March 2022

Looking through the media outlets of the wider Mediterranean this March revealed great interest in China’s expansion in Africa, especially in the Horn of Africa and Algeria through its Belt and Road Initiative. Furthermore , countries like Iraq, Iran and Saudi Arabia focused on their relations with Beijing with regard to the oil market.

Against this background, the Lebanese newspaper al-Akhbar published a review of Beijing’s footprint in the Horn of Africa since the beginning of this year. According to the newspaper, Chinese presence in the region is likely to continue to increase, as China replaces Western powers as the African continent’s main partner. Specifically,  on March 16th the Chinese Special Envoy for the Horn of Africa and the Ethiopian Minister for Foreign Affairs held consultations to strengthen the comprehensive strategic cooperative partnership between the two parties, something which was already discussed during the Forum on China-Africa Cooperation in Dakar last November, and to find ways to enhance their diplomatic efforts to resolve the ongoing dispute between Addis Ababa and its downstream neighbors, Sudan and Egypt. [1]

In contrast, China’s evolving bilateral relationships with Somalia and Somaliland hint to a complex situation. While the ties between Beijing and Mogadishu continue as before, China is now reportedly joining Somalia’s efforts to contain the self-proclaimed independent republic of Somaliland. [2] This decision may be motivated by the breakaway state’s decision to build closer relations with Taiwan on the basis of their shared economic interests and a similar political situation. [3] Additionally, in the past, Beijing presented several investment offers to Hargheisa, but they were refused suggesting that Somaliland’s rapprochement to Taiwan is not only of an economic and developmental nature, but an attempt “to strengthen its position and importance to Washington and Brussels, as a reliable ally in the Horn of Africa to counter Chinese influence,” wrote Egyptian journalist Hamed Fathy.

Investment and sovereignty were also at the center of the meeting between Wang Yi and Algerian Foreign Minister Ramtane Lamamra from March 19th to the 21st. Lamamra stated his country’s will to further develop diplomatic relations with China, especially over issues of common interest like the question of Western Sahara. The two sides agreed to finalize the executive plan to include Algeria in the Belt and Road Initiative “as soon as possible.” [4] This plan should revolve around three major strategic projects in the North African country, namely the construction of a central port and an industrial phosphate pole in the east, and an iron deposit project in the west. [5] This development has not gone unnoticed in Spain, which recently has begun supporting the Moroccan stance which calls for an autonomous Western Sahara under Rabat’s rule. [6]

The situation is complex in Iraq as well. Experts in Baghdad have started to question the seriousness of the “Iraq-China oil-for-reconstruction deal” once again. As revealed by Manar al-Obaydi, no real results in terms of GDP growth have been achieved in sensitive sectors such as agriculture and industry despite Iraqi imports from China amounting to 11 billion US dollars last year with 3 billion having been deposited in the special fund established to manage the investments connected to the joint agreement. [7] At the same time, the demonstrations that started in the past months against the Chinese oil companies operating in several Iraqi fields are still ongoing. For example, the residents of the al-Ahrar district in the Wasit governorate blocked access to the al-Ahdab oil field, managed by China National Petroleum Corporation, and called on the Chinese company to include the local population in the workforce. [8] In this context it is relevant to note that the domestic political instability might worsen the situation in the coming months. In fact, in the beginning of March the Parliament decided to cancel appointing the Minister of Oil, Ihsan Abd al-Jabbar, to the position of director of the Iraqi National Oil Company. This might be relevant because, as stated by the representative for the al-Basra Governorate Zahra al-Baccari, “the parliament's vote to cancel the cabinet's decision regarding the current oil minister in the caretaker government makes all agreements and contracts signed by the minister invalid. This is because the caretaker government is not constitutionally authorized to enter into such contractual or international obligations.” The mentioned agreements include several contracts signed with CNPC and other connected companies. [9]

China is also likely to witness a setback in its energy relationship with Iran because of the impact of the war in Ukraine on the energy market. Although China has been the major buyer of Iranian oil in the past years (700 thousand oil barrels per day in January, as reported by tracking agencies such as Platts and Kepler) and has been buying at a discount of RMB 400 per ton, market sources quoted by the Iranian economic newspaper Donya-ye Eqtesad have been reporting that Iran is offering China fewer shipments, that ought to be paid at full price. According to the newspaper, this might be due to the fact that the crisis in Ukraine and the embargo on Russian fossil fuels have increased the attractiveness of Iranian oil internationally. Tehran is therefore waiting for the possibly near conclusion of the nuclear deal to fully return to the global market where it can sell its huge oil reserves at full price. [10]

At the same time, the alleged decision of Saudi Crown Prince Mohammad bin Salman to allow Beijing to pay for its oil imports from Riyadh in RMB has raised much noise. According to several Western sources, this move might stem from Saudi Arabia’s disappointment with the Biden administration’s critical position toward the Kingdom and it may be the starting point for renewed energy alliance between China and Saudi Arabia. [11] However, journalist ʿAbdallah ibn ʿAbd al-Muhsin al-Faraj underlines that there is nothing new about this decision and that, if implemented, it would only serve Riyadh’s interest in diversifying its revenue basket “whenever the conditions are ripe for it.” [12] Given the levels of inflation in the United States and China’s foreseen growth and its global trading relations, al-Faraj suggests that the conditions for “the coming of the Petro-Yuan” might emerge soon.

For what concerns the development of the BRI in the Mediterranean region, Turkish media are keen to highlight the importance of Ankara in the trade routes linking China to Europe, especially through the BRI’s “Middle Corridor.” In particular, the Yenisafak Gazetesi asserted that the outbreak of the war in Ukraine and the consequent embargo on Russia created a significant opportunity for Turkey to present itself as an alternative supply chain route to Europe. [13] As reported by the newspaper, Ayşem Ulusoy, the President of the Association of International Forwarding and Logistics Service Providers, stressed the need to “encourage other countries to solve the existing technical problems related to the ‘Middle Corridor’,” by establishing logistic centers and free trade areas along it, thereby making Turkey into an international transportation hub      .

Yet, the development of logistic ties between China and Europe is not frictionless, as shown by COSCO’s ongoing adventure in the Port of Piraeus in Greece. According to figures provided by the Chinese companies and reported by Insider Greece, the revenues of the Piraeus Port Authority (PPA) increased by 39.4% mainly due to cruise activity, container shipment and shipbuilding and repairs. [14] Yet, the same newspaper revealed that on March 14th, the Greek Council of State withdrew approval from the framework of the PPA Master Plan concerning the mandatory investments requested in the concession contract of the port to the Chinese group. However, Piraeus for All, a group in the Piraeus Municipal Council, accused COSCO of continuing construction to expand the cruise pier and called on the competent authorities to implement the Council’s decision, threatening to resort to legal actions which would assign personal criminal responsibilities to those involved in that “illegal, unlicensed project.”

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