May 2020

This month, our review of the media reports published in the wider Mediterranean region focuses on the debate surrounding the “oil-for-reconstruction” agreement between Iraq and China; Sino-French competition in Morocco, Algeria, and Lebanon; the Iranian discussion about the relations with China; and continuing criticism from a number of countries about how China handled the Covid-19 outbreak.

On May 11th, the Yaqin News Agency reported that the Economic and Investment Committee of the Iraqi Parliament announced that they will put pressure on the new ministers of the just-appointed Mustafa Al-Kazemi government to make all documents related to the “oil-for-reconstruction” agreement, signed by then-Prime Minister Adel Abdul Mahdi during his visit to Beijing in September 2019, public. [1] This deal is crucial for the economic survival of Iraq. Speaking to Al-Monitor, Abdul Hussein al-Hanin, the former adviser to Mahdi, said, “The China-Iraq deal stretches over 20 years. Under the deal, Baghdad shall export to China 3 million barrels a month at the world price, currently estimated at USD 180 million.” As it appears in the previous issues of the ChinaMed Observer, the deal has been highly contested since its inception. Over time, Iraqi media have raised a number of important questions regarding the risks of corruption, the lack of prior debate regarding the deal, the lack of legitimacy of the Mahdi’s government in signing such an important deal, and whether Iraqi companies will be allowed to play a role in the projects financed by Chinese money. The creation of a new government has probably created space for political action beyond the denunciations by the media.

At the same time, the new Iraqi government might also be under external pressure in reconsidering the deal with China. Economist Saleh al-Hamashi spoke with Mawazin News regarding the strategic dialogue between Iraq and the United States that was held on June 11th. [2] Though its seems that China was not discussed, al-Hamashi’s comments are well-worth being taken into consideration. According to him, Iraq’s desperate economic situation forces it to seek economic cooperation with every country that can offer help, regardless of alliances. Yet, as the Sino-American competition intensifies, Iraqi politicians might be forced to make choices. Iraq might be easily cornered into making concessions to the Americans in order to receive more assistance and, subsequently, the deal with China might easily be one of the first casualties. China has significant energy and commercial interests in Iraq. Iraq has emerged as one of the main suppliers of crude oil to China, greatly making up for the decrease of the imports from Iran. In light of this, it will be very interesting to see how the situation will evolve as domestic and foreign pressure might undermine China’s position in Iraq. Moreover, given Iraqi fragility, the potential damages to Iraq’s economy might easily translate to political instability in the country and the region at large.

Iraq is not the only country where commentators and government officials feel growing pressure to reconsider close economic relations with Beijing. For example, the Minister of Communication and Spokesman for the Presidency of the Algerian Republic, Mohamed Oussaid Belaid declared that Algeria will continue to pursue close relations with China regardless of other countries’ perceptions. [3] In addition to the United States, France does not look favorably on China’s presence in the region—especially in North Africa. The Moroccan newspaper Al-Ousboue published a long report on Sino-French competition there. [4] Reportedly, the Spanish and French governments offered assistance to the Moroccan government to tackle the problem of smuggling from the Spanish enclaves of Ceuta and Melilla, which damages the Moroccan economy, in exchange for terminating cooperation projects with China. Generally, France wants Sino-Moroccan relations to be carried out under the larger umbrella of cooperation between Paris and Rabat. The same is true in the case of the Sino-Algerian relations. France wants relations between China and the two north African countries to be limited to tourism and, to a minor extent, technological cooperation. French military intervention across the Sahel should be seen as further evidence of Paris’ commitment to preserve its regional leadership vis-à-vis the Chinese challenge. Yet, the author argues that both Morocco and Algeria have no intention on being caught in the economic crossfire between China and France—and the European Union, more broadly. This report comes as French newspapers emphasize the success of China’s “mask diplomacy” in North Africa. Le Figaro, for example, published an article on how Chinese economic and diplomatic actors are working in tandem to both reshape China’s image in the aftermath of the Covid-19 outbreak and create opportunities for Chinese companies. [5] According to Hicham Rouibah, a junior scholar at the Research Institute for Development, China has been quite successful thus far although some skepticism remains regarding the quality of Chinese goods.

However, cooperation with China remains appealing even as Beijing’s ambitions are well-known. This is evident in an article published by Lebanon Economy which describes the negotiations between the Lebanese government and a number of Western companies to build desperately needed electricity capacity. [6] Beirut has said it plans to sign memorandums of understandings with Siemens AG, General Electric, Mitsubishi, and Ansaldo Energia for negotiations to propose financially viable solutions for building the plants. Lebanon is undergoing a financial crisis and, thus, has to withdraw sovereign guarantees for this project. While this might pose as an obstacle for negotiations with Western companies, the article reports that China National Machinery Import and Export Corporation (CMC) has been in touch with different members of the Lebanese government and communicating that it is willing to begin the construction of power plants in different locations following the BOOT model. It also does not require sovereign guarantees and the Bank of China will provide the necessary capital. According to the article, Lebanon could save up to USD 100 million with CMC in comparison to deals with the other companies. One of the journalists mentioned in the source acknowledges that the Chinese are willing to make such an offer because they want to expand their influence in the region. However, they argue, this is of little importance if this action can help Lebanon to produce more electricity, a crucial issue to keep its economy afloat.

Meanwhile, Iranian commentators continue to push for a rebalancing in the relations with China under the traditional foreign policy motto “Neither East, nor West, Islamic Republic.” Sharq published an extremely harsh article on how Iran’s dependence on China makes Tehran vulnerable to Beijing’s requests. [7] The article begins with series of criticisms against China’s commercial practices—such as stealing technological know-how from others—and the creation of an authoritarian regime. Then, China is accused of being not very different from other countries as it used its position in the Security Council to isolate Iran by voting in favor of the sanctions. While closing the door for Iran to develop relations with other countries, Beijing has exploited Iran’s dependency to force Tehran to use the profits of oil trade deposited in Chinese bank accounts to buy Chinese goods. Ultimately, using the sanctions as an excuse, Beijing has forced Iran to convert the American Dollars in those account into Chinese Yuan, paying a 12% fee. Like other articles that we reviewed last month, this one does not blame China for maximizing its interests. Instead, it should be seen as a lament for Iran’s current predicament and a call to find a way to change the situation.

To conclude, politicians and commentators in different countries continue to criticize China for how it handled the Covid-19 pandemic. In Italy, Foreign Minister Di Maio affirmed that Italy’s relations with NATO and the European Union (EU) are more important than the partnership with China after polls demonstrated China’s soft power gains and statements by Alessandro Di Battista, another leading member of the Five Star Movement, made a sensation in March. [8] At the same time, however, Di Maio is also pushing to create special regulations that would allow nationals from Russia, China, and Germany to enter Italy for tourism in order to support the Italian economy. [9] Prime Minister Conte is unlikely to allow these regulations as it would create policy differences with other EU countries. In general, the Five Star Movement continues to be criticized, especially by right-wing politicians, as the reason why the Italian government seems so reticent to criticize China on the management of the new coronavirus and other politically thorny issues. [10] Spanish, French, Turkish, and Israeli newspapers, too, published articles extremely critical of China, and reported threats made by politicians and/or members of the civil society to sue China. [11]