part of the second phase of Egypt’s electricity grid project.65 Egypt is also working with various Chinese firms to build a coal power generation facility on the Red Sea and a pumped-storage hydropower plant in Mount Ataka.66 Additionally, Chinese companies have a growing footprint in Egypt’s solar energy market. To illustrate, in 2015, Egypt’s Ministry of Electricity and Energy concluded a MoU with Chinese solar energy company Yingli Solar for the development of a solar energy plant, with the eventual goal of adding 500 megawatts (MW) of capacity to Egypt’s electricity supply.67 In 2020, China’s Gezhouba won a $287.5 million contract to build solar plants with a capacity of 500 MW.68 The same year, the Egyptian Nuclear Power Plant Authority and China National Nuclear Corporation signed a MoU for nuclear energy cooperation.69

Challenges for the MSRI in Egypt It is quite clear Egypt is very enthusiastic about the MSRI as top leader summits, numerous meetings, and a plethora of statements have made clear. This chapter has noted many political reasons for this. From an economic vantage point, China’s scheme promises many trade, FDI, and other benefits and meshes well with its so-called “Egypt Vision 2030” which encompasses the SCZone, the New Administrative Capital, and

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a multitude of reform programs. As for Vision 2030, it aims to boost Egypt’s GDP, enhance its competitiveness, move it up the value-added chain, increase per capital income, create jobs, diversify the economy, and improve infrastructure.70 In any event, one cannot assume the MSRI will be realized simply because fits with Egyptian development objectives and offers economic and political gains. After all, there are various political and economic obstacles facing it. On the whole, the “domestic politics of Egypt [currently] are relatively stable. There are no large-scale anti-government riots and disputes” and al-Sisi appears firmly in control. However, discontent is widespread because of cuts in government services and subsidies, food, energy, and water shortages, serious corruption, and very high levels of unemployment, especially among the young. While terrorist incidents have declined dramatically due to a government crackdown, terrorism, armed militias, and opposition parties present continuing threats to stability generally and investment and infrastructure projects specifically. There also is the potential for projects to encounter delays due to disruptive labor unions.71 Egypt also suffers from a cumbersome bureaucracy and legal system and heavy government involvement in the economy which makes things opaque to foreign investors and leaves projects at risk of abrupt policy changes.72 Aside from this, the al-Sisi administration has neither the will nor the power required to root out deep-seated corruption and inefficiency.73 The lack of will partly results from the fact that the Egyptian army possesses wide-ranging interests throughout the economy. On top of the above, as several other chapters in this book make amply clear, the MENA region has its own challenges that may have a negative impact on the MSRI.74 As for economic issues, Egypt’s growth rate has improved in recent years, but the government faces many challenges that will constrain its ability to finance and follow-through with large-scale MSRI projects. A critical one is the country’s weak public finances and high debts. Egypt is very highly indebted and a very large proportion of government moneys go to interest payments, limiting its ability to pay for projects or borrow more. And while the Egyptian economy has been diversifying, government revenues still depend heavily on tourism which has been hit hard because of terrorism and, more recently, the Covid-19 epidemic.75 Regarding funding, it is well understood that the realization of the MSRI requires large sums of money. In this vein, Egypt has joined the Asian Infrastructure Investment Bank (AIIB). But it remains to be seen how

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many and to what extent the AIIB will help Egypt finance MSRI projects, with the AIIB, to date, having just provided $510 million to Egypt for a rural sanitation project and a non-MSRI related solar park.76 Turning to the MSRI specifically, we should not forget the sheer scale and complexity of many proposed mega projects will present immense design, construction, and financial difficulties making it unlikely such projects will advance quickly, if at all. It remains to be seen, too, if certain projects will remain economically viable. For example, of late, the expanded Suez Canal has not been drawing as much shipping as anticipated because reduced global trade and plummeting oil prices have pushed shippers to shun the Suez Canal in favor of going around the Cape of Good Hope. The Suez Canal also faces competition from projects other projects such as a railway running from the Red Sea through Israel to Mediterranean and the Polar Silk Road.77 It also remains to be seen if Chinese companies have the will and ability to invest or, likewise, that China will be able and willing to loan the eye-catching amounts set forth in the headlines given current circumstances and some of the problems encountered elsewhere along the MSRI.78

Conclusion This chapter explores Egypt in the MSRI. It began with an overview of Egypt’s political relationship with China, emphasizing the contemporary period. It then turned to an examination of Egypt’s trade, FDI, contracting, and other links with China. Following this, it covered a variety of MSRI projects in Egypt in areas such as seaports, railways, and power generation. It then thoroughly discussed the political and economic channels that will affect the implementation of the MSRI. The main findings of this chapter are that the MSRI is moving forward in Egypt. It is not, however, growing by leaps and bounds despite extensive and positive political and economic connections between Egypt and China and contrary to what many news stories imply. The reasons for this are quite clear. There are a number of political and economic obstacles such as the threat of terrorism in the former case and very high Egyptian government debts in the latter case that delay or prevent the realization of the MSRI in Egypt. Although it was not the main purpose of this analysis, this chapter further reveals that Egypt, for a variety of international and domestic political and economic reasons, was already moving closer to

