July 2018

One of the main changes we see in July’s Mediterranean media is that the (potential) effects of the China-United States trade war and, more generally, the worsening of the relations between the two countries, has started to be discussed in relation to China’s role in the wider Mediterranean region. In comparison, it is important to note that Russia never made it into articles concerning this topic, despite its newly re-discovered pivotal role in the regional balance.

We begin this month’s review with articles about this topic from Israel, Turkey, Iran, and Jordan. TheMarker, a popular Israeli business-oriented newspaper, published three articles that describe the uncertainty of Israel’s position as it looks at its American protector declaring a trade war on China, a country that has grown increasingly important for the Israeli economy and that the Netanyahu administration has spent significant diplomatic capital to strengthen relations with. As the journalist Dafna Maor wrote: “The fact that Trump is just as ready to fight trade wars with his closest friends [European countries, ed.] as with his enemies is a worrying development for Israel, which has enjoyed unprecedented support from the current tenant of the White House.” Essentially, it is clear to the author that there is nothing Israel can do to avoid the eventual storm. For the moment, the Israeli press describes the government as engaged in a difficult discussion over the establishment of a commission to screen foreign investments. This hardly looks like a sincere change of mind by the government but, rather, appears to be a move forced by the circumstances. Some argue that the American government directly put pressure on Israel. Professor Avi Simhon, Head of the National Economic Council, told TheMarker that the Knesset’s Foreign Affairs and Defense Committee is involved in the discussion but the government seems very cautious as it does not want to be kidnapped by the looming trade war. Moreover, while the American market remains the main destination of Israeli goods (USD 9,42 billion in 2017), Israeli exports to China reached USD 2,71 billion in 2017. Eli Barasch, head of the China Desk at GKH (a large Tel Aviv law firm), offered some reason to be optimistic: if Chinese investments will be banned from the United States, they will probably go to Israel, whose tech companies have always attracted the attention of Chinese investors. Yet, it is difficult to say how realistic Mr. Barasch’s hopes are since the Americans fear precisely that Israeli technologies will arrive in the hands of the Chinese military. In the case of Turkey, which imports from China and the United States much more than it exports to them, Ali Osman Akat, the Chairman of the Turkish-American Business Association - American Chamber of Commerce, declared that the country is unlikely to suffer significantly from the trade frictions between China and the United States. One way to actually gain from the present situation, he argued, is that of investing directly in the United States to avoid rising American tariffs. IRNA, Iran’s official news agency, reported approvingly the words of the spokesman of the Chinese Foreign Ministry concerning the trade relations between the two countries. Iran and China are “two old business partners” that will continue expanding their economic cooperation regardless of American pressure. As proof of the solidity of the base upon which this trade relationship is built, the article reports that the total trade volume has expanded by more than 10% during the first quarter of 2018 and exports of oil to Beijing, 630.000 barrels per day. The taking over by China National Petroleum Corporation of Total’s shares in the South Pars gas field might be indicative of what is to come in future. IRNA commentators also claimed that China will keep on paying great attention to Africa and the Middle East as a result of growing American pressure, and Xi Jinping’s recent visit to those regions confirms that China will look or is already looking for new partners against American unilateralism. Ret. General Musa al-Adwan, a former commander of Jordan's Special Forces made a similar argument in his suggestion to Jordanian policymakers in favor of cooperating more with China. Al-Adwan took the deal between China and Kuwait over the development of the Failaka and Boubyan Islands to show the significant economic benefits for those who cooperate with China. At the same time, he further added that it is clear that Washington is losing its influence in the region and that China is the only valid alternative. American tariffs will push China to strengthen economic, and eventually political, cooperation with its partners in other regions.

