December 2020

This month, the articles published in the wider Mediterranean region seem to suggest a generally spread two-fold approach to the countries’ relations with China. Despite the fact that many countries still view China as a major economic partner, there seems to be an increasing number of voices calling for caution in dealing with the Asian power. This is especially evident in the US-EU-China triangle as a new American administration is about to come in, as well as in the Chinese economic engagement in countries like Iran and Iraq.

Against this background, the Israeli business newspaper Calcalist published an interesting article on the future developments of US-Israel relations vis-à-vis Israel’s ties with China under the new Biden leadership. [1] According to the article, the new administration is “expected to be more considerate and will encourage cooperation between the powers in defined areas.” However, one of the main goals of Biden’s presidency will be to “create an international united front that will strengthen American stances against China.” Discussing a topic that we mentioned in previous issues of the ChinaMed Observer, the article argues that the United States might continue to consider the sharing and the selling of Israeli technological know-how and products with China as a threat to US national security. Therefore, “not only will the pressure not diminish – it is likely to even increase.” For Israel to be able to continue to implement its agreements with China, the article suggests that the Israeli government should initiate a dialogue with the Biden administration to outline and clarify the relations between Israel and China, so as not to harm American interests and lose Israeli supporters in the US Congress and Senate. What is interesting to note is that the article does not consider this change of approach as a “surrender” to American pressure. Simply, “if the Israeli government expects the United States to take into account Israeli interests vis-à-vis Iran, Israel should show that it takes into account American interests vis-à-vis China.”

For their part, Greek media have published a series of articles that take into consideration the recently announced EU-China Comprehensive Agreement on Investment (CAI) and the American reaction to it. The deal, that was announced on December 30 but has not been signed yet, is intended to improve the conditions of market access and level the playing field for EU companies in China. Although CAI is considered to be one of the most ambitious agreements ever concluded between China and a third party, many important points for the European Union are still under negotiation, including the conditions for investment protection and the issues of human rights and labors. Writing for the leftist newspaper Iskra, Panagiotis Sotiris points out that the new American administration, in particular through the National Security Advisor to the President-elect, Jake Sullivan, put the European Union under pressure to delay the deal and to involve their transatlantic partners in the discussion of their common interests. [2] Sotiris suggests that the United States, already “afraid that the Chinese strategy One Road-One Belt […], with the promises of large transit networks and infrastructure investments that had been met quite positively in European countries, would increase the European dependence on China,” are concerned about the possibility that the Chinese might use the agreement with EU, once concluded, as a bargaining chip in the negotiations with the US. On the other hand, in a note published in Free Sunday, Giorgios Kyrtsos, a Member of the European Parliament, presents the draft of the European Commission for a “new EU-US Agenda for Global Change”. [3] Although he acknowledges China’s impressive economic growth and its exemplary management of the coronavirus pandemic, he points out that China is the number one strategic challenge for both the United States and the EU, and that “tackling its ever-increasing international influence and some dynamic to aggressive initiatives in its wider region can only be achieved through joint efforts.”

Italian media and think tanks share the same concerns on CAI. The Italian Institute for International and Political Studies (ISPI) highlights that this new agreement is important for its positive impact on the commercial ties between China and the European Union and because “it will contribute to create a more relaxed climate between China and the West, inevitably influencing global geopolitics.” [4] Others worry that CAI will nullify European pressure on China for the protection of human rights and labor rights. For instance, the European MP Giuliano Pisapia, in an interview with Linkiesta, affirms that the agreement ought to include a sanctioning mechanism for the violation of human and labor rights, and environmental policies, otherwise the European Parliament will strongly oppose the deal. [5] Pisapia not only calls for caution, but also suggests a reconciliation with the United States.

Meanwhile, the debate over Chinese economic engagement continues in Middle Eastern media. For example, Nasim Tavakkol, an Iranian entrepreneur and member of the Tehran Chamber of Commerce, points out that the significance of the cooperation between Iranian and Chinese middle and small companies has increased. [6] This is an important development for the trade relations between the two countries while Iran remains under US sanctions. However, if “on one hand, the capability of the two countries to cooperate in this context has increased; on the other, the lack of adequate protection laws and business consulting services has created significant challenges for Iranian companies.” In particular, Tavakol identifies the lack of legal support from the Iranian Embassy in China, the scarce importance accorded to exclusive customs representation by China, and the freezing of Iranian capital due to US sanctions as the most pressing issues. Hence, she suggests that the Iranian government, in addition to providing the necessary support, should also establish a “swap department” to allow Iranian producers to use the capital blocked in Chinese factories.

Finally, Iraqi media offer new, interesting insights on the developments of two important issues in the relations between Iraq and China. First of all, contrary to what was announced last month, the Iraqi Government Media Center confirmed the appointment of al-Faw Grand Port project to the Korean company Daewoo, instead of to a Chinese one. According to the article, “the Chinese company presented its offer for the digging of the navigation channel to the depth required by the ministry, including the lift of 36.5 million m3 of mud deposit, at a higher cost than the Korean offer and with less efficiency. Also, the Chinese company was not specialized in constructing ports, but, rather, in the production of electrical generators and cables. It failed to provide the Iraqi side with the documentation to prove its specialization in the construction of ports, despite continuous statements about this issue.”  [7] This decision did not come without disagreement among Iraqi elites. For example, the newspaper al-Zaman reported some statements by Mazen al-Faylim, a member of the Economic and Investment Parliamentary Commission, stressing that China would be the best choice as a partner for a project that is “gaining great strategic, sovereign, and developmental importance.” According to him, China is interested in the port, especially within the framework of the Silk Road initiative. Moreover, not only does it possess the financial strength to support this project, but also “a major country like China cannot be influenced by regional and international pressures.” In a similar fashion, we found conflicting views also on the much-discussed “oil-for-reconstruction” agreement. Adel al-Jubouri, an economic journalist, praises the agreement signed by the former President Abd al-Mahdi “as one of the solutions and options available to confront the severe economic crisis the country is facing in light of the coronavirus pandemic and the decline in oil prices, in addition to the lack of adequate alternatives to compensate the large fiscal deficit.” [8] At the same time, other Iraqi economic and political experts, joining others that talked with Bloomberg, strongly criticize the deal and the offer made by the Chinese company ZhenHua Oil to pay the Iraqi Oil Marketing Company (SOMO) about USD 2.5 billion for 28 million barrels of crude between July 1st, 2021 and June 30th, 2022. [9] Omar al-Sattar, a political analyst, considers Iraq to be “undoubtedly the biggest loser from this deal” because “Chinese influence has started to increase in Iraq, and despite the gradual withdrawal of the United States from Iraq, they will not abandon it. Therefore, Iraq will become an arena for competition among world powers.” In addition, the deal is considered to be “risky” and “unusual” because Iraq had never entered into similar deals before, especially since oil prices are possibly on the rise, and because ZhenHua Oil could ship the Iraqi crude oil to any destination while, usually, it is not possible to resell Middle Eastern crude to a third party. In this debate, the Minister of Planning Khalid Battal announced that the “oil-for-reconstruction” agreement is still active and that the limited funds allocated to it in the federal budget for FY 2021 will be directed to the construction schools. However, Battal also stressed that “Iraq cannot disrupt all its economic, political and strategic relations with other countries and move closer only to China because this would harm the future of Iraq.” [10]  Hence, he also assured that the agreement with China will not interfere with the similar one signed with Egypt and with the tripartite cooperation between Iraq, Egypt and Jordan.

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