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China and that it would, therefore, be incorrect to attribute all or much of Egypt’s shift to China’s massive initiative. From a policy standpoint, the analysis herein makes clear that decision makers elsewhere should expect strong and perhaps even stronger Egypt–China links. However, they should not conclude Egypt has bound itself exclusively to China or that China or Chinese companies will recklessly throw resources at the MSRI in Egypt in order to bring about its full implementation. Political and economic realities matter. In terms of analytical implications, this study highlights the value of taking a political economy approach to analyzing both the speed and extent to which the MSRI will be realized as well as its political effect on participant nations. One of limitation of this study is that there are instances where the data on MSRI projects is not definitive due to a lack of public disclosures or inadequate follow-up reporting. We attempted to address this issue through the use of multiple Egypt as well as non-Egypt based media sources. Another limitation is that we were unable for reasons of space or time to investigate Washington’s possible effect on the progress of MSRI in Egypt. We have no evidence that the US is interfering directly or indirectly with the MSRI, but the possibility exists given the importance of Egypt to the US as well as the frosty relationship between the US and China. Lastly, the situation in Egypt is always evolving, though shifts in Egypt’s economic situation are more likely than changes in its domestic or external political situation. Whatever the case, the state of the MSRI in Egypt will require ongoing monitoring. Egyptian and Chinese statements and commentaries are painting a glowing portrait of the MSRI and SREB in Egypt. It is bringing green to the desert both literally and figuratively as COFDI and loans flow into Egypt to aid Egypt industrialize, buildup its power grid, and enhance connectivity both within and outside the country. Change is occurring, but it remains to be seen if the MSRI landscape will be filled in completely given the political and economic challenges enumerated in this chapter.

Notes 1. “Full text: Vision for Maritime Cooperation Under the Belt and Road Initiative,” Xinhua, June 20, 2017, http://news.xinhuanet.com/english/ 2017-06/20/c_136380414.htm. 2. Jean-Marc F. Blanchard and Colin Flint, “The Geopolitics of China’s Maritime Silk Road Initiative,” Geopolitics 22, no. 2 (2017): 223–245.

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3. For discussion, see Jane Perlez and Yufan Huang, “Behind China’s $1 Trillion Plan to Shake Up the Economic Order,” The New York Times, May 13, 2017, https://www.nytimes.com/2017/05/13/ business/china-railway-one-belt-one-road-1-trillion-plan.html; Jean-Marc F. Blanchard, “Probing China’s Twenty-First-Century Maritime Silk Road Initiative (MSRI): An Examination of MSRI Narratives,” Geopolitics 22, no. 2 (2017): 246–268; and “China’s Belt-And-Road Plans Are to Be Welcomed—and Worried About,” The Economist, July 26, 2018, https://www.economist.com/leaders/2018/07/26/chinasbelt-and-road-plans-are-to-be-welcomed-and-worried-about. Except as otherwise noted, all amounts herein are denominated in United States dollars (USD). 4. Mordechai Chaziza, China’s Middle East Diplomacy: The Belt and Road Strategic Partnership (East Sussex: Sussex Academic Press, 2020). 5. Useful works on Egypt-China ties or relations within the context of the MSRI/BRI include Mordechai Chaziza, “Comprehensive Strategic Partnership: A New Stage in China-Egypt Relations,” Middle East Review of International Affairs 20, no. 3 (2016): 41–50; Mordechai Chaziza, “The Chinese Maritime Silk Road Initiative: The Role of the Mediterranean,” Mediterranean Quarterly 29, no. 2 (2018): 54–69; Mahmoud Ahmed Mohamed Mohamed Soliman and Jun Zhao, “The Multiple Roles of Egypt in China’s ‘Belt and Road’ Initiative,” Asian Journal of Middle Eastern and Islamic Studies 13, no. 3 (2019): 428–444; and Chaziza, China’s Middle East Diplomacy, chap. 2. 6. Abigaël Vasselier, “Chinese Perceptions of Country Risks in North Africa,” China Analysis, June, 2017, http://www.ecfr.eu/page/-/China_ Analysis_June_2017.pdf, 7–10. 7. See, e.g., the chapters by David Styan, Conrad John Masabo, and Jeffrey Payne herein as well as the chapters in Jean-Marc F. Blanchard, ed., China’s Maritime Silk Road Initiative and South Asia (Singapore: Palgrave MacMillan, 2018), and Jean-Marc F. Blanchard, ed., China’s Maritime Silk Road Initiative and Southeast Asia (Singapore: Palgrave MacMillan, 2019). 8. Chris Zambelis, “A New Egypt Looks to China for Balance and Leverage,” China Brief , September 21, 2012, https://jamestown.org/ program/a-new-egypt-looks-to-china-for-balance-and-leverage; and Yasser M. Gadallah, “An Analysis of the Evolution of Sino-Egyptian Economic Relations,” in Towards Well-Oiled Relations ? China’s Presence in the Middle East Following the Arab Spring ed. Niv Horesh (Houndmills: Palgrave MacMillan, 2016), 95. 9. “China, Egypt Endorse One Belt Silk Road Project,” The BRICS Post, April 14, 2017, http://thebricspost.com/china-egypt-endorse-one-beltsilk-road-project.