The assessment of China’s role in regional economic dynamics appears uncertain with ups and downs. The London-based Arab newspaper Rai al-Youm commented on the challenge that the UAE is facing as Chinese companies advance in the Horn of Africa. According to the journalist, the success of DP World in the London Court of International Arbitration against the government of Dijbouti over the seizure of the Doraleh Container Terminal (DCT) from the Emirati company, and the threat to take legal action against third parties that might be involved in the management of the port, will not solve the problem. The reason behind this is the strong economic ties between China (represented by China Merchant Group in this case), Djibouti, and Ethiopia, which are expanding their cooperation in Djibouti’s key logistic facilities including the Djibouti Port and Free Zone Authority and, probably, DCT soon (here Djibouti’s ambassador to Ethiopia explains the problem with DP World and the prospects of cooperation with Ethiopia and, to some extent, China). Abdillahi Adaweh Sigas, CEO of DCT, told a reporter from the Jeune Afrique that the country needs further investments in its port facilities. It seems, thus, that there is simply too much pressure on the Emirati company. Simone Tagliapietra, Senior Research with the Fondazione Eni Enrico Mattei and Fellow at the Bruegel Institute, also commented on China’s presence in Mediterranean harbors. In particular, he pointed out how European leaders appear divided in the face of China’s attempt to boost logistics integration in the Balkan Peninsula by connecting the Greek Piraeus Port with the European heartland via railway. As long as there is no common European investment screening mechanism in place, Tagliapietra wrote, it will remain difficult to have a comprehensive understanding of the implications of and approach to China’s expanding role in Europe and its neighborhood. Similar doubts continue to surface in Israeli media as well. Not only is the Israeli holding company Mivtach Shamir, with the help of Apax Partners, reportedly trying to buy back Tnuva after the failure of Bright Food to expand the company’s reach into the Chinese diary market, but some politicians have also harshly criticized the government and El Al’s management for not putting up any resistance to China’s demand to delete Taiwan from the list of countries the company flies to. Both the Israeli government and the company did not reply to accusations of committing “cynical and ugly act.” Adopting a sober tone, media from Algeria and Morocco commented positively on the outcomes of the China-Arab States Cooperation Forum for their countries. In both cases, the articles did not provide much insight and simply reported the content of the agreements signed by the heads of states and the main points of China’s proposal for strengthening its partnership with the Arab countries. It is important to remember that not all the countries will benefit the same amount because regional competition to attract China’s attention and investments is fierce. Tunisia, for example, just signed a Memorandum of Understanding with China but its Moroccan neighbor did so one year ago already and, according to the Jeune Afrique, has already taken the place of China’s logistic hub in the Maghreb. Others, like Algeria, will probably benefit more if they will be able to foster competition between Europeans and Chinese. Data from Algerian customs show that France, Italy, and Spain are closing the gap with China in terms of exports to Algeria and remain the best customers of the North African country.

Beyond economic concerns, regional media foresee a larger role for China in security affairs than what we at ChinaMed believe Beijing is comfortable with. Rai al-Youm, for example, put forward the opinion that the effects of Trump’s policies towards China and the region (Iran in particular) will hardly have any effect because any serious attempt to pressure oil producing countries to chose side between Washington and Beijing or to disrupt the flow of oil towards China will be met by strong Chinese resistance. According to the reporter, that might also include a military component. Similarly to the article published by the Syrian outlet Al-Watan (dismissed by the Chinese embassy in Damascus as rumors) that has caused much uproar among Western China watchers, the Moroccan newspaper Maghress claimed that Chinese troops have been operating in Syria since early 2016 to hunt the Uyghurs that joined the terrorists organizations. Yet, it is important to point out that it is not the first time that similar claims have appeared in the media and there has been nothing so far that would confirm the presence of more than advisors to train Syrian forces in the use of the weapons purchased by Damascus (at least until late 2016) and eight soldiers of the Chinese People’s Armed Police in charge of the protection of Chinese diplomats. While, thus, one can only speculate about eventual Chinese moves in the fight against terrorism in Syria, the Turkish newspaper Türkiye reported that a Chinese citizen was arrested in Turkey's southern Sanliurfa Province, which shares a long border with Syria, by local antiterrorism units in early July. He and 17 other people are suspected of belonging to or aspiring to join the PKK/PYD-YPG.

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