China opens new shipping line to Tripoli
BEIRUT - A vast container ship called CMA CGM Congo arrived October 9 in Tripoli, said Xinhua, China’s state media agency.
This is the latest overture by Beijing to debt-ridden Lebanon and a follow-up on promises made at the China Arab States Cooperation Forum in July, when China pledged more than $23 billion in credit, loans and humanitarian assistance to the Arab world.
It is no secret that China is interested in Lebanese infrastructure. In 2009, the China Harbour Engineering Company won a contract to build a 600-metre quay extension at Tripoli, with a view to rebuilding the disused railway to Homs. Tripoli has strategic importance as the only deep-water port in the region that is not controlled by the Russian military.
“China sees Lebanon as part of one package, including Syria, Iraq and central Asia,” said Neil Quilliam, senior research fellow with the MENA Programme at Chatham House, an independent policy institute in London. Quilliam leads a project mapping China’s Belt and Road Initiative and specialises in relations between Arab countries and China, India and Japan.
“China recently appointed a special envoy to Syria and a special envoy to the Middle East peace process,” he said. “I was in Shanghai recently discussing the sequencing of Syria’s reconstruction process. While the US and European powers want a political settlement before reconstruction, China views it the other way round. They deem it necessary to already start creating places for refugees to return to.”
“[Chinese President] Xi Jinping is betting on having good relations with practically all the players in the region. China does not have the historical legacy of many others. It hopes it can simultaneously deal with Iran and Saudi Arabia; Israel and Lebanon. And in Lebanon, infrastructure is its main focus,” Quilliam said.
Lebanon sorely needs financing for infrastructure. The Capital Investment Plan commissioned by the World Bank ranked Lebanon 130th out of 137 in quality of overall infrastructure. In April, Western partners at the CEDRE conference proposed investment in several sectors, including $10.8 billion devoted to infrastructure.
However, it comes with the proviso that reforms are made to reduce fiscal deficit and public debt. Lebanon is third in the world for government debt to GDP — behind Japan, a booming economy, and Greece, a failed economy.
“Western nations have an interest in keeping Lebanon stable for two reasons,” said Lebanese journalist Nizar Hassan. “First, it is a [domestic] political issue. They want to prevent a further influx of refugees to Europe. Second, Lebanon is a stage for proxy politics. This is Prime Minister Saad Hariri’s last chance to save the economy. His ties to Europe and Gulf make it appealing for Western investors to keep economy going and therefore him going. He is also an ally against (the) Assad regime.”
However, there may be a third reason for Western patience with Lebanon. Any punitive measures taken by Western investors against Lebanon might allow new investors to gain a footing.
“As we have seen before, the main outcome of American and European sanctions against Iran is that China has moved in to fill the vacuum,” said Thomas Schellen, editor of Executive magazine in Beirut.
“There is no doubt that the West paints Chinese money darker than is necessary. For the time being, I see confrontation on trade fronts far more likely than military. Nevertheless, small countries may get caught between larger powers. Lebanon is one such country and it should be wary of entering relations with the Chinese.”
However, Schellen said there was a limit to the possibility of Chinese investment. “The World Bank’s plan has considerable financial advantages,” he said. “The risks involved are thought to be predictable. As for financing infrastructure, China’s large conglomerates are looking for opportunities on a scale which Lebanon cannot offer. They are not interested in deals of a few hundred million dollars.”
Eliana Ibrahim, president of China Arab Association for Promoting Cultural and Commercial Exchange, said she agreed that Lebanon’s size presents difficulties for Chinese investment in infrastructure. “China really has money. China really has the will to invest. A project joining Lebanon, Syria, Iraq, Iran — that would be something the Chinese would really be interested in,” she said.
Ibrahim frequently acts as a mediator between Chinese and Lebanese markets. “The Chinese are slower than Western investors. They need to watch and feel safe,” she said. “In China all my friends ask what are good projects to invest in? They trust me because I am Chinese.”
In some sectors, such as shipping and electricity, it seems Chinese investors need no convincing. Beginning in February, a new 450-megawatt power plant is set to provide the capital with 24 hours of electricity for the first time since the end of the civil war in 1990.
“On October 13, I am welcoming Power China to Lebanon. They are interested in financing up to 80% of the new power plant,” Ibrahim said. “Despite this, Power China was not able to send their head boss! This may be a big project for Lebanon but it is small for China.”
Ibrahim said Tripoli’s port is a special case. “Tripoli has even greater potential than Beirut because it has space,” she said. “In general, Tripoli should have more opportunity — it should have.”