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10. Chaziza, “Comprehensive Strategic Partnership,” 42. 11. “Jiang Zemin Meets Egyptian Counterpart Hosni Mubarak,” People’s Daily Online, April 18, 2000, http://en.people.cn/english/200004/ 18/eng20000418_39112.html. 12. “Hu Jintao Visits Egypt,” China Daily, January 30, 2004, http://www. chinadaily.com.cn/english/doc/2004-01/30/content_301788.htm. 13. Zambelis, “A New Egypt Looks to China for Balance and Leverage.” 14. Degang Sun and Yahia Zoubir, “China’s Response to the Revolts in the Arab World: A Case of Pragmatic Diplomacy,” Mediterranean Politics 19, no. 1 (2014): 17. 15. “China, Egypt to Advance Comprehensive Strategic Partnership,” Xinhua, September 1, 2018, http://www.xinhuanet.com/english/201809/01/c_137437048.htm. 16. Shannon Tiezzi, “China’s Egypt Opportunity,” The Diplomat, December 24, 2014, http://thediplomat.com/2014/12/chinas-egypt-opportunity. 17. “Egypt Enters into Initial Deal for 15 Projects Worth $10 Bln with China-minister,” Reuters, June 16, 2015, http://www.reuters.com/art icle/egypt-investment-china-idUSL5N0Z14NG20150615; and “China to Fund $10bn Worth of Egyptian Infrastructure Schemes,” Global Construction Review, June 22, 2015, https://www.globalconstructionreview.com/ news/ch8i8n8a-f8u8n8d-10b8n-w2or0t8h6-4eg8y065p4t2i0a8n. 18. “Xi Meets Egypt President Sisi,” China Daily, September 2, 2015, http://www.chinadaily.com.cn/world/2015victoryanniv/2015-09/02/ content_21779600.htm. 19. “Xi Starts Egypt Visit to Synergize Development Plans,” China Daily, January 21, 2016, https://www.chinadaily.com.cn/world/2016xivisitm iddleeast/2016-01/21/content_23183336.htm. 20. “Chinese President Arrives in Egypt for State Visit,” Xinhua, January 20, 2016, http://news.xinhuanet.com/english/2016-01/21/c_135029270. htm; Lin Noueihed and Ali Abdelaty, “China’s Xi Visits Egypt, Offers Financial, Political Support,” Reuters, January 21, 2016, http://www. reuters.com/article/us-egypt-china-idUSKCN0UZ05I; Shannon Tiezzi, “Xi’s Visit Cements Egypt’s Place on the ‘Belt and Road’,” The Diplomat, January 22, 2016, https://thediplomat.com/2016/01/xisvisit-cements-egypts-place-on-the-belt-and-road; Ofir Winter and Assaf Orion, “Egypt and China Following Xi’s Visit,” INSS Insight, February 11, 2016, https://www.inss.org.il/publication/egypt-and-china-follow ing-xis-visit; and Shannon Tiezzi, “The Belt and Road and Suez Canal: China-Egypt Relations Under Xi Jinping,” The Asia Dialogue, February 16, 2016, https://theasiadialogue.com/2016/02/16/87681. 21. People’s Republic of China, Ministry of Foreign Affairs, “Xi Jinping Meets with President Abdel Fattah al-Sisi of Egypt,” September

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23.

24.

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26. 27.

28. 29.

30.

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4, 2016, https://www.fmprc.gov.cn/mfa_eng/topics_665678/XJPCXB ZCESGJTLDRDSYCFHJCXYGHD/t1395065.shtml. “Full Text: List of Deliverables of Belt and Road Forum,” Xinhua, May 15, 2017, http://www.xinhuanet.com//english/2017-05/15/c_1 36286376.htm. “Investment Minister Signs MoU in Beijing,” Egypt Today, May 16, 2017, https://www.egypttoday.com/Article/3/5203/InvestmentMinister-signs-MoU-in-Beijing. “Egypt’s President al-Sisi Arrives in China to Attend BRICS Summit,” Egyptian Streets, September 4, 2017, https://egyptianstreets.com/2017/ 09/04/egypts-president-al-sisi-arrives-in-china-to-attend-brics-summit/. Hisham Abu Bakr Metwally, “BRI Chinese Investment Grabs Egypt’s Attention,” China Focus, September 19, 2018, http://www.cnfocus. com/bri-chinese-investment-grabs-egypt-s-attention. Chaziza, “Comprehensive Strategic Partnership,” 42–43. “Broad Prospect for China-Egypt Economic and Trade Cooperation,” China Daily, January 21, 2016, http://www.chinadaily.com.cn/world/ 2016xivisitmiddleeast/2016-01/22/content_23204973.htm; Chaziza, “Comprehensive Strategic Partnership,” 42; and Haisam Hasssanein, “Egypt Takes Another Step Toward China,” The Washington Institute Policywatch, August 19, 2019, https://www.washingtoninstitute.org/pol icy-analysis/view/egypt-takes-another-step-toward-china. Winter and Orion, “Egypt and China Following Xi’s Visit.” Chaziza, “Comprehensive Strategic Partnership,” 41; and Soliman and Zhao, “The Multiple Roles of Egypt in China’s ‘Belt and Road’ Initiative,” 430–432. “China, Egypt Oppose Linking Terrorism with Specific Nations, Religions,” Xinhua, January 22, 2016, http://news.xinhuanet.com/english/ 2016-01/22/c_135033234.htm; Winter and Orion, “Egypt and China Following Xi’s Visit”; and Juan Chen, “Strategic Synergy Between Egypt ‘Vision 2030’ and China’s ‘Belt and Road’ Initiative,” Outlines of Global Transformations: Politics, Economics, Law 11, no. 5 (2018): 225. People’s Republic of China, State Council, “China-Africa Trade Surges in Q1,” May 11, 2017, http://english.gov.cn/state_council/ministries/ 2017/05/11/content_281475652349490.htm; “China Becomes Single Largest Contributor of Africa’s FDI: Report,” Xinhua, May 3, 2017, http://news.xinhuanet.com/english/2017-05/03/c_136254183. htm; and Soliman and Zhao, “The Multiple Roles of Egypt in China’s ‘Belt and Road’ Initiative,” 432–435. As discussed in the introduction to the book, it is a challenge to separate MSRI (and SREB) from non-MSRI/non-SREB projects. The methodology used to address this issue is discussed in the section entitled Egypt in the MSRI.

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33. Emma Scott, “China-Egypt Trade and Investment Ties: Seeking a Better Balance,” The Centre for Chinese Studies, June, 2015, http://www.ccs. org.za/wp-content/uploads/2015/06/CCS_PB_China_Egypt_Trade_ Ties_Emma_Final_2015.pdf. 34. World Bank, “World Integrated Trade Solution: Trade Statistics by Country/Region,” https://wits.worldbank.org/CountryProfile/ en/EGY. 35. The AEI-Heritage Foundation, “China Global Investment Tracker,” is available at https://www.aei.org/china-global-investment-tracker. One limitation to this otherwise valuable and widely used database on COFDI is that it only includes investments larger than $100 million. There is no reason to believe that this will result in a substantial undercounting of total COFDI in Egypt. 36. Metwally, “BRI Chinese Investment Grabs Egypt’s Attention.” 37. Gadallah, “An Analysis of the Evolution of Sino-Egyptian Economic Relations,” 98–100; Scott, “China-Egypt Trade and Investment Ties”; and Hou Liqiang, “Chinese Companies Boost Operations in Egypt,” China Daily, February 15, 2016, http://www.chinadaily.com.cn/bus iness/2016-02/15/content_23481956.htm. 38. “Xi Starts Egypt Visit to Synergize Development Plans.” 39. “Egypt Plans New Capital Adjacent to Cairo,” Al Jazeera, March 14, 2015, http://www.aljazeera.com/news/2015/03/egypt-plans-cap ital-adjacent-cairo-150314014400946.html. 40. Kieron Monks, “Egypt Is Getting A New Capital - courtesy of China,” CNN , October 10, 2016, http://edition.cnn.com/style/art icle/egypt-new-capital/index.html; Neil Ford, “Egypt: New Capital City Project Hit by Chinese Withdrawal,” African Business Magazine, February 23, 2017, http://africanbusinessmagazine.com/region/northafrica/egypt-new-capital-city-project-hit-chinese-withdrawal; and Ahmed Kamel, “Chinese Project to Build New Egyptian Capital Revived,” Nikkei Asian Review, May 26, 2017, https://asia.nikkei.com/Business/Compan ies/Chinese-project-to-build-new-Egyptian-capital-revived. 41. “China to Invest $11.2 Billion in Projects for Egypt’s New Administrative Capital,” Egypt Independent, September 4, 2017, http://www.egypti ndependent.com/china-invest-11-2-billion-projects-egypts-new-administr ative-capital. Another source suggests much of these amounts are not FDI, but contracting. Chen, “Strategic Synergy between Egypt ‘Vision 2030’ and China’s ‘Belt and Road’ Initiative,” 226–227. 42. “China’s US$20 Billion Project to Development a New Capital for Egypt Falls through Amid Discord over How to Share Revenue,” South China Morning Post, December 17, 2018, https://www.scmp.com/bus iness/china-business/article/2178276/chinas-us20-billion-project-dev elop-new-capital-egypt-falls; and Aidan Lewis and Mohamed Abdellah,

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44. 45. 46.

47. 48. 49.

50.

51.

52. 53. 54. 55.

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“Egypt’s New Desert Capital Faces Delays as It Battles for Funds,” Reuters, May 13, 2019, https://www.reuters.com/article/us-egypt-newcapital/egypts-new-desert-capital-faces-delays-as-it-battles-for-funds-idU SKCN1SJ10I. “Feature: Chinese Construction Projects in Egypt’s New Capital City Model for BRI-Based Cooperation,” Xinhua, March 18, 2019, http:// www.xinhuanet.com/english/2019-03/18/c_137902708.htm. Gadallah, “An Analysis of the Evolution of Sino-Egyptian Economic Relations,” 96–97. AEI-Heritage Foundation CGIT . “Egypt Signs $2B Refinery Deal with China,” The San Diego UnionTribune, May 3, 2010, https://www.sandiegouniontribune.com/sdutegypt-signs-2b-refinery-deal-with-china-2010may03-story.html. Gadallah, “An Analysis of the Evolution of Sino-Egyptian Economic Relations,” 95–98. Ibid., 97. “China Grants Egypt $US 71 Million for Satellite Project, Vocational Training Centre,” Egyptian Streets, March 22, 2017, https://egyptians treets.com/2017/03/22/china-grants-egypt-us-71-for-satellite-projectvocational-training-centre. “Agreement with Head of Silk Road Fund to Enhance Investments to Activate Joint Egyptian Chinese Projects,” Daily News Egypt, May 15, 2017, https://dailynewsegypt.com/2017/05/15/agreement-head-silkroad-fund-enhance-investments-activate-joint-egyptian-chinese-projects. “Investment Ministry Signs MoU with China Exim Bank to Support Development Projects,” Daily News, August 29, 2017, https://dailyn ewsegypt.com/2017/08/29/investment-ministry-signs-mou-china-eximbank-support-development-projects. “China, Egypt Eye Belt and Road Cooperation,” Xinhua, April 24, 2017, http://news.xinhuanet.com/english/2017-04/25/c_136232916.htm. To be clear, 2013 is not a hard date because some projects initiated before 2013 were invigorated or given new life by the BRI. Scott, “China-Egypt Trade and Investment Ties.” “China Harbour Builds New Terminal South of Egypt’s Suez Canal,” Xinhua, August 29, 2018, http://www.xinhuanet.com/english/201808/29/c_137428464.htm. Ahmed Farouk Ghoneim, “Egypt’s Suez Canal Corridor Project,” Middle East Institute, August 19, 2014, https://www.mei.edu/publications/ egypts-suez-canal-corridor-project-0; Marina Iskander, “Legal Alert 105: The Suez Canal Corridor Area Project,” Andersen Tax &Legal, 2018, https://andersentaxlegal.com.eg/legal-alert-105; and Embassy of Egypt in Washington, DC, “The Suez Canal Economic Zone: An Emerging

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International Commercial Hub,” http://www.egyptembassy.net/media/ Egypt_SuezCanal_082216a.pdf. “China Now Biggest Investor in Suez,” China Daily, March 23, 2017, http://www.chinadaily.com.cn/business/2017-03/23/content_2 8648386.htm; Hong Zhao, “Egypt Announces New Chinese Investments in Textile,” China Daily, April 5, 2017, http://www.chinadaily. com.cn/business/2017-04/05/content_28803966.htm; and Mahmoud Fouly, “Spotlight: Figures Show Growth in Egypt, China Cooperation on Belt and Road Initiative,” Xinhua, May 3, 2017, http://news.xinhua net.com/english/2017-05/03/c_136254160.htm. Marilyn Balcita, “Belt and Road Initiative Continues to Bloom in the Egyptian Desert,” HKTDC Research, May 27, 2019, https://research. hktdc.com/en/article/MzE5NzE4NzI2. “China Key to Modernizing Egypt’s Railway Infrastructure: Official,” China Daily, August 18, 2017, http://www.chinadaily.com.cn/business/ 2017-08/14/content_30575962.htm. “Ministry of Transportation Signs $800m MOU with China for Railway Project,” Daily News Egypt, April 5, 2014, http://www.dailynewsegypt. com/2014/04/05/ministry-transportation-signs-800m-mou-china-rai lway-project/. Scott, “China-Egypt trade and investment Ties.” “Egypt to Sign MOU With Chinese Company to Construct Sixth Metro Line,” All Africa, January 11, 2016, http://allafrica.com/stories/201 601041476.html. “Egypt, China Ink Deal to Build Fast Tram around Cairo,” China Daily, August 16, 2017, https://www.chinadaily.com.cn/business/201708/16/content_30674992.htm. Scott, “China-Egypt Trade and Investment Ties.” “Egypt, China Sign Energy Contract,” Egypt oil-gas, September 5, 2017, http://www.egyptoil-gas.com/news/egypt-china-sign-energy-contract. It is unclear if this project is different from an agreement Egypt signed with China’s State Grid in 2015 also relating to upgrading its power grid (See Scott, “China-Egypt Trade and Investment Ties”). “Interview: Chinese Investments in Egypt’s Electricity Sector in Continuous Increase: Official,” Xinhua, September 8, 2018, http://www.xinhua net.com/english/2018-09/08/c_137452789.htm. “Yingli Will Build 500 MW Solar PV Project in Egypt,” OFweek, February 10, 2015, http://en.ofweek.com/news/Yingli-will-build-500MW-solarPV-project-in-Egypt-25326. “China’s Gezhouba Signs $287.5 MN Contract to Build Solar Plants in Egypt,” Energy Egypt, January 14, 2020, https://energyegypt.net/chi nas-gezhouba-signs-287-5-mn-contract-to-build-solar-plants-in-egypt. We

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are unable to confirm if this contract was for the project Yingli was originally supposed to complete or a completely new project. CNNC, “CNNC Signs MOU with Egyptian Nuclear Power Plant Authority,” May 29, 2015, http://en.cnnc.com.cn/2015-05/29/c_4 8892.htm. Chen, “Strategic Synergy between Egypt ‘Vision 2030’ and China’s ‘Belt and Road’ Initiative,” 220–221. Talip Küçükcan, “The Belt and Road Initiative and Middle Eastern Politics: Challenges Ahead,” Insight Turkey 19, no. 3 (2017): 88; Chen, “Strategic Synergy between Egypt ‘Vision 2030’ and China’s ‘Belt and Road’ Initiative,” 230–232; Robert R. Bianchi, China and the Islamic World: How the New Silk Road Is Transforming Global Politics (Oxford: Oxford University Press, 2019), 125; and Jan-Pieter Laleman, “Egypt: The Continuation of Economic Reforms Is Improving Macroeconomic Fundamentals,” Credendo, June 26, 2019, https://www.credendo.com/ country-risk-assessment/egypt/continuation-economic-reforms-improv ing-macroeconomic-fundamentals. Michael Fahy, “Egypt’s Construction Sector Offers Rewards But Risks also High,” The National, July 22, 2017, https://www.thenational.ae/ business/egypt-s-construction-sector-offers-rewards-but-risks-also-high1.613205; Vasselier, “Chinese Perceptions of Country Risks in North Africa”; and Heba Saleh, “Egypt’s Economic Turnaround Hailed by Investors,” Financial Times, August 26, 2019. David Schenker, “Will Sisi Squander His Chance to Fix Egypt’s Economy?” The National Interest, May 17, 2016, http://nationalinterest. org/feature/will-sisi-squander-his-chance-fix-egypts-economy-16237. For elaboration, see Küçükcan, “The Belt and Road Initiative and Middle Eastern Politics,” 87; and Mordechai Chaziza, “Religious and Cultural Obstacles to China’s BRI in the Middle East,” BESA Center Perspectives Paper, no. 1604 (2020), https://besacenter.org/wp-content/uploads/ 2020/06/1604-Religious-Cultural-Obstacles-Silk-Road-ME-Chazizafinal.pdf. Laleman, “Egypt.” “China-Led AIIB Board Approves $510 Mln Funding for Egypt Infrastructure Projects,” Amwal Al Ghad, December 9, 2018, https://en. amwalalghad.com/chinas-aiib-reviewing-longer-term-infrastructure-invest ments-to-tackle-future-epidemics; “Egypt 5 Biggest Recipient of AIIB Investments: Minister,” Belt and Road News, July 17, 2019, https:// www.beltandroad.news/2019/07/17/egypt-5-biggest-recipient-of-aiibinvestments-minister; and “AIIB Seeks to Establish More Investment Projects in Egypt,” Egypt Today, July 26, 2019, https://www.egyptt oday.com/Article/3/73210/AIIB-seeks-to-establish-more-investmentprojects-in-Egypt.

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Index

A Abdul-Mahdi, Adel, 210 Abu Dhabi, 213, 227, 232, 238, 239, 243 Adama, 63, 74, 93 Addis Ababa, 27, 55, 56, 62–64, 84, 85, 89, 95, 118 Africa, 1–4, 6–14, 16–19, 21, 22, 25, 26, 30, 53–57, 59, 61, 62, 65–67, 70, 71, 81–83, 85, 87, 88, 90, 93–95, 97, 98, 111, 113–117, 119, 121–127, 138, 140, 141, 145, 146, 150, 151, 214, 255, 256, 258, 260, 261 African Union (AU), 14, 56, 59, 85, 95, 115, 126, 150 Aid, 9, 10, 15, 16, 31, 56, 84, 90, 95, 117, 140, 177, 214, 269 Ain Sokhna port, 260 Arabia, 8–11, 13–16, 68, 86, 87, 128, 167, 170, 203, 211, 214, 228–230, 238, 241, 243, 244 Arabian Peninsula, 235, 239, 243

Arab League, 13, 21, 115 Asia, 26, 56, 65, 83, 111, 115, 122, 201, 214, 232, 255 Asian Infrastructure Investment Bank (AIIB), 24, 66, 211, 267 Asia-Pacific Region (APR), 3

B Bab al-Mandab, 126 Bagamoyo, 18, 23, 24, 91, 122 Bagamoyo Port, 138, 146, 147, 149, 151 Bagamoyo Port Complex (BPC), 27, 28, 138, 139, 144, 145, 147–151 Bagamoyo Special Economic Zone (BSEZ), 138, 139, 145, 146, 148, 149 Beijing, 5, 8, 9, 17, 23, 53, 67, 71, 84, 92, 94, 95, 98, 112–114, 116, 117, 120, 121, 123–125, 128, 168, 170, 172, 176, 179,

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2021 J.-M. F. Blanchard (ed.), China’s Maritime Silk Road Initiative, Africa, and the Middle East, Palgrave Studies in Asia-Pacific Political Economy, https://doi.org/10.1007/978-981-33-4013-8

285

286

INDEX

181, 199, 201, 203, 205–207, 210, 211, 213, 214, 216, 228, 229, 237, 243, 244, 258–260, 263, 264 Belt and Road Forum, 20, 67, 125, 138, 237, 259 Belt and Road Initiative (BRI), 1, 2, 5, 14, 15, 18, 20, 24, 25, 29, 62, 71, 81, 85, 90, 94, 95, 98, 111, 120, 123–125, 137–139, 141, 144, 150, 152, 165–167, 174, 178–183, 199, 200, 207–209, 213–216, 227, 233, 235, 237–239, 241, 243, 255–257, 259, 261, 266 Blanchard, Jean-Marc F., 16, 18, 20, 22, 25, 27, 28, 34, 38, 40, 42–44, 64, 70, 72, 76, 99, 270 C Central Asia, 5, 167, 177–179, 182, 199 Chaziza, Mordechai, 16, 20, 22, 25, 29, 255–269 China. See also Chinese government; People’s Republic of China (PRC) China Development Bank, 24, 259, 264 China-Djibouti relations, 125 China-Egypt relations, 11, 258, 269 China-Ethiopia relations, 113 China Export Import Bank (China ExIm Bank), 88, 118, 259 China-Iran relations, 166, 167 China-Iraq, 29, 200, 216 China-Kenya relations, 57 China-Kuwait, 8, 10 China-Pakistan Economic Corridor (CPEC), 181, 236 China-Saudi Arabia relations, 203 China-Tanzania relations, 139–141

Chinese Communist Party (CCP), 112, 141, 201 People’s Liberation Army Navy (PLAN), 120, 178 China Civil Engineering Construction Corporation (CCECC), 63, 91 China Communications Construction Company (CCCC), 91 China Fortune Land Development Company (CFLD), 263 China Gezhouba Group, 93, 242 China Harbour Engineering Company (CHEC), 145, 265, 266 China Merchant Holding (CMHC), 63, 65. See also China Merchants Group (CMG); China Merchants Ports Holdings Limited (CMPH) China Merchants Group (CMG), 27, 111 China Merchants Ports Holdings Limited (CMPH), 146 China Metallurgical Group Corporation (MCC), 174 China National Petroleum Corporation (CNPC), 171, 206, 211, 238 China Nonferrous Metal Industry’s Foreign Engineering and Construction Company, 239 China Power Construction Cooperation, 263 China Railway Construction Corporation (CRCC), 118, 242, 266 China Railway Engineering Corporation (CREC), 91, 174, 210 China Road and Bridge Corporation (CRBC), 60 China State Construction Engineering Corporation (CSCEC), 238, 263

INDEX

Chinese government, 95, 111, 121, 209, 214 Chinese outward foreign direct investment (COFDI), 8–16, 19, 24, 83, 85–88, 92–94, 96, 98, 142, 143, 174, 176, 177, 180, 181, 233–235, 242, 259, 261, 262, 269 Cold War, 140, 228 post-Cold War, 139 Communist Party, 112, 141, 201 Congo, 61 Connectivity, 3, 5, 6, 18, 19, 29, 53–57, 59, 61–63, 65–67, 69–72, 90, 98, 115, 118, 139, 144, 147, 150, 166, 179, 207, 211, 214, 228, 235, 237, 242–244, 265, 269 Corridors, 53, 64 COSCO, 119, 238, 239, 265 Counter terrorism, 178 Currency, 90 reserves, 5, 67 swap, 53, 233

D Dalian, 119, 123, 240, 263 Dar es Salaam, 143, 144, 148 Debt trap, 6, 17, 23–25, 27, 150 Dependence, 19, 65, 71, 181 Djibouti Djibouti-Ethiopia Railway, 18, 55, 70, 82, 117, 125 Djibouti Ports and Free Zones Authority (DPFZA), 65, 112, 115, 119, 122 Doraleh Multipurpose Port (Doraleh MPP), 18, 55, 61 Port Autonome International de Djibouti (PAID), 122 Domestic

287

domestic policy, 2, 8, 71, 82, 83, 85, 93, 97, 98 domestic politics, 31, 82, 83 Dominance, 94, 124, 236 Dorraj, Manochehr, 16, 20, 22, 25, 28, 165–184 Douala port, 59 E East Africa, 18, 56, 57, 59, 61, 62, 67–69, 82, 97, 118, 120, 121, 123, 125–128, 143–145, 147, 148 East Coast Rail Link (ECRL), 6 Economic economic benefits, 12, 139, 151 economic dependence, 71 economic development, 10, 89, 93, 115, 145, 204, 209, 212, 235 economic effects, 3 economic growth, 24, 67 economic independence, 28, 175 economic relations, 22, 83, 85, 93, 96, 97, 138, 141, 151, 167, 177, 183, 205, 227, 228, 230, 233, 236, 256, 260, 264 economic sanctions, 28, 168, 175, 176, 181 economic stimuli, 2, 31, 98, 183 Ethiopia, 3, 7, 9, 10, 13–15, 18, 23–27, 55–59, 61–66, 68–71, 81, 82, 84–95, 97–99, 112, 114–119, 125–128 Ethiopia-Djibouti Railway, 55, 118, 125, 128 Ethiopia-Djibouti SGR, 23, 61, 62, 91 Europe, 4, 11, 21, 54, 56, 65, 67, 115, 167, 178, 179, 199, 255, 256, 261, 263 European Union (EU), 88, 95, 114, 116, 172, 177

288

INDEX

Export Processing Zone Authority (EPZA), 148, 157 F Farah, Mohamed Idriss, 63 Financial financial integration, 5, 235, 244 financial resources, 14, 84 Five-Year Development Plan, 145 Foreign aid, 7 Foreign direct investment (FDI), 5, 6, 10, 13, 15, 16, 19, 20, 22, 27, 30, 31, 87, 88, 92, 95–98, 166, 167, 174, 182, 206, 208, 227, 236, 256, 257, 259, 260, 265, 268 Foreign policy, 2, 71, 83, 84, 93, 95, 114–116, 121, 167, 178, 207, 243, 257, 260 Forum on China African Cooperation (FOCAC), 2, 12–14, 17, 112, 116, 125, 128 Free trade zone (FTZ), 18, 21, 65, 119, 127, 145, 179, 180 Fulton, Jonathan, 16, 20, 22, 25, 29, 227–244 G Governance, 96 Guelleh, Ismael Omar, 112, 114, 116, 121 Gulf Cooperation Council (GCC), 3, 10, 13, 15, 16, 20–22, 25, 29, 167, 177, 202, 211, 213, 216, 227–230, 232, 235–237, 239, 242–244 Gulf of Aden, 116, 178 Gwadar port, 182 H Hambantota port, 66

Hawassa, 63, 64, 89 Hegemon, 115, 126 Hong Kong, 125 Huawei, 67, 173 Hu Jintao, 137, 229, 258 Hydropower, 15, 24, 93, 94 hydropower plants, 174, 266 hydropower projects, 27, 88, 93

I India, 5, 25, 26, 87, 141, 167, 169, 182 Indian Ocean, 4, 54, 67, 116, 117, 121, 126, 200, 239, 261 Indian Ocean Region (IOR), 19, 21, 57 Infrastructure, 4, 6, 9–13, 15, 19–28, 30, 53–57, 59, 62, 65, 66, 71, 72, 84, 85, 90–94, 96–98, 113, 115, 117–119, 122, 125–127, 138, 139, 143, 144, 146, 149, 151, 152, 165, 166, 169, 174–177, 200, 203, 208, 209, 213, 214, 227, 232, 233, 235–237, 241, 256, 259, 261, 263–265, 267 Integration, 19, 55, 71, 72, 118, 145, 227, 255, 264 International Monetary Fund (IMF), 123, 124 Iran economy, 168, 173, 174, 176, 202, 212 Iran-China relations, 167 Iranian revolution, 168, 172 Iran-Pakistan pipeline, 180 Iraq-Iran war, 168, 174 Islamic Republic, 168, 177 Islamic revolution, 168

INDEX

J Jebel Ali Free Zone Authority (JAFZA), 232, 238 joint venture (JV), 66, 96, 141, 174, 242, 264, 265

K Kenya, 3, 4, 7–10, 14, 15, 18, 23–26, 55, 57–63, 65–71, 97, 116, 125, 126, 150 Kenya Railways Corporation, 125 Kenyatta, Uhuru, 67, 71 Khalifa Industrial Zone Abu Dhabi (KIZAD), 238, 239 Khalifa Port Free Trade Zone (KPFTZ), 238 Kikwete, Jakaya Mrisho, 138, 146 Kisumu, 61 Kuwait, 8, 10, 13, 15, 21, 202, 203, 211, 228, 229, 233, 237, 242, 244 Kuwait Direct Investment Authority, 235

L Lamu port, 55, 59, 61–63 Lamu Port-South Sudan-Ethiopia (LAPSSET), 55, 57, 59–66, 69, 126 Larijani, Ali, 179 La, Yifan, 118 Loans, 6–13, 15, 19, 22–24, 27, 28, 30, 31, 61–63, 65–67, 84, 88, 90, 96, 97, 119, 123–125, 128, 140, 256, 259, 260, 262, 269

M Madinat Al-Hareer project, 237 Magufuli, John J., 138, 147, 149 Malaba, 55, 60, 61

289

Maritime Silk Road, 137 Maritime Silk Road Initiative (MSRI), 1, 26–28, 53, 81, 137, 165, 199, 227, 255 participants, 3, 6, 18, 20–25, 31, 54, 98, 126, 151, 167 projects, 2, 5, 6, 18–21, 23, 26, 31, 54–57, 60, 64, 65, 69–72, 82, 83, 90, 99, 112, 138, 139, 144, 150–152, 167, 179, 228, 235–237, 240, 255, 257, 265, 267–269 Masabo, Conrad John, 18, 19, 25, 27, 28, 137–152 Mashhad, 174 Mbegani seaport, 138 Mboya, Cliff, 18, 23, 25, 26, 53–72, 126 Mekelle-Woldia-Hara-Gebeya project, 18 Memorandum of Understanding (MoU), 56, 178, 179, 208–210, 238, 241, 259, 264–266 Meng, Wanzhou, 173 Middle East, 10, 56, 67, 121, 125, 126, 167, 179, 200, 207, 212, 229, 230, 232, 233, 237, 240, 244, 256, 258 Middle East and North Africa (MENA), 1–4, 6–16, 20, 22, 30, 256, 267 Military base, 27, 65, 67, 114, 116, 120, 128 Mining, 13, 15, 138, 149, 151, 175, 179, 182 Modjo, 63 Mombasa, 55, 62, 150 Mombasa port, 57, 125 Mombasa-Nairobi Railway, 18, 55, 60, 91, 113 Multinational corporation (MNC), 5, 6, 30, 31, 99, 139, 140

290

INDEX

Muslim Brotherhood, 243

N Nairobi, 60 Nationalism, 138, 149, 151, 168 Nuclear agreement, 169, 171, 172

O Ogaden, 117, 123 Oil pipeline, 21, 59, 61 One Belt, One Road (OBOR), 112, 124 Organization of African Unity (OAU), 140

P Payne, Jeffrey, 199–216 People’s Republic of China (PRC), 1, 7, 8, 18, 24, 53, 81, 83, 111, 116, 137, 141, 165, 199, 201, 202, 228, 255, 257 Persian Gulf, 178–180, 182, 200, 216, 230 Political political effects, 27, 82, 97, 98 political elites, 30, 150 political instability, 5, 208 political relations, 9, 11, 15, 28, 82, 97, 139, 151, 200, 228, 257, 258 political ties, 5, 8, 12, 84, 116, 168, 181

R Railways, 3, 5, 13, 24, 26, 27, 54, 57, 60, 66, 71, 83, 90, 91, 97, 98, 112, 146, 174, 179, 180, 210, 233, 256, 259, 265, 268

Red Sea, 62, 65, 111, 114, 117, 119, 121, 124, 126, 241, 256, 261, 266, 268 Regime stability, 228, 260 Renminbi (RMB), 53, 67, 233 Renminbi internationalization, 67

S Sanctions, 28, 166, 168–170, 172–177, 179, 181, 182, 203, 230 Seaports, 5, 16, 18, 20, 54, 165, 179, 181, 256, 264, 265, 268 Shanghai Cooperation Organization (SCO), 177 Shekou, 122, 123, 127 Shenzhen, 91, 127, 145 Silk Road Economic Belt (SREB), 2–5, 20, 21, 24–26, 29, 53, 71, 165–167, 174, 179–184, 199, 200, 208, 213, 255, 256, 259, 269 Singapore, 115 Sinopec, 13, 172, 262 Sinosteel, 174 Soft, 165 Soft infrastructure, 53 Soft power, 5, 19, 21, 166 Sokhna port, 260 Somaliland, 66, 91 South Africa, 7, 10–15, 141 South Asia, 26, 177 Southeast Asia, 5, 54, 200 Special economic zones (SEZs), 5, 18, 20, 21, 27, 57, 64, 66, 70, 83, 85, 87–92, 94, 97, 145, 265 State-owned enterprises (SOEs), 24, 94, 96, 112, 124, 139, 140, 207, 263 Styan, David, 18, 19, 27, 70, 90, 111–128

INDEX

Suez Canal, 182, 255, 259, 261, 265, 268 Suez Canal Economic Zone (SCZone), 29, 257, 259, 260, 264–266 Sun Jianguo, 178 Sustainability, 55, 60, 111, 113, 123

T Tanzania Tanzania and Zambia Railway Authority (TAZARA), 140 Tanzania-China International Mineral Resources Ltd (TCIMRL), 141 Tanzania Commission for Science and Technology (COSTECH), 148 Tanzania Nation Development Corporation, 141 Tanzania Port Authority (TPA), 145, 146 Tanzania terrestrial fiber optic network (NICTBB), 143 TAZARA, 61, 140, 147, 152 Technology transfer, 19, 92, 149, 175, 264 Tehran, 28, 166, 168, 174, 176, 178, 180, 181, 183, 201, 205 Tehran-Mashhad trunk line, 180 Terrorism, 5, 21, 25, 95, 166, 179, 180, 213, 261, 267, 268 Tianjin Economic-Technological Development Area (TEDA), 264, 265 TEDA special economic zone, 264 Trade trade barriers, 53

291

trade deficit, 89 trade partner, 12, 86, 172, 206, 232, 261 Trump administration, 172, 176, 180, 183, 230, 243 U United Nations (UN), 7, 8, 12, 85, 175, 177, 201, 258 W Wang Yi, 18, 212, 237, 243, 264 Wang Yilin, 238 Wen Jiabao, 95, 233 West Africa, 59 World Bank, 60–62, 95, 123, 144, 148–150, 261 X Xiaomi, 67 Xi Jinping, 5, 14, 20, 112, 137, 146, 172, 179, 229, 241, 243, 258, 259 Y Yang Shangkun, 10, 229 Yiwu (China)-Tehran railway, 180 Z Zarif, Javad, 179 Zhang Gaoli, 233, 241 Zhang Ming, 56 Zheng He, 57 Ziso, Edson, 18, 25, 27, 64, 70, 81–99